Accountants already face plenty of compliance requirements when it comes to issues like accounting and auditing standards, the Tax Code and Sarbanes-Oxley, so the last thing they need to worry about is being connected to money laundering and terrorist financing investigations, but those problems are exactly what the government is urging them to keep in mind.
At a conference held last week by the New York State Society of CPAs and its Foundation for Accounting Education, prosecutors, FBI agents and attorneys warned about the dangers faced by accountants in such investigations. While accountants owe a duty to their clients to protect confidential financial information, law enforcement doesn't like to be stonewalled when it's probing potential suspects.
"When you work in law enforcement, you get cynical about people," said FBI agent Douglas Leff. "By not explaining at all, it tends to make us want to focus on you."
He warned that when a client tries to push an accountant into a potentially illegal situation, it's a good idea to back away. "There are times when you don't need people's business," he said. "Let him find somebody else."
Jody Myers of the International Monetary Fund's legal department outlined the work of the Financial Action Task Force, an intergovernmental body that has been developing international policies to combat money laundering and terrorist financing.
The FATF has issued a set of recommendations on suspicious transaction reporting and related requirements for accountants and has encouraged countries to extend their reporting requirements to the professional activities of accountants like auditing. The professional secrecy exceptions may or may not apply to accountants or auditors.
Certainly accountants have to deal with a host of requirements already and probably the last thing they want to consider is that their client is laundering drug money or helping to finance al-Qaeda. But accountants, as always, need to maintain their skepticism about not only their client's accounts and taxes, but also the ways in which the government may interpret their actions.
Accountants do need to act as advocates for clients, but not to the extent of placing themselves in peril. Already there seems to be no shortage of regulatory agencies, government bodies and industry watchdogs that seem ready to jump at any infraction.
Still, accounting firms can add value in helping to root out instances of money laundering and corruption on behalf of a variety of organizations. Their forensic accounting abilities are increasingly being called into action by the very same enforcement bodies that keep looking over their shoulder.
