i) Issues to Consider to Prove or Disprove Money Laundering Allegation:

• Inconsistent Transactions:
  • Evaluate transactions that appear inconsistent with Sampa Sawmill Ltd.’s known legitimate business activities or means. This includes unusual deviations from normal account and transaction patterns.
• Complex or Obscure Identity:
  • Investigate situations where the personal identity of those involved in transactions is difficult to determine or deliberately obscured.
• Improper or Unrecorded Transactions:
  • Look for unauthorized or improperly recorded transactions and inadequate audit trails that could indicate money laundering activities.
• Large Cash Transactions:
  • Pay special attention to large currency transactions, especially those involving the exchange for negotiable instruments or the purchase of funds transfer services.
• Structured Transactions:
  • Identify whether transactions are structured to avoid detection by regulatory authorities or to bypass record-keeping and reporting thresholds.
• Use of Intermediaries:
  • Assess the use of intermediaries in transactions for no apparent business reason, which could be indicative of money laundering.

(5 marks)

ii) Need for Ethical Guidance for Professional Accountants on Money Laundering:

• Conflict Between Confidentiality and Reporting:
  • Ethical guidance is necessary because there is an inherent conflict between an accountant’s duty of confidentiality towards their clients and the legal obligation to report suspicions of money laundering to authorities.
• Legal Obligations:
  • Accountants are required by law to report any knowledge or suspicion of money laundering to the appropriate authorities, and ethical guidance ensures they understand their obligations.
• Protection Against Liability:
  • Professional accountants need guidance to understand that they are not in breach of their professional duty of confidentiality when they report money laundering in good faith. Statutory protection often applies in such cases.
• Avoiding Repercussions:
  • Without proper ethical guidance, accountants might fear legal repercussions or being sued for breach of confidence, which could deter them from reporting suspicious activities.
• Clarification of Professional Duty:
  • Ethical guidance helps clarify that the duty to report overrides confidentiality in cases of money laundering, ensuring that accountants act in compliance with both legal and professional standards.

(5 marks)