You are part of the audit team for a national chain of hotels and bars named ‘FAQ’s’. Totally unconnected with the audit, you have been invited to a friend’s birthday party at FAQ’s in Borchester, England. Early in the evening, when you go to the bar to pay for your round, you notice that there is a tea-towel obscuring the till so that you cannot see the total for the round.
You are aware that this is a policy adopted by some employees at some establishments to ensure that not all cash passes through the till. What are you responsibilities in the circumstances and would they be different if you had visited the pub as part of your verification of the internal control procedures?
WHAT DO YOU DO?
Under UK legislation, visiting the pub as a member of the public and not in your role of auditor means that you are there in a private capacity and not there “acting in the course of business”.
Therefore, you are not required to make a report under The Money Laundering Regulations 2007.
However, you are still subject to an ordinary citizen’s obligation to report a criminal offence. ACCA Rulebook 2009 section 3.8 paragraph 5 states: “Members must obey the law. It is the responsibility of members to familiarise themselves with the law that applies to them and ensure that they work within the law.”
Under UK law, as a private individual, you are under no obligation to report a ‘suspicion’; you would only need to take the matter further if you were certain a crime had been committed. However, you may wish to bring the matter quietly to the attention of an appropriate manager at the time of your visit.
The Money Laundering Regulations 2007 “apply to the following persons acting in the course of business carried on by them in the United Kingdom (“relevant persons”) -
(c) auditors, insolvency practitioners, external accountants and tax advisers;” [Statutory Instrument 2007 No 2157: Money Laundering Regulations 2007]
Therefore, if the same situation came to your attention when visiting the pub as part of your auditing procedures, you would fall under The Money Laundering Regulations (as quoted above). You would need to report any ‘suspicions’ in accordance with The Money Laundering Regulations.
Your report would be made either to your firm’s Money Laundering Reporting Officer (MLRO) or to the Serious Organised Crime Agency (SOCA), as appropriate, if after due reflection you conclude that there are grounds for suspicion.
Further information on making a report can be found on the SOCA website (please click on the link at the bottom of this page).
In jurisdictions other than the UK, please check the local laws. [ACCA Rulebook 2009 section 3.8 paragraphs 2 and 5]