Warning the client is tipping off, a criminal offence
A worked RES examination question on aml cft, from our Paper 2 bank — with the rule it turns on, and why each of the four options is right or wrong.
The question
Ms Naidu is tempted to tell Mr Lau the agency may have to report him; Mr Quek warns her against it.
- (i) Ms Naidu reports her suspicion to the agency first, and the agency files the suspicious transaction report through its official channel.
- (ii) If Mr Lau abandons the purchase before completion, the duty to report any suspicion falls away.
- (iii) Telling Mr Lau the agency may have to report him would amount to tipping off, a criminal offence.
- (iv) Suspicion alone is enough to trigger the reporting duty, even without proof of wrongdoing.
The answer, and why
Answer: A
The rule. The salesperson reports her suspicion to the agency, which files the suspicious transaction report through its official channel. The duty is triggered by suspicion alone and is absolute — it survives even if the deal collapses. Warning the client is tipping off, a criminal offence.
Why A is correct. (i) reporting through the agency, (iii) tipping off as a criminal offence, and (iv) suspicion alone triggering the duty are correct. (ii) is false — the duty does not fall away if Mr Lau abandons the purchase.
The other options.
- B adds the false (ii), the duty lapsing on abandonment.
- C drops the reporting-channel point at (i).
- D drops the tipping-off point at (iii).
Exam note. Suspicion alone triggers an absolute duty; abandoning the deal does not end it, and warning the client is a crime.
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