Ten Red Flag Questions for Private Schools and Universities

Ten Red Flag Questions for Private Schools and Universities

by | Jun 25, 2024 | Blog, News

A 2022 article warning private schools and universities that appeared on the law firm website Withersworldwide is worth noting. It warns private schools and universities that they are at particular risk of receiving the proceeds of bribery and corruption and legitimising them. These warnings also extend to the possibility of financing terrorism.

Anyone in a senior management position and, in particular, responsible for the financial side of a private school or university should ask themselves the following (non-exhaustive list of) ‘red flag’ questions about a payment:

  1. Is the payer native to, or resident in, a high-risk country?
  2. Are the funds coming from a foreign bank account?
  3. Is the payer a Politically Exposed Person (see Section 37 (10) of the Criminal Justice (Money Laundering & Terrorist Financing) Acts 2010 to 2021), subject to sanctions or designated as (or associated with) a proscribed organisation?
  4. Are the funds part of a complex or illogical arrangement, such that it is unclear who is making the payment, e.g. from an offshore company?
  5. Has the payer taken steps to conceal their identity? Has anyone in the organisation ever met the payer in person?
  6. Are the payer’s assets inconsistent with their known legitimate income?
  7. Is the payment made up of a disproportionate amount of private funding, bearer’s cheques or cash?
  8. Are significant amounts being offered (unnecessarily) in advance or is the school or university being put under pressure to complete the transaction quickly without good justification?
  9. Is any of the information provided by the payer suspicious (e.g. falsified) or has information been withheld?
  10. Is a refund being requested for an overpayment (and if so, to different accounts)?

Sometimes the answers to these questions will be perfectly reasonable and innocent. Remain on the alert to the potential ML and terrorism risks where the source of funds is unclear or concerning, especially where a payment would tick more than one of the boxes listed above.

For more on AML please see our Anti-Money Laundering Policies Controls and Procedures Manual on our website. — View the table of contents here.

Please go to our website to see our:

  • Anti-Money Laundering Policies Controls and Procedures Manual (March 2022) — View the table of contents
  • AML Webinar (December 2023) available here, which accompanies the AML Manual. It explains the latest legal AML reporting position for accountancy firms and includes a quiz. Upon completion you receive a CPD certificate for attendance in your inbox.
  • Letters of engagement and similar templates—Please visit our website here where immediate downloads are available in Word format. A bulk discount is available for orders of five or more items bought together.
  • ISQM TOOLKIT, or if you prefer to chat through the different audit risks and potential appropriate responses presented by this new standard, please contact John McCarthy FCA by email at john@jmcc.ie.
  • We typically tailor ISQM training and brainstorming sessions to suit your firm’s unique requirements. The ISQM TOOLKIT 2022 is available to purchase here.
Anti-Money Laundering National Risk Assessment

Anti-Money Laundering National Risk Assessment

by | Nov 1, 2016 | News

‘The specialist nature of the knowledge and services provided by the accountancy service providers makes them vulnerable to being sought out and exploited by those who seek to launder the proceeds of crime or evade tax. It is recognised in international risk-based guidance that accountancy service providers may be sought to assist in the structure and design of transactions intended to conceal the nature and origin of funds.’

So says the first ever National Risk Assessment published jointly in October 2016 by the Department of Justice and Equality (DoJE) and the Department of Finance. The assessment covers the main risk areas of the many sectors in Ireland that are subject to the provisions of the Criminal Justice (Money Laundering and Terrorist Financing) Act, 2010.

The report identifies the fact that very few (80 out of a total of 21,682 AML reports) suspicious transaction reports (known as STRs) were made by the accountancy profession, according to a separate report called the 2015 Annual Report on Money Laundering and Terrorist Financing from the DoJE, given the size of the sector. As a result, (among other risk factors) the sector is assessed as Medium-High risk.

Among the accountancy services identified, by the National Risk Assessment report as vulnerable to the risk of money laundering and terrorist financing are:

  • Company and trust formations;
  • Insolvency services;
  • Providing financial advice;
  • Providing tax advice;
  • Handling client money;
  • Managing client assets and financial accounts;
  • Investment business services;
  • Auditing financial statements; and
  • Company secretarial services. 

This first ever National Risk Assessment has been produced ahead of the international inspection of Ireland being carried out by the FATF in December 2016 called the Mutual Evaluation Review. This review can have significant international positive or negative reputational impact potential for Ireland as a financial centre, in a post-Brexit world.

To hear more about how to be on the alert for suspicions of money laundering and terrorist financing under the Criminal Justice (Money Laundering and Terrorist Financing) Act, 2010, come to our next AML course on Monday 28 November 2016.