A feature article by Alan S. Abel and James S. Gerson, “The CPA’s Role in Fighting Money Laundering,” appeared in the June issue of the JofA.

In the course of editing the authors’ manuscript, the JofA editorial staff modified certain passages to ensure readers would fully understand the article’s complex subject matter. Unfortunately, this resulted in publication of a final version the authors feel, in some parts, does not convey the meaning they intended. We regret these inaccuracies and apologize to the authors for them.

Following are referenced excerpts from the published article and the authors’ original text:

Introduction (page 26).

Published: “Until approximately 10 years ago, law enforcement officials in the United States and around the world waged the battle against money laundering without support from the business community or other branches of the government.”

Correction: This statement should be deleted—the authors do not believe this is true.

“The Law of the Land” (pages 26-27).

Published: “The BSA (31 U.S.C. 5312(a)(2)) defines only certain kinds of businesses as ‘financial institutions’...and requires them to report to the Treasury signs of potential money laundering or any other suspicious activity.…Under the BSA, an independent insurance company is not a financial institution, but an insurance company owned by a bank holding company is. So, a CPA working for the former would be subject to BSA requirements, but one employed at the latter would not.”

Correction: “The BSA (31 U.S.C. 5312(a)(2)) defines many kinds of businesses as ‘financial institutions.’ Currently, banks and bank holding companies and their non-bank subsidiaries are required to report suspicious activity to the Treasury under federal regulations. Independent insurance companies are indeed defined as financial institutions under the act (Title 31 U.S.C. 5312(a)(M)), but are not currently required to report suspicious activity to the Treasury Department. Insurance subsidiaries of bank holding companies are required to report suspicious activity by the Federal Reserve (12 CFR 225).”

Published: “It is likely that new legislation or Treasury rules soon will mandate reporting of suspicious activity by the entire financial services sector.”

Correction: “It is expected that mandatory reporting of suspicious activity will be extended to others within the financial services industry.”

“What Auditors Need to Know” (page 28).

Correction: The entire first paragraph should be replaced with the following:

“Financial Statement Effects. Money launderers tend to use the business entity more as a conduit than as a means of directly expropriating assets. For this reason, money laundering is far less likely to affect financial statements than are such types of fraud as misappropriations and consequently is unlikely to be detected in a financial statement audit. In addition, other forms of fraudulent activity usually result in the loss or disappearance of assets or revenue, whereas money laundering involves the manipulation of large quantities of illicit proceeds to distance them from their source quickly and in as undetectable a manner as possible. However, money-laundering activities may have indirect effects on an entity’s financial statements.”

Sidebar: “The ‘Black Market Peso Exchange’ System” (page 30).

Correction: “Columbian” should be spelled “Colombian.”

Sidebar: “Who Has to Care About the BSA and Why” (page 31).

Correction: This section should be entitled “Bank Secrecy Act ‘Financial Institutions.’”

Published: “Under the Bank Secrecy Act, a wide range of businesses are defined as ‘financial institutions,’ making them subject to the anti-money laundering regulatory requirements issued by the U.S. Department of the Treasury.… But other—sometimes similar—entities do not fall within the definition and the BSA does not apply to them.”

Correction: “The Bank Secrecy Act defines a wide range of businesses as financial institutions. The following businesses are subject to anti-money-laundering regulatory requirements issued by the U.S. Department of the Treasury:...”

—The Editors