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What to do if you suspect money laundering

Written on Jun 29, 2023

By Jessica Salerno-Shumaker, OSCPA senior content manager  

While money laundering might be a well-known term when it comes to fraud, not enough accounting professionals can spot some of the telltale signs.   

“I’ve come across quite a few CPAs and finance professionals who did not know what money laundering looked like,” said Robert Norlander, CPA. “And they were even preparing tax returns for drug dealers.”  

Norlander was a special agent with the IRS Criminal Investigations Unit for more than 20 years and will present on the topic at the upcoming Fraud & Forensic Conference on Aug. 29 and Ohio Accounting Shows later this fall.   

When working with clients, one area that can reveal money laundering is cash deposits under $10,000. Norlander said banks are required to file a currency transaction report with the IRS if someone has received cash more than $10,000, so receiving $9,900 can go unchecked. 

A second sign of money laundering is unusual cash deposits that are not reflective of the system. An example of this would be if someone is consistently paying their rent in cash, something that is rarely done anymore.  

“Another example is a business that has no economic purpose,” Norlander said. “They have a business where money comes in, money goes out, and there's no postage, no rent and no office supply. They don't have a brick-and-mortar location and there's no website. That doesn’t always mean it’s money laundering but it's a key indicator that something's going on. Because no one operates a business with no overhead.”  

If an auditor suspects money laundering, the first step they should take is to let the partner-in-charge or the audit committee know. If a bookkeeping business suspect one of its clients, Norlander said it’s in the best interest of the business to stop serving the client.  

“Because then ultimately, it puts them in the position of potentially being asked if they are helping facilitate some of that work by submitting financial statements that they suspect are not accurate,” he said.  

While spotting money laundering will likely not be an everyday occurrence for most CPAs, Norland said it’s important for them to stay vigilant.  

“There needs to be awareness of what it looks like,” he said. “And if they do see it, take it your supervisors, law enforcement, or drop the client. At least know that it exists and be able to recognize the signs.”   

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