DEFINITION OF MONEY LAUNDERING:
Engaging in any of the following acts willfully, having knowledge that the funds are the proceeds of a felony or a misdemeanour :
♦ Transferring or moving proceeds or conducting any transaction with the aim of concealing or disguising their Illegal source;
♦ Concealing or disguising the true nature, source or location of the proceeds as well as the method involving their disposition,
♦ Movement, ownership of or rights with respect to said proceeds;
♦ Acquiring, possessing or using proceeds upon receipt;
♦ Assisting the perpetrator of the predicate offense to escape punishment.
ANTI-MONEY LAUNDERING STEPS:
1. Identifying and assessing risks.
2. Establishing, documenting, and updating policies and procedures to mitigate the identified risks.
3. Maintaining adequate risk-based customer due-diligence (C.D.D) and ongoing monitoring procedures.
4. Identifying and reporting suspicious transactions.
5. Putting in place an adequate governance framework for anti-money laundering, including appointing an anti-money laundering Compliance Officer, and ensuring adequate staff screening and training.
6. Maintaining adequate records related to all of the above.
7. Complying with the directives of the Competent Authorities of the State in relation to the United Nations Security Council resolutions.
RISK IDENTIFICATION AND ASSESSMENT FOR AUDITORS
♦ Financial audits related to a client’s books, records, and annual and periodic accounts.
♦ Operational audits related to a client’s internal controls, governance structures, and risk management processes and procedures.
♦ Compliance audits related to a client’s adherence to legal and regulatory requirements.
AUDITING ANTI-MONEY LAUNDERING INTERNAL CONTROLS, POLICIES AND PROCEDURES, AND GOVERNANCE:
♦ Involvement of appropriate resources in the formulation, approval and implementation of relevant internal controls, policies and procedures.
♦ Consistency & completeness of the relevant policies and procedures with the organization’s stated risk appetite.
♦ Compliance with the requirements of the A.M.L Law, Decision, and other applicable laws and regulations.
♦ Application of a risk-based approach.
♦ Extent of awareness and training of employees with regard to the relevant internal controls, policies and procedures;
♦ Consistency of application and adherence to the relevant internal controls, policies and procedures;
♦ Effectiveness of the relevant internal controls, policies and procedures;
♦ Documentation, record-keeping, and application of periodic reviews/updates in respect of the relevant internal controls, policies and procedures.
INDICATORS OF SUSPICIOUS TRANSACTIONS FOR AUDITORS :
1. The Client’s Beneficial Owner or Controlling Person:
♦ Refuses to provide personal or business information.
♦ Is under investigation or has known connections with criminals.
♦ Is the signatory to multiple company accounts (especially unrelated companies) without sufficient explanation.
♦ Has previously been prohibited from holding a directorship role in a company.
2. The Client Entity:
♦ Cannot provide evidence of real activity.
♦ Suddenly becomes active after a long period of dormancy, without a logical explanation.
♦ Has directors or controlling shareholder(s) who do not appear to have an active role in the company.
♦ Has an unusually large number of beneficiaries and other controlling interests.
♦ Is not normally a cash intensive business, but appears to have substantial amounts of unexplained cash.
♦ Has a complex corporate structure that does not make commercial sense.
♦ Frequently, or without adequate explanation, changes legal structures.
♦ Conducts an unusual number or frequency of transactions in a relatively short time period.
♦ Disposes off assets under conditions which are unusual.
♦ Makes deposits or other payments from multiple accounts or sources.
♦ Appears to engage multiple professionals in the same country to facilitate the same aspects of a transaction without a clear reason for doing so.
♦ Provides falsified records.
♦ Establishes or acquires a legal entity or legal arrangement without a logical explanation or description of the purpose.
3. The client’s transactions:
♦ Involve the use of a large sum of cash without an adequate explanation as to its source or purpose.
♦ Are financed by a non-financial institution third party, whether a natural or a legal person, with no logical explanation or commercial justification.
♦ Involve loans or other financing from private third parties without adequate supporting agreements, collateral, or regular interest payments or principal repayments.
♦ Involve funds received from a legal entity which subsequently goes into liquidation or is struck off the register.
♦ Are executed from a business account but appears to involve personal purchases or sales, or public finances.
♦ Involve complicated transaction routings or multi-jurisdictional corporate structures without sufficient explanation or trade records.
♦ Involve funds that are sent to, or received from, a foreign country when there is no apparent connection between the country and the client,
♦ Involve contributions to the share capital of a company which has no registered address or permanent establishment in the country.
4. The Means of Payment:
♦ Involves cash or negotiable instruments which do not state the true payer.
♦ Is divided in to smaller parts with a short interval between them.
♦ Involves third-party funding with no apparent connection or legitimate explanation.
5. Choice of Auditor:
♦ Is unreasonable and without a clear explanation, given the size, location or specialization of the auditor.
♦ Has changed a number of times in a short space of time without legitimate reason.
♦ Is due to the fact that the business relationship was refused by another auditor.
♦ The client requests that shortcuts be taken, or that the work is completed in an unreasonably short time period, and is prepared to pay substantially higher fees than usual in exchange.
♦ The client’s requested or preferred means of payment is unusual.
e.g. precious metals or stones, virtual currencies, or other unconventional payment methods.