Bribery and Money Laundering Flashcards
What Acts and regulations are you aware of relating to Bribery, Money Laundering and Corruption?
Bribery Act (2010)
Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations (2017)
Proceeds of Crime Act (2002)
Are you aware of any RICS documents of this topic?
RICS Professional Statement - Countering Bribery, Corruption, Money Laundering and Terrorist Financing (2019)
Are you aware of any new bills which the government are introducing to try and combat money laundering?
Registration of Overseas Entities Bill
What is the Bribery Act (2010)?
The Bribery Act is an Act of parliament which provides principles to follow for bribery prevention and aims to reduce bribery in businesses in the UK and abroad
Is non-compliance with the Bribery Act a criminal offence?
Yes
What is the aim of the Bribery Act?
To reduce bribery in businesses across the UK
What is a bribe?
Persuade (someone) to act in one’s favor, typically illegally or dishonestly, by a gift of money or other inducement.
What are the six principles for bribery prevention under the Bribery Act?
- Proportionality
- Top Level Commitment
- Risk assessment
- Due diligence
- Communication
- Monitor and review
What are the four offences under the Bribery Act?
- Bribing
- Receiving a bribe
- Bribing a foreign official
- Failure to prevent a bribe
Are companies responsible for their employees corrupt acts?
Yes, unless they can show that they have put adequate policies and procedures in place to combat bribery.
Give me some examples of the types of policies / procedures companies could put in place to combat bribery.
Staff training
Provision of policies
Regular reviews
Can certain forms of lavish entertainment be classified as bribery?
Yes if it is not reasonable and proportionate
Is hospitality prohibited by the Act?
No as long as it is reasonable and proportionate and it is registered in a gift and hospitality register.
Are cash gifts allowed?
No cash payment over 10,000 euros can be accepted under the Money Laundering Regulations (2017)
What should be considered with gifts in kind?
Income tax liability
Can you accept a gift from a 3rd party or contractor?
No
Who is the Bribery Act policed by?
The Serious Fraud Office (SFO)
What are the penalties for non-compliance with the Bribery Act for individuals?
Unlimited fine and/or max. 10 years imprisonment
What are the penalties for non-compliance with the Bribery Act for companies?
Unlimited fine
Are you aware of any case law relating to bribery?
In 2016, SWEET GROUP were prosecuted for a bribe offered to a Middle Eastern Business - fined £1.4m by Serious Fraud Office and £250k by RICS
What should you consider if asked a question on bribery and hospitality?
THE LAW - Bribery Act 2010 Your firms procedures Consider - Proportionality Timing Reciprocation
Tax implications and money laundering (cash)
Employment contract details
What are you firms anti-Bribery procedures?
Do no accept or give cash
Must have prior approval for gifts or hospitality over £100
All gifts and hospitality must be registered on a gift register
Must comply with the Bribery Act and RICS Professional Statement - mirrors obligations
Is hospitality, promotional and other ‘low’ value business expenditure which seeks to genuinely promote and improve the image of a firm acceptable?
Yes it is, in accordance with anti-bribery policy.
What is money laundering?
When the proceeds of crime are disguised and realised as legitimate assets
What type of work does the Money Laundering, Terrorist Financing and Transfer of Funds Regulations cover?
Agency work and other relevant financial business work
What are the key provisions of the Money Laundering, Terrorist Financing and Transfer of Funds Regulations?
- Requirement to conduct a written ML and TF risk assessment for the firm
- Implement systems, policies, procedures and controls
- Provide staff training
- Comply with new customer due diligence
- Comply with requirements relating to PEP
- Ensure appropriate record keeping
- AML checks to confirm the identity of the proposed purchaser of a property and check the purchaser’s source of funds before contracts are exchanged. (THINK AUCTIONEERING)
What are the three levels of AML due diligence?
- Customer DD
- Enhanced DD
- Simple DD
What would you need to do to carry out appropriate due diligence on an individual?
Identify the individual based on a reliable independent source - passport or driving licence
Where applicable identify the beneficial owners
Copy of bank statement, utility bill etc. within the last 3 months to show evidence of their address.
Obtain information on the purpose for the purchase and check the purchasers source of funds
What would you need to do to carry out appropriate due diligence on a private limited company?
Request the full company name, company number, address of the registered office, the names of the company directors and names of shareholders with 25% or more holding.
Obtain information on the purpose for the purchase and check the purchasers source of funds
How would you carryout money laundering checks on a public limited company?
I would request evidence of their London Stock Exchange listing.
How would you carryout money laundering checks on a publicly accountable body?
Request evidence of government ownership / control
When would you carry out enhanced due diligence for money laundering checks?
If the transaction involved a person from a ‘high risk country’ or a PEP or a family member / business associate of a PEP
How would you carry out enhance DD checks?
Additional procedures and more detailed examination of the background and purpose of the transaction is required.
What is a PEP?
Politically exposed person - someone who has been entrusted with a prominent public function
Why must you carry out enhanced DD checks on PEPs?
Because they present a higher risk for potential involvement in bribery and corruption by virtue of their position and the influence they may have.
