Sweeping it under the carpet: The role of accountancy firms in moneylaundering

Abstract

White-collar crime is increasing in the Western world. It has been estimated that some £500 billion of hot money is laundered through the world's financial markets each year. Such huge amounts of money cannot be successfully laundered without the involvement of accountants (and other professionals) who use their expertise to create the complex webs of transactions whose purpose it is to conceal and obscure illegal activity. Despite this involvement, accountants and auditors are expected to play a leading role in the reporting of fraud and moneylaundering. Through a detailed consideration of a case in which a small accountancy firm was judged by the UK High Court to be involved in moneylaundering, the paper explores the relationship between regulators and errant accountants. The reluctance or inability of the regulators to pursue other accountants and larger accounting firms involved in this case suggests that the current regulatory apparatus operates to shield the activities of accountancy firms from critical scrutiny.