12. Financial Crime

Question 1

Where is the definition of financial crime found?

Answer 1

The Financial Services Act (2012)

Question 2

According to the Financial Services Act (2012), the definition of financial crime as any offence involving what?

Answer 2

1. Fraud or dishonesty
2. Misconduct in, or misuse of information relating to a financial market
3. Handling the proceeds of a crime
4. Or the financing of terrorism

Question 3

What are two examples of financial crime?

Answer 3

• Identity Theft
• Money Laundering

Question 4

What is identify theft?

Answer 4

When an individual takes the details of another individual to open bank accounts, obtain loans, credit cards etc.

Question 5

What is money laundering?

Answer 5

An attempt to turn illegitimate money into legitimate money.

Question 6

What’s an example of money laundering in insurance?

Answer 6

Person opening insurance policy with illegitimate money, cancelling within the cooling off period. Insurance company returns premium and therefore money appears clean.

Question 7

Where is fraud defined and what four methods can it arise by?

Answer 7

• The Fraud Act 2006
  1. By Misrepresentation
  2. By failing to disclose information
  3. Abuse of power
  4. Making or supplying items, for use in frauds

Question 8

What is the purpose of the Money Laundering Regulations 2007?

Answer 8

To ensure certain businesses operate adequate anti-money laundering controls.

Question 9

The Money Laundering Regulations 2007 cover a wide range of businesses including:

Answer 9

1. Independent legal professionals
2. Casinos
3. Estate agents
4. Accountants, tax advisors, auditors
5. Financial and credit businesses

Question 10

Businesses covered by the Money Laundering Regulations must have systems and processes in place to:

Answer 10

• Assess the risk of the business being used by criminals to launder money
• Check ID of customers
• Monitor customer activities and report suspicious activities
• Retain all documents that relate to the financial transactions, risk assessment and management procedures
• Ensure staff aware of regulations and receive training

Question 11

What is the FCA objective to financial crime?

Answer 11

Reduce extent to which it is possible for a financial business to be used for a purpose connected to financial crime

Question 12

Financial Services Act (2012) - definition

Answer 12

Any offence involving:
1. Fraud or dishonesty
2. Misconduct in or misuse of information relating to a financial market
3. Handling the proceeds of a crime or the financing of terrorism