Question Tag: Financial Crimes

Search 500 + past questions and counting.
Professional Bodies Filter
Program Filters
Subject Filters
More
Tags Filter
More
Check Box – Levels
Series Filter
More
Topics Filter
More
  • 10 Marks

BCL – Apr 2022 – L1 – Q1b – Public sector entities, Contract Law

Explain money laundering, its stages, and list anti-corruption institutions in Ghana.

Pepo Ghana Ltd operated three accounts at the Arena branch of Coin Bank Ltd. On 27 May 2020, the Financial Intelligence Centre (FIC) in a letter, directed Coin Bank Ltd to freeze all the accounts of Pepo Ghana Ltd.

i) Explain money laundering and explain TWO (2) stages of money laundering. (6 marks)

ii) List TWO (2) anti-corruption institutions in Ghana.

(4 marks)

i) Money Laundering is the act of transferring illegally obtained money through legitimate people or accounts so that its original source cannot be traced. The offence of money laundering is established if the person knows or ought to have known that a particular property is or forms part of the proceeds of an unlawful activity and the person:

  • Converts, conceals, disguises or transfers the property,
  • Conceals or disguises the unlawful origin of the property, or
  • Acquires, uses or takes possession of the property.

It is also a crime to aid and abet money laundering activities where a person, knowing that another person has obtained proceeds from an unlawful activity, assists them.

Stages of Anti-Money Laundering:

  1. Placement: This is the first stage in money laundering. At this stage, ‘dirty’ money is placed into the legal financial systems. The movement of cash from its source and placing it in circulation through financial institutions, casinos, businesses, disguised shops, forex bureaus, transfers both locally and abroad, etc.
  2. Layering: This is meant to make the trailing of illegal proceeds difficult for the law enforcement agencies, making it difficult to detect and uncover laundering activity. This involves creating a complex web of transactions to obscure the audit trail and conceal the original source and ownership of the illegal funds.
  3. Integration: This is the movement of previously laundered money into the economy, mainly through the banking system, thus legitimizing it. The money is now absorbed into the economy. Once the money has been placed and layered, the funds will be integrated back into the legitimate financial system as legal tender.

(6 marks)

ii) Anti-Corruption Institutions in Ghana:

  • Economic and Organized Crimes Office (EOCO)
  • Financial Intelligence Centre (FIC)
  • Securities and Exchange Commission (SEC)
  • Internal Audit Agency (IAA)
  • Public Procurement Authority (PPA)
  • Office of the Special Prosecutor
  • Commission for Human Rights and Administrative Justice (CHRAJ)

(Any 2 points @ 2 marks each = 4 marks)

  • 10 Marks

AAA – Nov 2023 – L3 – Q5a – Current Issues, Audit Evidence

Explain the stages of money laundering and audit obligations in a scenario involving suspicious transactions.

a) You have commenced the audit of Atika Ltd, a company involved in the importation and sale of plumbing materials. As part of the audit, you have noticed the following:

  1. Atika Ltd does not pay its suppliers in Germany through the bank. It relies mostly on the black market for the transfer of funds to its suppliers.
  2. Atika only sells its goods in Ghana.
  3. On 25 March within the audit year, there was a cash deposit of US$2,500,000.00 into the forex account of Atika Ltd.
  4. On 30 March the company transferred the following:
    • US$499,999.99 to an unknown account in Cameroon
    • US$399,999.99 to an unknown account in Kenya
    • US$499,999.99 to an unknown account in Niger
    • US$250,000.00 to the personal account of the Managing Director
    • US$150,000.00 to an unknown company.
  5. The company’s general ledger shows a revenue of GH¢1,560,000.00.
  6. The import documentation shows purchases of GH¢36,000,000.00. There is no evidence of payment for the goods from Atika Ltd’s bank accounts.
  7. The closing inventory amounted to GH¢2,145,200.00.

The Audit Manager has raised the issue of money laundering considering the nature of the transactions above.

Required:

i) Explain to the team members the various stages of money laundering and show how the above transactions confirm the client’s engagement in money laundering. (6 marks)

ii) What are the obligations on the firm for money laundering? (4 marks)

i) The three stages of money laundering are as follows:

  • Placement: This is when the criminal places illegal cash in what appears to be a legitimate business transaction. The deposit of US$2,500,000 into the forex account of the company may suggest the placement of illegal proceeds into the company.
  • Layering: In this stage, the funds move through several transactions or ‘layers’. The transactions will be complex and may move the funds between different countries to make the source of the illegal funds more difficult. The transfers on the 30 March suggest the layering of the funds.
  • Integration: In this final stage, the funds are moved back into the economy to convert them into a legitimate form. The purchase of goods suggests the integration of the funds back into the economy.

(3 points @ 2 marks each = 6 marks)

ii) Obligations on firms regarding money laundering:

  1. Appoint a Money Laundering Reporting Officer: The firm must appoint a Money Laundering Reporting Officer (MLRO) whose responsibility is to receive reports on suspected money laundering activities from other employees and report them to the appropriate authorities.
  2. Establish Reporting Procedures: The firm should establish procedures within the firm for reporting any suspicion of money laundering by client companies.
  3. Training and Education: The firm must provide training and education to staff on procedures for detecting and reporting suspicions of money laundering activities.
  4. Implement Systems and Controls: The firm should put in place systems, controls, and procedures to ensure that the firm is not used for money laundering purposes.

(4 points @ 1 mark each = 4 marks)

Take control of your business data with insight and in-depth understanding by taking this course. 

Services

Contact Info

  • +233203701923
    +233543919232
  • info@noohrabusiness.com

Get In Touch

Follow us on our social media and get daily updates.

Facebook-f Twitter Linkedin-in Envelope