Financial crime is a growth industry worldwide. The U.S. Department of the Treasury estimates that the proceeds from extortion, healthcare fraud, identity theft, insider trading, the trafficking of illicit drugs, and other financially-motivated crimes total several hundred billion dollars each year in the United States alone.
A major problem faced by criminal enterprises is "laundering" their "dirty money," that is, concealing the origins of their cash resources. Crime syndicates employ a wide range of money-laundering schemes that range from large-scale, cross-border currency smuggling to sophisticated electronic subterfuges. These latter schemes include using repeated wire transfers to hopscotch funds through a maze of offshore bank accounts to obscure their original source. The ultimate goal of money laundering is to introduce the proceeds from financial crime into a nation's banking system without drawing the attention of law enforcement and regulatory authorities.
U.S. federal statutes that criminalize money laundering include the Bank Secrecy Act of 1970 and the Money Laundering Control Act of 1986. These and other federal and state laws impose much of the responsibility for detecting and reporting moneylaundering activities on U.S. banks and other financial institutions. A wide range of organizations offer anti-money laundering (AML) consulting services to help financial institutions satisfy this onerous responsibility. The Big Four accounting firms rank among the largest suppliers of such services. The website of PricewaterhouseCoopers (PwC), for example, recently provided the following overview of the services that the firm offers to financial institutions wanting to develop "efficient AML compliance" control programs. "At PwC we have professionals that perform money laundering vulnerability assessments, compliance program evaluations, and gap analyses. We can develop a recommended approach for reducing risk, enhancing risk management, and implementing operational solutions." International terrorist organizations commonly use the proceeds from financial crime to finance their operations. Law enforcement and regulatory authorities around the world have implemented a wide range of measures to disrupt terrorisminspired money-laundering networks. Because most major U.S. banks have significant operations within New York, that state has become a focus of money-laundering prevention and detection in our nation. In 2011, New York's legislature consolidated two existing state agencies to create the New York State Department of Financial Services (DFS). Governor Andrew Cuomo appointed Benjamin Lawsky to serve as the first DFS superintendent. Lawsky made one of his priorities working with state and federal law enforcement agencies to identify money-laundering rings that were funneling illicit cash through New York banks. Because of his proactive and aggressive regulatory philosophy, Lawsky quickly established himself as one of the most powerful governmental officials in the nation's financial sector.

Questions
1. PwC's Bank of Tokyo engagement was a consulting service, not an attestation service. Do the professional standards for both types of services require the given practitioners to be "independent" of their clients?
2. Describe how the Bank of Tokyo engagement could have been modified to qualify as an attestation service rather than a consulting service. Identify the advantages and disadvantages of making that change in the engagement.
3. Would it be improper for PwC to prepare an HTR report for a bank for which it also provided anti-money laundering services? Defend your answer.
4. Is it unethical or otherwise inappropriate for accounting firms to apply a costbenefit analysis similar to that allegedly applied by the senior KPMG official? Defend your answer.