6. PC, ML and FSMA Flashcards
What is a reg activity under 19(1)
22 FSMA states specified investments and activities
IB(1.25) says what
advises S ensures authority given to 3rd to instruct, if instructed by 3rd
When is it common for S to act for Lender and why
In residential, as usually no negotiation
What is a business relationship for Reg 28
Between RP + customer, out of RP business + BR expected to last
When should S not act, generally, under CoI (IBs)
If direct conflict, if negotiating on substance, or if parties unequal
What principle is triggered if given instructions from 3rd party
P(4)
What should you explain (in Q) when dealing w/ conflict between O(4.1) and O(4.2)
Why confidentiality is in BI of one party, and how it conflicts w/ disclosure and BI of other party
What Ps are relevant if mortgage fraud suspected
P(1) and P(2)
Three kinds of specified activity under Part II RAO
Arranging investment, advising on merits or investment, or merits of RMC
What is occasional transaction for Reg 28
Transaction carried out not as part of BR
Why is it generally impossible to act for Lender and Borrowr
Interest in end result is not the same
IB applying to residential transaction, acting for Lender and Borrower
IB(3.7)
When is S released from duty under O(4.1), to do with mortgages
If fraud suspected
What does explaining issue and obtaining written consent from clients for exception to 3.5 obtain
P(4)
Exception in O(3.7)
Competing for same objective
Reg on timing for CDD
Reg 30
What defines specified investments for 19(1) FSMA
Part III RAO
What is standard CDD under Reg 28
Requires identification and verification of customer identity and obtaining info on purpose of intended BR/OT
Two kinds of clients which might fall under O(3.6)
Acting for Buyer/Landlord and Seller/Tenant; or for Lender and Borrower
When can CDD be carried out later than before relevant transaction
During BR (ONLY BR), if necessary to avoid disrupting course of business, low risk, and ASAP
What exceptions apply when conflict between 4.1 and 4.2?
O(4.4), continue to act if can safeguard info, both give informed consent, and reasonable to act
O(1.3) says what?
Consider if can comply w/ CoC
Two Outcomes on own and client conflict of interest
O(3.4) and (3.5)
What is CML CoT
Certificate of Title for mortgage
When can a regulated activity be carried out, and not contravene 19(1) FSMA
If authorised or exempt
Where is the general prohibition under FSMA
19(1)
Why must you cease acting for 1 if conflict between 4.1 and 4.2
Cannot comply w/ CoC (per O(1.3))
What does specified activity under Part II RAO NOT include
Giving generic advice or only info - need opinion and recommendation
Why is M of commercial property not covered by FSMA
Not a dwelling for RMC definition under 61(3)(a)
Four elements to RMC
Lender provided credit, borrower is individual, obligation to repay secured as 1st legal M of land, and at least 40% to be used as dwelling
Where are two exceptions to O(3.5)
O(3.6) and (3.7)
What must M be for S to act for Lender and Borrower (under IB(3.7))
Residential, on standard terms, reasonable, CML CoT and in BI of both to act
Outcome on exceptions to conflict between 4.1 and 4.2
O(4.4)
When can S act for joint purchasers
If they hold as JTs
What is a ‘relevant person’ for Reg 28
‘Independent legal professionals’
Glossary definition of competing for same objective
Obtained by one = unobtainable by other
Reg on what is CDD
Reg 28
No authorisation needed for specified activity under Part II RAO unless what
Carried out in relation to specified investment
What IB advises S ensures authority given to 3rd to instruct, if instructed by 3rd
IB(1.25)
What must S do for exception to O(3.5) be relied upon
Explain issues + obtain written consent from clients
For how long does duty of confidentiality last
Indefinitely, unless waived, allowed or overridden
What defines specified activities for 19(1) FSMA
Part II RAO
Outcome on confidentiality
O(4.1)
O(1.2) says what
Must protect client’s interests
When is CDD required under Reg 28
If relevant person establishes BR or carries out occasional transaction
When can S act for A, despite holding material info on B
If info can be protected
Where is RMC defined for Part II RAO
61(3)(a)
When is CDD usually carried out
Before OT/BR
Can Ss be liable if they receive laundered money, even w/o knowledge
Yes
What IBs rule out substantially common interest
Possible prejudice, unequal bargaining, or end result differs
What shows 4.1 takes precedence over 4.2
O(4.3)
What happens if Borrower is lying on mortgage docs, and S acting for Borrower and Lender
O(4.1) takes precedence, so cease acting for Lender
What is the procedure for money laundering
CDD required? What is CDD? Timing
What outcome is triggered if instructions from 3rd
O(1.2)
What does S disclose to Lender if must cease to act due to conflict between O(4.1) and (4.2)
Disclose only ‘professional reasons’
Exception in O(3.6)
Substantially common interest
How do you rule out the application of two exceptions to O(3.5)
By IB or glossary
How to deal w/ conflict Q
Is there a conflict under O(3.5) per IBs or facts? Does exception apply? Consider Glossary + if IBs exclude
Outcome on disclosure
O(4.2)
Two kinds of specified investments in Part III RAO
Rights under Cs of insurance and under RMCs
What happens if S instructed to deal w/ more than one prospective B (contract race)?
Inform all Bs + confidentiality duty applies so requires consent
Why is it unlikely S can act for Lender and Borrower in commercial
Not residential, nor CML CoT under IB(3.7), and potential negotiation
How is a substantially common interest defined in glossary
Clear common purpose + strong consensus on means, so conflict = peripheral
Reg on if CDD required
Reg 27
What is breach of 19(1) FSMA
Criminal offence
Why is it rarely possible to act for Buyer/Landlord and Seller/Tenant
Interest in end result differs
Why must you cease acting for client if O(4.2) cannot be met
Can no longer give standard of care under O(1.5), against P(4)
What is it important to note about IB(3.14)
It applies if there is a TRANSFER FOR VALUE
