A prospective client walks into an accounting firm wanting to incorporate a company. The accountant feels uncomfortable after the meeting. Which two of the accountant's observations warrant…

Question

Options

• AThe prospective client is unable to provide information about the beneficial owners.
• BThe prospective client is able to provide source of funds and source of wealth documents.
• CThe prospective client presents confusing details about the proposed business and has very little
• DThe principal activities of the proposed company are importing and exporting new furniture.
• EThe prospective client exhibits confidence when speaking to the accountant when providing

• A
  70% (38)
• B
  9% (5)
• D
  6% (3)
• E
  15% (8)

Explanation

A lack of information about beneficial owners is a red flag for potential money laundering or terrorist financing. It is important to identify who the actual owners of the company are to understand their potential risk exposure. Confusing details about the proposed business activity and lack of knowledge about the proposed business are also red flags for potential money laundering or terrorist financing. This could indicate that the proposed business activity is not legitimate and is being used to conceal illegal activities. Therefore, these two observations should be escalated to the compliance officer for further investigation.

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