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The profession of auditors and accountants is not an easy thing. They have access to the financial records and activities of their clients. This accessibility to financial records increases their vulnerability to money laundering. The involvement of their clients in money laundering activities also increases their exposure.
 
So, they must be extra vigilant to the risks of money laundering and terrorism financing. In this article, we list down the red flags of money laundering that auditors and accountants must be aware of. We also mention the important AML requirements that they must fulfil to remain in compliance with AML regulations.
 

Key aspects that make auditors and accountants vulnerable to money laundering and financial crime

Some of aspects of the profession of auditors and accountants make them vulnerable to financial crimes. They must be aware of these factors to save themselves from becoming a victim of money laundering and terrorism financing. These factors include:
  • Payments from clients are the proceeds from a money laundering or financial crime incident.
  • The financials of a client are unusual in terms of source, complexity level, type of business activity, geographical origins, etc.
  • The client hides the identity details of the ultimate beneficial owner (UBO), senior managers, signatories, legal representatives, etc. to launder the proceeds of criminal activities.
  • The client may use shell companies or complex legal structures to layer the laundered money from illicit sources and bring the money back into the legal financial system of the country.
  • The client conceals the sourcing of funds of the company and the auditor and/or accountant, being responsible for the financial management of this company, becomes a part of money laundering crime.
  • An accountant or auditor may unknowingly be involved in laundering the proceeds of a fraud activity of a client through shell companies.
  • The client hides any kind of association with Politically Exposed Persons (PEPs) concerning some kind of controlling stake
  • The client tries to influence the accuracy or transparency of the auditor’s or accountant’s work through bribery or any other ways.
Detailed Guide of AML Compliance Requirements