How can money be laundered in the Accounting sector?

  • Company carries non-existent or satisfied debt that is continually shown as current on financial statements.
  • Company has no employees which is unusual for the type of business
  • Company records consistently reflect sales at less than cost, thus putting the company into a loss position, but the company continues without reasonable explanation of the continued loss.
  • Company makes large payments to subsidiaries or similarly controlled companies that are not within the normal course of business.
  • Company acquires large personal and consumer assets when this type of transaction is inconsistent with the ordinary business practice of the client or the practice of that particular industry.

Identifying suspicious transactions for Accountants:

  1. Client appears to be living beyond his or her means.
  2. Company has no employees which is unusual for the type of business
  3. Client has business activity inconsistent with industry averages or financial ratios.
  4. Client has cheques inconsistent with sales (i.e., unusual payments from unlikely sources).
  5. Client has a history of changing book-keepers or accountants yearly.
  6. Client is uncertain about location of company records.
  7. Company is paying unusual consultant fees to offshore companies.
  8. Company shareholder loans are not consistent with business activity.
  9. Examination of source documents shows misstatements of business activity that cannot be readily traced through the company books.
  10. Company is involved with organizations located in a country that does not have adequate money laundering laws and is known as a highly secretive banking and corporate tax haven.