Chapter 1

Question 1

what is money laundering

Answer 1

the process by which criminals attempt to conceal the true origin and ownership of the proceeds of their criminal activity, allowing them to maintain control over the proceeds and, ultimately, providing a cover for their sources of income.

Question 2

3 types of money laundering offences

Answer 2

Acquiring, using, posessing or concealing criminal property

failing to report money laundering

tipping off a client of suspicions

Question 3

what internal controls and policies should you have to combat money laundering

Answer 3

regular training to ensure client identification procedures are carried out

have a money laundering reporting officer (MLRO) and / or a money laundering compliance principal (MLCP)

Question 4

what do you need to know in terms of client identification

Answer 4

know clients identity, ownership structure and their operating cash flows

Question 5

how long should you keep client identification records

Answer 5

at least 5 years from the end of the client relationship

Question 6

what is suspicion in terms of money laundering

Answer 6

more than speculation but falling short of evidence

Question 7

what should the MLRO do if they have suspicions of money laundering

Answer 7

report to relevant authority (NCA in UK)

Question 8

what is CDD

Answer 8

customer due diligence

Question 9

3 steps of CDD

Answer 9

identify customer and verify identity

identify any beneficial owner who is not the customer

understand the purpose and intended nature of the relationship

Question 10

what does NOCLAR mean

Answer 10

non compliance with laws and regulations

Question 11

is the auditor responsible for preventing NOCLAR

Answer 11

no but an audit can deter clients from not complying

Question 12

what should an auditor consider if possible NOCLAR is discovered

Answer 12

potential financial consequences such as fines, penalties, damages etc

whether the above requires a disclosure

whether the consequences are serious enough to consider the going concern

Question 13

when would an auditor consider withdrawal from the engagement

Answer 13

when the entity does not take the remedial action the auditor considers necessary

Question 14

5 steps to dealing with laws and regulations

Answer 14

obtain understanding of laws

if NOCLAR is discovered, obtain further understanding

evaluate impact on FS

report to appropriate management

consider withdrawal form client if they do not co-operate

Question 15

what audit opinion is required when non compliance has caused a material impact on FS

Answer 15

qualified or adverse

Question 16

who oversees the work of the international auditing and assurance standards board

Answer 16

public interest oversight board