Providing Assurance that all is well on Money Laundering: What Role for the Internal and External Auditor?

Published date01 February 1993
Date01 February 1993
DOIhttps://doi.org/10.1108/eb025610
Pages107-110
AuthorJohn Tattersall
Subject MatterAccounting & finance
Providing Assurance that all is well on
Money Laundering: What Role for the
Internal and External Auditor?
John Tattersall
John
Tattersall
is Partner, Coopers & Lybrand, London. He
is also leader of the firm's Business
Controls Assessment practice, and
Chairman of its Financial Regulation Unit.
ABSTRACT
Senior management and the board of direc-
tors of any financial institution need to be
provided with assurance that the institution
is complying with both the spirit and the
letter of laws and guidance on the preven-
tion of the use of financial institutions for
money laundering:
1 to avoid financial penalties if money
laun-
dering is found by the authorities to have
taken place;
2 to protect the reputation of the institution;
and
3 to ensure that the institution is seen to be
taking a lead in such matters.
The board must therefore ensure that full
use is made of whatever resources are
available to it, ie the compliance officer and
compliance department, the internal audit
function and the external auditors.
This paper comments on the way in
which directors and management should
seek to obtain such assurance.
WHAT NEEDS TO BE CHECKED?
RECORDS
It is important to check that adequate
records are being maintained to show
information such as the identity of
beneficial owners of accounts, the exist-
ence of proper audit trails through inter-
mediaries, the volume of funds flowing
through each account and the origin and
destination of funds. Information should
be readily accessible to ensure that no
delays or other undue difficulties would
be experienced in accessing accurate
information (ie because of the way in
which data are stored). Proper storage
arrangements should have been insti-
tuted for the retention of records.
The testing of records forms a regular
part of the processes of the internal
auditor, and the extra objectives of
record keeping can easily be added to
the internal audit objectives.
ACCOUNT OPENING PROCEDURES
It is necessary to check that there is
proper documentation of account open-
ing procedures to show that require-
ments laid down in internal manuals
have been followed. More specifically,
107

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