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Ian is an accountant and one of his clients, Jet, runs an illegal operation as well as some other legitimate businesses. Jet approached Ian for advice as to how he should deal with the gains he makes from the illegal operation.
Ian suggested that Jet should use his legally made money to buy the local football club, Kickers, with the intention of passing his gains from the illegal operation through its accounts.Is Ian’s advice to Jet criminal under money laundering legislation?
The model answer suggests “No”. However, I thought the advice should indeed be criminal as he has assisted Jet in retaining the illegal proceeds.Can you please help me clarifying this?
Thank you.Hi Iniss
This is a strange one, indeed.
The three offences under money laundering legislation are:
Laundering, Failure to report and Tipping off.
That second one, failure to report, occurs when an individual fails to report knowledge or suspicion of money laundering.
Given the scenario of Ian and Jet as set out in the question, it would seem easy to answer that ‘Yes, it IS an offence’.
However, so far, Jet has not been involved in laundering – he’s only considering it! And the offence is where there is knowledge or suspicion of laundering … and so far no laundering has yet taken place.
Now, when Jet takes Ian’s suggestion to heart and invests in Kickers and starts to launder, that’s when Ian then has to throw Jet under the metaphorical bus and report him. Imagine what’s next … Jet’s in court and his defence revolves around the assertion that he was only acting on Ian’s advice.
That would certainly make an interesting exchange.
OK?
Ian reasoned that it would be easy to mingle the illegal money with the football club’s legitimate receipts. Jet accepted the proposal, bought the club, appointed Ian as its finance director and together they passed the illegal money through the football club.
Sorry my bad, I did not cut and paste the full scenario. So at this stage, money laundering has actually taken place and the advice should now be criminal?
Thanks so much for your time!
When, in lectures, I exhort my students always to RTFQ, I insist that, no matter what they initially thought, the F in RTFQ stands for ‘FULL’. 🙂
Apparently Ian is now an active participant in the actual laundering process. Unless there is more to the question that you are again teasing me by its omission, then I must agree with you that Ian is equally liable as Jet under money laundering legislation.
Strange that the printed solution says ‘Not guilty’
Where’s the question from? And is there no further justification for the ‘not guilty’ answer?
Yes sir, that’s really all for the scenario and there is no explanation on this. I got this from ACCA Study Hub.
I believe the model answer “No” could be correct only before the actual laundering occurs. The question may be on the initial advice before any illegal activity has been carried out.Hmmm. Maybe. But that would be a very strange question! Sorry that I cant help further 🙁
Hmmm. Maybe. But that would be a very strange question! Sorry that I can’t help further 🙁
No you’ve helped me so much for such timely clarification. I agree with you the question is so strange and there could possibly a mistake in it.
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