10. STUDY MANUAL questions on Criminal law.

Question 1

Financial Wizards LLP invites 20 senior partners in three local accountancy firms to an England v Wales rugby match, in the hope of securing new business.

Has an offence been commited under the Bribery Act (2010)?

Answer 1

No. Such normal corporate hosipitality is likely to be regarded as entirely proper.

Question 2

Jack offers a HMRC inspector a sum of money to turn a blind eye to a minor irregularity in his financial records, but the inspector refuses to accept it.

Has an offence been committed under the Bribery Act (2010)?

Answer 2

Yes. The offering of a bribe is an offence, even if that offer is declined.

Question 3

Angela is an auditor working at Frazzle Ltd. She believes that accounting irregularities point to the Managing Director being involved in criminality. She should …

Answer 3

Report the matter to her firm’s MLRO, and ONLY to that person.

Question 4

A builder always requiring payment in cash should ALWAYS be reported to the NCA?

Answer 4

No. Only if, for example, it is not all being declared as income.

Question 5

A client discloses over a business lunch that he is paying builders working on his home in cash, believing that the good price he has been offered is as a result of their not declaring the income.

Should this be disclosed to the MLRO/NCA?

Answer 5

Yes.

Question 6

Which act governs the law on whistleblowing?

Answer 6

The Public Interest Disclosure Act (1998)

Question 7

T/F: A person making a qualifying disclosure must be able to show, on the balance of probabilities, that the matters alleged are true.

Answer 7

FALSE

they need only show that they had a ‘reasonable belief’

Question 8

The standard of proof required for a whistleblowing disclosure is that the worker had a ‘…’ of the alleged wrongdoing.

Answer 8

reasonable belief

Question 9

T/F: A whistleblowing disclosure must always be made to a person’s employer in the first instance.

Answer 9

FALSE

Question 10

In the event of a valid whistleblowing, the whistleblower (is / is not) entitled to claim damages.

Answer 10

is

Question 11

Whistleblowing legislation is designed to …

Answer 11

protect the worker

Question 12

T/F: Whistleblowing legislation exists to punish employers.

Answer 12

FALSE

It is to protect workers making qualifying disclosures.

Question 13

The three principal ways of committing fraud under the Fraud Act (2006) are:

Answer 13

Fraud by false representation.
Fraud by failure to disclose information.
Fraud by abuse of position.

Question 14

T/F: The criminal offence of fraudulent trading requires that the relevant company is insolvent or in liquidation.

Answer 14

FALSE

Fraudulent trading may be going on in a profitable, going concern.

Question 15

The three principal offences under insider dealing legislation are:

Answer 15

Dealing.
Encouraging another to deal.
Improper disclosure of inside information.

Question 16

T/F: an offence is commited under insider dealing legislation even if the reason for ‘encouraging another to deal’ is not disclosed.

Answer 16

TRUE

Question 17

T/F: an offence is commited under insider dealing legislation even if the person who has been ‘encouraged to deal’ does not actually do so.

Answer 17

TRUE

Question 18

The maximum penalty for insider dealing is … imprisonment.

Answer 18

7 years

Question 19

Inside information is PSI* relating to a SI of securities that are PA and not to securites generally. It must, if MP, be likely to have a SE on P and it must be specific or P.

Answer 19

price sensitive information

Question 20

Inside information is PSI relating to a SI* of securities that are PA and not to securites generally. It must, if MP, be likely to have a SE on P and it must be specific or P.

Answer 20

specific issuer

Question 21

Inside information is PSI relating to a SI of securities that are PA* and not to securites generally. It must, if MP, be likely to have a SE on P and it must be specific or P.

Answer 21

price affected

Question 22

Inside information is PSI relating to a SI of securities that are PA and not to securites generally. It must, if MP*, be likely to have a SE on P and it must be specific or P.

Answer 22

made public

Question 23

Inside information is PSI relating to a SI of securities that are PA and not to securites generally. It must, if MP, be likely to have a SE* on P and it must be specific or P.

Answer 23

significant effect

Question 24

Inside information is PSI relating to a SI of securities that are PA and not to securites generally. It must, if MP, be likely to have a SE on P* and it must be specific or P.

Answer 24

price

Question 25

Inside information is PSI relating to a SI of securities that are PA and not to securites generally. It must, if MP, be likely to have a SE on P and it must be specific or P*.

Answer 25

precise

Question 26

T/F: A person accepting a bribe is guilty of an offence under the Bribery Act (2010)

Answer 26

TRUE

Question 27

Making or attempting to make the proceeds of crime appear respectable.

Answer 27

money laundering

Question 28

Any activity by which the apparent source and ownership of money representing the proceeds of crime are changed so that the money appears to have been obtained legitimately.

Answer 28

money laundering

Question 29

Three principal defences to a charge of failure to report money laundering DIRECTLY to the NCA by an accountant employed in a firm.

Answer 29

Insufficient training.
Specific privileged circumstances.
Report was made to the MLRO.

Question 30

T/F: general legal privilege exists in respect of an accountant giving advice on revenue (tax) law.

Answer 30

FALSE

General legal privilege applies only to solicitors, barristers, e.t.c. and NOT to accountants.

Question 31

The maximum penalty for …. is 7 years imprisonment.

Answer 31

insider dealing

Question 32

The maximum penalty for money laundering is … imprisonment.

Answer 32

14 years

Question 33

The maximum penalty for … is 14 years imprisonment.

Answer 33

money laundering

Question 34

The maximum penalty for failure to report money laundering is … imprisonment.

Answer 34

5 years

Question 35

The maximum penalty for … is 5 years imprisonment.

Answer 35

failure to report money laundering

Question 36

The maximum penalty for tipping off is … imprisonment.

Answer 36

2 years

Question 37

The maximum penalty for … is 2 years imprisonment.

Answer 37

tipping off

Question 38

The maximum penalty for fraud or bribery is … imprisonment.

Answer 38

10 years

Question 39

The maximum penalty for … is 10 years imprisonment.

Answer 39

fraud or bribery