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part b (1) the solution states that:
It is possible that Dedza did not obtain appropriate references or obtain professional clearance. There is no reason why the client identification procedures and customer identification procedures would necessarily have raised any issues if Kora has previously had a clean recordI don’t understand the part from ‘ there is no reason why the client……” can you explain this sentence to me so it is more clearer
I would imagine that that even if the audit firm did not do customer identification checks, there could be a possibility that under declaring profits could have happened during the the time that the audit firm has accepted the client. ?thanks
What it means is that, even if there had been thorough client screening, there is nothing in the question to indicate that there was anything wrong / questionable about the client
Ok?
So even though they did all checks there is still a possibility that the auditor may not find anything suspicious.
See ‘placing’ does that mean depositing dirty cash into a llegitimate company account in order to make the money clean and foreseeable.
Thanks
Where is the word “placing” in your question? The meaning of a word is dependent upon its context so ……… give me the context and I’ll explain the meaning 🙂
Money laundering process has 3 stages.
Placing : getting money into the system in the first place. This could be by making bank deposits, making investment or through front business which is a legitimate business that is used to launder money. Eg betting shop which receives high level of cash could be used to deposit stolen cash.I don’t know if my previous msg was correct about placing?
You threw “placing” into your supplementary question without having previously mentioned it! So it rather threw me!
But your summary of it is correct – it’s the introduction of illegally obtained money into the “system” via a legitimate business. I suppose any cash-based business provides opportunities (bars, restaurants, hotels, retail sales, casinos) but if course the owner that is trying to launder will need to be aware of matters such as goss margins.
Yes I know sorry about that it just came to my mind 🙂
thanks for the explanantion. It indeed makes sense. E.g you could open up a bar where there is alot of cash sales, and perhaps open up a consultancy company and deposit some of the undeclared cash in this legitimate business.
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