Jack is a broker and has acquired a large new commercial client who insists on settling all transactions in cash. He suspects an element of money laundering may be taking place. What must Jack do in compliance with the Chartered Insurance Institute's Code of Ethics?

Jack, as a broker, has a responsibility to adhere to the highest ethical standards, particularly concerning money laundering and financial crime. The correct course of action in this scenario is for Jack to report his concerns to the relevant authorities. By doing so, he is fulfilling his duty to protect the integrity of the financial system and help prevent any potential illegal activities.

When there is a suspicion of money laundering, there are specific legal obligations that individuals in the financial sector must comply with, including the requirement to report any suspicions to the authorities, such as the National Crime Agency in the UK. This reporting mechanism is fundamental to combating financial crime and ensuring that brokers do not inadvertently facilitate illicit activities.

This choice emphasizes Jack's ethical and legal obligations not just to his client, but to the broader public and financial system. Reporting his suspicions supports accountability and transparency, aligning with the principles set out in the Chartered Insurance Institute's Code of Ethics.

In contrast, choosing to disclose his concerns to the insurers or discontinuing trading without adequate action could potentially put him at risk of non-compliance with legal obligations and ethical standards. Maintaining client confidentiality at the expense of reporting suspicions is not only unethical but can also expose him to liabilities should illegal activities be confirmed later. Thus