Ch 28: Ethics

Question 1

What must we do if the client has tax irregularities?

Answer 1

1. advise the client to inform HMRC or request to do so on their behalf
2. explain the consequences of tax evasion; criminal proceedings - fines, jail time
3. if the client refuses to co-operate then we must resign as tax adviser and inform HMRC that we have resigned but don’t tell them why
4. consider the need to submit a suspicious activity report under the national crime agency

Question 2

What must we do if there is a conflict of interest?

Answer 2

1. Disclose the conflict to the clients
2. Consider allocating the clients to different partners
3. Use safeguards - separate teams, information barriers, staff training, NDAs

Question 3

What must we do if we identify money laundering?

Answer 3

1. Professionals must implement preventative measures
2. Must report suspicious activities to the National Crime Agency
3. Must not ‘tip off’ a client that a suspicious activity report has been made
4. Failure to comply is a criminal offence

Question 4

What must we do when acting for new clients?

Answer 4

1. Obtain proof of identity (photo ID and utility bill) and proof of identity for the business (VAT reg or bank statement, proof of incorp, details of directors)
2. Communicate with former adviser (request permission from client and ask client to authorise previous adviser to communicate with us)
3. Letter of Engagement setting out respective responsibilities
4. Ensure no conflict of interest

Question 5

What are the AML procedures which a business needs to maintain?

Answer 5

1. Register with an appropriate supervisory authority
2. Appoint MLRO and implement internal reporting procedures
3. Train staff to ensure they are aware of the relevant legislation and establish appropriate internal procedure
4. Carry out customer DD on any new client and monitor existing clients
5. Verify the identity of new clients and maintain evidence of ID and records of transactions undertaken for or with the client
6. Report suspicions of money laundering to the NCA using a SAR

Question 6

Can we use knowledge obtained from other clients?

Answer 6

Yes, but:

• we must not use any confidential information obtained as a result of our professional and business relationships for the benefit of the client
• confidentiality is one of the fundamental principles of ethics
• confidentiality applies to confidential information obtained in respect of both current and past clients