Bribery, Corruption, Money Laundering and Terrorist Finance

Question 1

What must firms do when countering bribery

Answer 1

• Not directly or indirectly accept or offer something that could constitute a bribe
• Have a policy and training in place to comply with relevant countries laws
• Carry out due diligence checks
• Report any breach of the law to the police who will notify the Serious Fraud Office (SFO)
• Evaluate potential risks that may lead to bribery and corruption
• Retain information of compliance with standards
• Implement a register for gifts
• Appoint an ethics champion

Question 2

What must members do when countering bribery

Answer 2

• Not offer or accept any bribes
• Ensure they have knowledge of professional standards
• Report any activity that breaches the law to the police who will notify the SFO
• Abide by company policy on Bribery

Question 3

What must firms do when countering money laundering and terrorist finance

Answer 3

• Not facilitate money laundering
• Have systems and training in place to comply with laws
• Report any matters to the police who will notify the SFO
• Carry out due diligence and review any potential clients or customers that could be a risk
• Only use reliance where there is a certain level of confidence with the client who conform to legal requirements
• Carry out due diligence checks by:
  o Understanding the client and purpose of the transaction (PEP?)
  o Conduct identity checks
  o Record and store how the firm has complied with the professional statement
  o Identify if simplified or enhanced due diligence is required

Question 4

What must members do when countering money laundering and terrorist finance

Answer 4

• Not facilitate or be complicit in money laundering
• Report any suspicious activity to the police who will notify the SFO
• Ensure you are competent and trained in dealing with money laundering

Question 5

Firms are advised to carry out risk audits, what are some of the risk factors that firms must consider

Answer 5

• Countries
• Sectors
• Organisation
• Nature of the transaction

Question 6

What are some of the common due diligence checks

Answer 6

• Required to ask for
  o Identification of the client (identify current owner or ownership structure)
  o Source of fund check
   Bank statement
   Trust deeds
   Evidence of bonus payments
  o Source of wealth check
• Enhanced due diligence is typically undertaken when there is a high risk client e.g. PEP
• Simplified due diligence is a reduced form of due diligence for low risk clients that may have already been a prior client. However it is advised that new due diligence checks are conducted every few years or when a high value transaction occurs
• Credit check

Question 7

What is a PEP?

Answer 7

• These are people identified as high risk from a money laundering perspective due to their position of power
• Identification of a PEP does not mean work should be rejected. Instead more thorough checks should be taken to ensure money exchanged has not been laundered

Question 8

What is ‘reliance’

Answer 8

Using a risk based approach when a client has already passed through checks required by a regulated entity

Question 9

What is beneficial ownership?

Answer 9

This is the person who ultimately controls a company or entity by having the majority share in it. It helps to identify this party as they may be politically exposed.

Question 10

What did the Bribery Act 2010 enforce

Answer 10

Offence for commercial organisations that fail to prevent employees from bribing another person on their behalf

Question 11

Is hospitality permitted by the Bribery Act 2010?

Answer 11

Yes, so long as it is proportionate and reasonable

Question 12

What are the 6 principles in the Bribery Act

Answer 12

1) Proportionality (to risks likely to occur)
2) Top level commitment (those high up in organisation must commit)
3) Risk assessment (assess bribery risks you are likely to occur)
4) Due diligence (background checks)
5) Communication (communicating policy to staff and others who perform services)
6) Monitoring and review

(Very similar to conducting a risk assessment)

Question 13

Are facilitation payments legal?

Answer 13

No they are illegal, they are used to bypass certain processes for example planning

Question 14

What other legislation is there on countering bribery and corruption

Answer 14

Criminal Finances Act 2017

Question 15

What is an MLRO?

Answer 15

Money Laundering Regulations Officer

In charge of carrying out checks and is mandatory for companies to employ one

Question 16

What is the maximum amount of cash a client can pay a firm?

Answer 16

10,000 euros

Question 17

What legislation sets the cap on the acceptance of cash for work

Answer 17

The Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2017

Question 18

What is due diligence

Answer 18

Identifying who your customer is and checking they are who they say they are e.g. background checks

Question 19

What are the 3 types of due dilligence

Answer 19

Simplified due diligence
Customer Due diligence
Enhanced due diligence

Question 20

What documents are required for due diligence?

Answer 20

Passport 
Drivers licence (2 forms of photo ID confirming who they are)
Birth certificate 
Mortgage Statement
Residential address

Question 21

When should due diligence be carried out?

Answer 21

establishing a business relationship

carrying out an occasional transaction that amounts to 15,000€ or more

you suspect money laundering or terrorist financing, (red flags)

you doubt the accuracy or adequacy of documents or

Question 22

What checks are needed for enhanced due diligence

Answer 22

seeking additional independent, reliable sources to verify information provided or made available to you

taking additional measures to better understand the background, ownership and financial situation of the customer, and other parties to the transaction

taking further steps to be satisfied that the transaction is consistent with the purpose and intended nature of the business relationship

increasing the monitoring of the business relationship, including greater scrutiny of transactions

Question 23

What is the name of the person who owns and controls a business?

Answer 23

Beneficial owner

Question 24

When is enhanced due diligence carried out?

Answer 24

when the customer is not physically present when you carry out identification checks

when you enter into a business relationship with a ‘politically exposed person’ -

when you enter into a transaction with a person from a high risk third country identified by the EU

any other situation where there’s a higher risk of money laundering

Question 25

What enhanced due diligence checks are carried out?

Answer 25

Further investigation into source of funds

Greater investigation on ID

Greater checks on documents provided by credit or financial institutions

Question 26

What measures would you take when dealing with a politically exposed person?

Answer 26

Enhanced due diligence:

Request sign off from senior management

Carry out stricter monitoring of finances and business relation

Question 27

What is the Anti Corruption Benchmark?

Answer 27

A set of benchmarks to deal with the corruption within the public sector that the RICS has partnered in producing.