Would you ever use simplified DD on parties involved in a property transactions / when would you use it?
No - only for transactions with a low risk of money laundering or terrorist financing activities
Is there a limit on the amount of cash which can be accepted or paid under the Money Laundering, Terrorist Financing and Transfer of Funds Regulations (2017)?
Yes - 10,000 euros
Once you have carried out AML checks on a client do you ever have to do them again?
Yes on-going business relationships with a client should be monitored
Do you have to keep detailed records of your procedures undertaken?
Yes
Who takes responsibility for AML compliance?
A senior staff member of board member must be appointed to take responsibility of all compliance
What is a MLRO and what is their role?
Money Laundering Reporting Officer
Must be appointed to report any suspicions
How long must a firm retain records for under the Money Laundering, Terrorist Financing and Transfer of Funds Regulations (2017)?
5 years
Who is responsible for policing the Money Laundering, Terrorist Financing and Transfer of Funds Regulations (2017) for estate agents?
HMRC - firms must register on an annual basis
What are the penalties under the Money Laundering, Terrorist Financing and Transfer of Funds Regulations (2017) for assisting with money laundering?
max. 14 years imprisonment and/or unlimited fine
What are the penalties under the Money Laundering, Terrorist Financing and Transfer of Funds Regulations (2017) for tipping off or failing to report suspicion?
max. 5 years imprisonment and/or unlimited fine
What is tipping off?
Informing a person that they are under suspicion of money laundering
Where could you look for Red Flag indicators of money laundering?
The RICS have a helpful table with red flag indicators
Name some red flag indicators / warning signs of money laundering.
If the client / purchaser of a property is:
Being evasive about who they are, the source of the funds or the reason for the transaction
If the source of the funds is a large cash payment or loans from non-institutional lenders
If the transaction has unusual features:
- unnecessarily complicated structures
- paying a very high price for a property
- buying a potentially loss making property
Unexplained changes to legal providers
Non-institutional legal firm used
Willingness to pay high fees
What would you do if you suspected money laundering was taking place?
I would inform the MLRO of my suspicions who should report this to the National Crime Agency
What is the Proceeds of Crime Act (2002)?
It is an Act of Parliament which allows enforcement authorities in the UK to recover money and other assets which are deemed to be the proceeds of crime
What are the criminal offences intended to combat AML under the Proceeds of Crime Act (2002)?
- Concealing criminal property
- Acquisition, use or possession of criminal property
- Arrangements - if a person enters into an arrangement which they know or suspect facilitates the acquisition, use, retention or control of criminal property by or on behalf of another person
What is the RICS Professional Statement - Countering Bribery, Corruption, Money Laundering and Terrorist Financing (2019)?
It sets out the mandatory, globally applicable requirements for RICS members and firms in relation to bribery, corruption, money laundering and terrorist financing.
When did the RICS Professional Statement - Countering Bribery, Corruption, Money Laundering and Terrorist Financing (2019) come into effect?
September 2019
What are the three parts of the RICS Professional Statement - Countering Bribery, Corruption, Money Laundering and Terrorist Financing (2019)?
Part 1 - Mandatory requirements relating to bribery, corruption, money laundering and terrorist financing
Part 2 - Guidance setting out supporting good practice for the above
Part 3 - Supplementary Guidance on some of the concepts set out in part 1 and part 2 - there is also a useful glossary
What is contained within Part 1 of the RICS Professional Statement - Countering Bribery, Corruption, Money Laundering and Terrorist Financing (2019)?
Contains requirements for RICS members and regulated firms:
- Not to offer or accept anything that could constitute a bribe and not to facilitate or be complicit in ML and TF
- Have procedures / systems in place to comply with the law
- Report suspicion to the relevant authority
- Retain records to show the firm has met the requirements of this professional statement
When can you rely on 3rd party reliance checks?
Only where there is a level of confidence for the quality of the information provided by the 3rd party e.g. solicitors.
What guidance is provided in Part 2 of the RICS Professional Statement - Countering Bribery, Corruption, Money Laundering and Terrorist Financing (2019)?
Have a written policy in place to comply with Part 1 of the document
Set up a gifts register
Provide staff training
Senior management should take control of the process
Keep up to date with legislation
Encourage transparency
Publish code of behaviour for all staff
What supplementary guidance is provided in Part 3 of the RICS Professional Statement - Countering Bribery, Corruption, Money Laundering and Terrorist Financing (2019)?
Establish a risk based approach - consider the 3 W’s:
Who you act for
What you are doing
Why you are being asked to do something
Dealing with PEPs
What is the Registration of Overseas Entities Bill?
It is a new proposed bill which governments hope will prevent money laundering in the property sector and promote transparency
What will overseas companies have to do under the new Registration of Overseas Entities Bill?
It is proposed that the beneficial owner of non-UK parties will need to be disclosed
Where will the information on beneficial owner be held under the new Registration of Overseas Entities Bill?
On a public register
How can governments currently request information on assets where they are unsure of the beneficial owner?
They can serve Unexplained Wealth Orders on owners of property assets >£50k where the Government has reasonable grounds to suspect criminal funds have been used.
