7. Regulatory processes, systems and controls

Question 1

Solvency II

Answer 1

Name given to EU wide solvency rules. Refers to the amount that assets should exceed liabilities.

Question 2

Equivalence

Answer 2

Mutual recognition of EU and UK standards being of a similar quality.

Question 3

Reasons sanctions are imposed

Answer 3

1. Political pressure
2. Enforce concept of respect for democracy
3. Enforce concept of respect for human rights
4. Maintain and restore peace to a region

Question 4

US sanctions

Answer 4

Important for London Market to comply with US sanctions due to close relationship

Specifically includes Cuba

Question 5

Crystal

Answer 5

Lloyd’s system for information about sanctions on a country-by-country basis

Question 6

Money laundering

Answer 6

Process by which criminals attempt to disguise the origin of cash or other assets that they have earned from crime

Question 7

3 stages of money laundering

Answer 7

Placement - process of putting cash into the financial system and converting it into financial assets
Layering - series of complex transactions
Integration - access to clean money

Question 8

Money Laundering, Terrorist Financing and transfer of funds regulations 2017

Answer 8

Require creation and maintenance of systems to prevent and control money laundering and effective training

Question 9

Money Laundering Reporting Officer

Answer 9

Point person in any organisation who makes an annual report on systems and controls in place.

Reports given to MLRO can then be directed to NCA.

Question 10

Client verification

Answer 10

Must know your clients and that they are genuine

Full name
Registered number
Registered office in the country of incorporation
Business address
Photographic identification (individual)

Question 11

Bribery Act 2010

Answer 11

Four offences
- Bribing another
- receiving a bribe
- bribing a foreign public official
- failing to prevent bribery