In recent blogs we looked at some scenarios of money laundering in practical day to day business life.
Today we look at another example based on the latest Consultative Committee of Accountancy Bodies (CCAB) AML Guidance released in early March 2022.
The scenario is: Your client’s overseas subsidiary is one of three key suppliers of goods to a particular market in Europe. The subsidiary has recently significantly increased its prices and margins and its principal competitors have done the same.
There has been press speculation that the suppliers acted in concert, but publicly they have cited increased costs of production as driving the increase. Whilst this explains part of the reason for the increase, it is not the only reason for the increase in margins.
On reviewing the accounting records, you see significant payments for consultancy services and seek an explanation. Apparently, they relate to an assessment of the impact of the price increase on the market as well as some compensation for any losses the competitors suffered on their business outside of Europe.
Some of the increased profits have flowed back to the Irish parent company. There is not a criminal cartel offence under local law but there is under Irish law.
Where do one’s AML reporting duties lie in this situation?
- If you suspect a price fixing cartel – Report the matter as a suspicious money laundering transaction and document your decision process along with any associated professional advice received.
- If you do not suspect criminal activity – do not report but document your decision carefully along with any associated professional advice received.
The CCAB-I guidance elsewhere goes on to clarify that money laundering offences include, in certain circumstances, conduct occurring overseas which would constitute an offence if it had occurred in Ireland, even if it is not an offence in that overseas jurisdiction.
Please note that few potential money laundering reporting scenarios are clear cut. Legal and professional advice may be necessary to fully understand your reporting obligations.
Are your AML Policies Controls & Procedures up to date?
We have just released our latest Anti-Money Laundering Policies Controls & Procedures Manual (March 2022) – View the Table of Contents click here.
To ensure your letters of engagement and similar templates are up to date visit our site here where immediate downloads are available in Word format. A bulk discount is available for orders of five or more items if bought together.
For our latest Audit Quality Control Manual (October 2021) (implementing the latest Irish Audit & Accounting Supervisory Authority standards including ISQC1 on audit quality control) click here. View the Table of Contents here.