Bribery, Corruption, Money Laundering and Terrorist Finance Flashcards
What must firms do when countering bribery
- 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
What must members do when countering bribery
- 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
What must firms do when countering money laundering and terrorist finance
- 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
What must members do when countering money laundering and terrorist finance
- 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
Firms are advised to carry out risk audits, what are some of the risk factors that firms must consider
- Countries
- Sectors
- Organisation
- Nature of the transaction
What are some of the common due diligence checks
- 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
What is a PEP?
- 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
What is ‘reliance’
Using a risk based approach when a client has already passed through checks required by a regulated entity
What is beneficial ownership?
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.
What did the Bribery Act 2010 enforce
Offence for commercial organisations that fail to prevent employees from bribing another person on their behalf
Is hospitality permitted by the Bribery Act 2010?
Yes, so long as it is proportionate and reasonable
What are the 6 principles in the Bribery Act
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)
Are facilitation payments legal?
No they are illegal, they are used to bypass certain processes for example planning
What other legislation is there on countering bribery and corruption
Criminal Finances Act 2017
What is an MLRO?
Money Laundering Regulations Officer
In charge of carrying out checks and is mandatory for companies to employ one
What is the maximum amount of cash a client can pay a firm?
10,000 euros
What legislation sets the cap on the acceptance of cash for work
The Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2017
What is due diligence
Identifying who your customer is and checking they are who they say they are e.g. background checks
What are the 3 types of due dilligence
Simplified due diligence
Customer Due diligence
Enhanced due diligence
What documents are required for due diligence?
Passport Drivers licence (2 forms of photo ID confirming who they are) Birth certificate Mortgage Statement Residential address
When should due diligence be carried out?
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
What checks are needed for enhanced due diligence
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
What is the name of the person who owns and controls a business?
Beneficial owner
When is enhanced due diligence carried out?
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
What enhanced due diligence checks are carried out?
Further investigation into source of funds
Greater investigation on ID
Greater checks on documents provided by credit or financial institutions
What measures would you take when dealing with a politically exposed person?
Enhanced due diligence:
Request sign off from senior management
Carry out stricter monitoring of finances and business relation
What is the Anti Corruption Benchmark?
A set of benchmarks to deal with the corruption within the public sector that the RICS has partnered in producing.
