Professional Protocol and Money Laundering Issues

As a result of information now given to us by the client, it seems that the Enquiry will need to be dealt with under Code 9 (Civil Fraud) procedures. Our client does not recognise the gravity of the situation, and is unwilling to accept our advice on the steps now needed to bring these matters out in the open.

We have now received a "standard" Professional Clearance letter from the new accountants requesting opening balances/copies of computations etc. There is, surprisingly, no mention of the Enquiry itself in the clearance letter, and it is something we will obviously bring to their attention in our correspondence.

However, we are not sure if we are also required to inform them of the NCIS report, or whether we should do this anyway, as a matter of professional courtesy.

Our concern is that we do not wish the new accountants to inform our client that we have made such a report (especially as there is a social aspect to our relationship with him). Although we would hope such information would be respected under professional discretion, the incoming accountants are not affiliated to any of the recognised accountancy bodies, and it is therefore debatable as to whether they would respect such protocol.

As a secondary point, we will be shortly informing the local tax office that we are no longer acting for the client. As it has not yet reached the stage where we have made formal contact with the Special Civil Investigations Office of the Inland Revenue, the local office are still dealing with the Enquiry. Would/should we inform them of the NCIS report and/or the probable scale of the issues discovered.

This has turned into a tricky situation - how would others proceed?

TN