MONEY LAUNDERING: THE ROLE
OF A FORENSIC ACCOUNTANT AS
AN EXPERT WITNESS
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PRESENTED BY AMADIEBUBE ROBERT
MBAMA MBA, CPA, CAMS
© Amadiebube Robert Mbama MBA, CPA, CAMS
October 15, 2008
HISTORICAL PERSPECTIVE
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 Financial Action Task Force (FATF)
1.
Formed by a group of seven industrialized nations in 1989 in
Paris.
2.
In 1990 established and issued its 40 recommendations.
3.
Revised in 1996 and 2003.
4.
Additional nine recommendations dealing mostly on measures
to counter terrorism.
© Amadiebube Robert Mbama MBA, CPA, CAMS
October 15, 2008
HISTORICAL PERSPECTIVE (Cont’d)
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 Recommendation 26 and the evolution of the
Economic and Financial Crimes Commission
(EFCC). – Nigeria.
 Called Financial Crimes Enforcement Network
(FinCEN in USA), Financial Transactions Reports
Analysis Centre of Canada (FINTRAC), Australian
Transaction Reports and Analysis Centre. Many
other countries have different names for it.
© Amadiebube Robert Mbama MBA, CPA, CAMS
October 15, 2008
HISTORICAL PERSPECTIVE (Cont’d)
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 Independent Corrupt Practices And Other Related
Offences Commission (ICPC) Establishment Act of
2000
 The Money Laundering (Prohibition) Act of 2004.
 The Economic and Financial Crimes Commission Act
of 2004
© Amadiebube Robert Mbama MBA, CPA, CAMS
October 15, 2008
What is Money Laundering
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 Process of concealing Illegal source
 Application of income derived from criminal or
illegitimate activity
 Subsequent disguising of the source of that income
to make it appear legitimate
 Source: Association of Certified Anti-Money
Laundering Specialists - ACAMS.
© Amadiebube Robert Mbama MBA, CPA, CAMS
October 15, 2008
What is Money Laundering (Cont’d)
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 Laundered money is like water, it seeks the path of
least resistance (ACAMS). Initially, money
laundering was associated with drug trafficking and
organized crime, however, it has been expanded to
include extortion, terrorism, official bribery and
corruption, arms smuggling, white collar crime and
many other crimes.
© Amadiebube Robert Mbama MBA, CPA, CAMS
October 15, 2008
The Three Stages: Placement, Layering and
Integration.
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 Placement
 Placement involves physically placing illegally
obtained money into the financial system or the
retail economy. "Dirty" money is most vulnerable to
detection and seizure during placement. (U.S.
Financial Crimes Enforcement Network)
© Amadiebube Robert Mbama MBA, CPA, CAMS
October 15, 2008
The Three Stages: Placement, Layering and
Integration (Cont’d).
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 Layering
 Layering is the separation of illegally obtained
money from its source through a series of financial
transactions that makes it difficult to trace the
origin.
 During the layering phase of money laundering,
criminals often take advantage of legitimate
financial mechanisms in attempts to hide the
source of their funds.
© Amadiebube Robert Mbama MBA, CPA, CAMS
October 15, 2008
The Three Stages: Placement, Layering and
Integration (Cont’d).
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 Layering (Cont’d)
 A few of the many mechanisms that may be
misused during layering are currency exchanges,
wire transmitting services, prepaid cards that offer
global access to cash via automated teller machines
and goods at point of sale, casino services and
domestic shell corporations lacking real assets and
business activity that are set up to hold and move
illicit funds. (U.S. Financial Crimes Enforcement
Network)
© Amadiebube Robert Mbama MBA, CPA, CAMS
October 15, 2008
The Three Stages: Placement, Layering and
Integration (Cont’d).
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 Integration
 Integration means converting the illicit funds into a
seemingly legitimate form. Integration may include
the purchase of businesses, automobiles, real estate
and other assets. (U.S. Financial Crimes
Enforcement Network)
© Amadiebube Robert Mbama MBA, CPA, CAMS
October 15, 2008
What is Forensic Accounting?
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 Forensic accounting is the specialty practice area of
accountancy that describes engagements that
result from actual or anticipated disputes or
litigation.
 "Forensic" means "suitable for use in a court of
law", and it is to that standard and potential
outcome that forensic accountants generally have
to work.
 Forensic accountants, also referred to as forensic
auditors or investigative auditors, often have to
give expert evidence at the eventual trial.
© Amadiebube Robert Mbama MBA, CPA, CAMS
October 15, 2008
What is Forensic Accounting? (Cont’d)
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 All of the larger accounting firms, as well as many medium-
sized and boutique firms, have specialist forensic
accounting departments. Within these groups, there may be
further sub-specializations: some forensic accountants may,
for example, just specialize in insurance claims, personal
injury claims, fraud, construction, or royalty audits. (Source
Wikipedia).
 Recently Forensic accountants have started to develop
expertise in tracking laundered money. Nigerian Forensic
accountants should lead the rest of the world in developing
expertise in tracking laundered money. This has urgency
written all over it since Nigeria’s economic growth has been
hampered by corruption which is a form of money
laundering.
© Amadiebube Robert Mbama MBA, CPA, CAMS
October 15, 2008
Who is a Forensic Accountant?
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© Amadiebube Robert Mbama MBA, CPA, CAMS
October 15, 2008
Who are Forensic Accountants?
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 Forensic accountants may be involved in recovering
proceeds of crime and in relation to confiscation
proceedings concerning actual or assumed proceeds of
crime or money laundering. Some forensic accountants are
also Certified Fraud Examiners, Certified Public
Accountants, Certified Money Laundering Specialists, or
Chartered Accountants.
 Forensic accountants utilize an understanding of business
information and financial reporting systems, accounting
and auditing standards and procedures, evidence gathering
and investigative techniques, and litigation processes and
procedures to perform their work.
© Amadiebube Robert Mbama MBA, CPA, CAMS
October 15, 2008
Are There Differences?
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 The major difference lies in the focus. While some
may focus on fraud, others may focus on money
laundering.
 No matter the differences, adequate training and
hands on experience will determine the level of
expertise.
© Amadiebube Robert Mbama MBA, CPA, CAMS
October 15, 2008
Who are Forensic Accountants? (Cont’d)
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 Forensic accountants are also increasingly playing
more proactive risk reduction roles by designing and
performing extended procedures as part of the
statutory audit, acting as advisers to audit
committees, fraud deterrence engagements, and
assisting in investment analyst research. (Source
Wikipedia)
© Amadiebube Robert Mbama MBA, CPA, CAMS
October 15, 2008
Who is an Expert Witness?
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© Amadiebube Robert Mbama MBA, CPA, CAMS
October 15, 2008
Who is an Expert Witness? (Cont’d)
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 An expert witness is a witness, who by virtue of
education, training, skill, or experience, is believed to have
knowledge in a particular subject beyond that of the
average person, sufficient that others may officially (and
legally) rely upon the witness's specialized (scientific,
technical or other) opinion about an evidence or fact issue
within the scope of their expertise, referred to as the
expert opinion, as an assistance to the fact-finder. Expert
witnesses may also deliver expert evidence about facts
from the domain of their expertise. At times, their
testimony may be rebutted with a learned treatise,
sometimes to the detriment of their reputations.
© Amadiebube Robert Mbama MBA, CPA, CAMS
October 15, 2008
The Role of a Forensic Accountant as an Expert
Witness
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 The principal role of a Forensic Accountant is to
Analyze, Interpret, Summarize and Present Complex
Business and Financial deals in a logical,
understandable manner supported with facts.
 As an Expert Witness, the Forensic Accountant must
(a) Investigate and Analyze Financial information. (b)
Develop Computerized applications (if applicable) to
Assist in the Analysis and Presentation of Financial
information.

Source: Alan Zysman B.Comm, CA·IFA, CFE has been in practice since 1984. His firm
Zysman Forensic Accounting Inc. located in Toronto, Ontario, Canada specializes
in the provision of Investigative and Forensic Accounting services.
© Amadiebube Robert Mbama MBA, CPA, CAMS
October 15, 2008
The Role of a Forensic Accountant as an Expert Witness
(Cont’d)
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 Communicate Findings in the form of a Report and
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supporting documents.
Assist in any Legal Proceedings.
Assist in obtaining documentation necessary to support or
refute a claim.
Review of the relevant documentation to form an initial
assessment of the case and identify areas of loss.
Assist with Examination for Discovery including the
formulation of questions to be asked regarding the financial
evidence.
Source: Alan Zysman B.Comm, CA·IFA, CFE has been in practice since 1984. His firm
Zysman Forensic Accounting Inc. located in Toronto, Ontario, Canada specializes
in the provision of Investigative and Forensic Accounting services.
© Amadiebube Robert Mbama MBA, CPA, CAMS
October 15, 2008
The Role of a Forensic Accountant as an Expert
Witness (Cont’d)
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 Attend the Examination for Discovery to review the
testimony, assist with understanding the financial issues
and to formulate additional questions to be asked.
 Review of the opposing expert's damages report and
reporting on both the strengths and weaknesses of the
positions taken.
 Assist with settlement discussions and negotiations.
 Attend trial to hear the testimony of the opposing expert
and to provide assistance with cross-examination.

Source: Alan Zysman B.Comm, CA·IFA, CFE has been in practice since 1984. His firm
Zysman Forensic Accounting Inc. located in Toronto, Ontario, Canada specializes
in the provision of Investigative and Forensic Accounting services.
© Amadiebube Robert Mbama MBA, CPA, CAMS
October 15, 2008
Steps that the Forensic Accountant Should Follow
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Meet with key individuals
Discuss expectations
Discuss fees and reimbursable costs
Gather Evidence after meeting with key
individuals
Research
Discuss with key individuals on information that
was obtained after research
Make any necessary adjustment to the facts, if
any, after discussion with key individuals
Write a formal report supported by evidence.
© Amadiebube Robert Mbama MBA, CPA, CAMS
October 15, 2008
The Nigerian Factor Affecting the Role of a
Forensic Accountant as an Expert Witness:
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Environment
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Very weak infrastructure
Weak judicial system
Weak educational system
Indiscipline
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Retards development
Creates chaotic social or work environment
Creates mistrust
Retards spiritual growth
© Amadiebube Robert Mbama MBA, CPA, CAMS
October 15, 2008
The Nigerian Factor Affecting the Role of a Forensic
Accountant as an Expert Witness: (Cont’d)
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 Corrupting Tendencies
 Willingness to compromise
 Abuse of office
 Abuse of power
 Rule of Law
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Insincerity in application
Justice delayed is justice denied
Abuse of office
Abuse of power
© Amadiebube Robert Mbama MBA, CPA, CAMS
October 15, 2008
The Nigerian Factor Affecting the Role of a Forensic
Accountant as an Expert Witness: (Cont’d)
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 The Nigerian Factor
 Lack of continuity
 Too much centralization of authority
 Too many Chiefs and not enough Indians
 Fiscal indiscipline
 Lack of transparency
 Institutionalized corruption
 Institutionalized money laundering
 Abuse of office
 Abuse of power
© Amadiebube Robert Mbama MBA, CPA, CAMS
October 15, 2008
Thank You
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 Until we meet again
© Amadiebube Robert Mbama MBA, CPA, CAMS
October 15, 2008