CH11 Criminal Law Flashcards
- Identify instances of money laundering and the obligations on professional accountants to detect and help prevent money laundering - Identify offences and their consequences under the anti-money laundering legislation and select appropriate courses of action to protect professional accountants from criminal liability. - Identify instances and consequences of bribery - Identify instances and consequences of fraud in a given scenario, including -The effect of the Fraud A
What is the penalty for money laundering? I.e.:
Concealing or helping to conceal criminal property
Acquiring or using criminal property
Inciting others to do the above
14 years imprisonment or
an unlimited fine
What is the penalty for failure to report? I.e.:
Failure to inform MLRO/NCA of any knowledge or suspicion that someone is engaged in money laundering
5 years imprisonment or
an unlimited fine
What is the penalty for tipping off?
2 years imprisonment or
an unlimited fine
What is the possible defence and how is it interpreted by the courts?
Reasonable excuse
Very narrowly - threats of physical violence
Which Act covers covers tax evasion?
Criminal Finance Act 2017
Does the Criminal Finance Act 2017 make a company or an individual criminally liable if they are involved in tax evasion? Under what circumstances?
A company/other business organisation (if their employees or agents are involved in tax evasion).
Are there similar offences to money laundering in terms of facilitating tax evasion and failing to prevent it with the Criminal Finance Act 2017?
Yes
What is the company’s defence against criminal charges of tax evasion under the Criminal Finance Act 2017?
If the company/business had reasonable prevent procedures
If it was unrealistic to have them
Broadly, what does the Money Laundering Regulations 2017 cover and who does it apply to?
They apply to all relevant persons and seek to enforce:
Record keeping
Client due diligence
Staff training
More specifically, what does the the Money Laundering Regulations 2017 want relevant persons to be able to recognise and provide?
Allow suspicious transactions to be recognised and reported
To provide an audit trail on a future investigation
Is non compliance with the Money Laundering Regulations 2017 a criminal offence and what is it punishable by?
Yes
2 years imprisonment and/or
a fine
Does money laundering have to have actually taken place for an offence to be committed under the Money Laundering Regulations 2017 for a fine and/or imprisonment to be imposed?
No
When do you have to do CDD? 5 things
- New business relationship
- Business formation service
- Occasional transactions
- Money laundering/terrorist activities suspected
- Doubt veracity of information provided
What must you do in terms of CDD? 4 things
- Identify customers and verify their identity
- Identify beneficial owners/people with significant influence
- Obtain information on nature/purpose of business relationship
- For organisations, identify who has ultimate control
When does legal privilege apply and who does it apply to?
Professionals giving litigation advice
What are the four main offences contained in the Bribery Act 2010?
- Bribing another person
- Being bribed
- Bribing a foreign official
- Corporate failure to prevent bribery
What does bribing another person involve?
Where someone offers, promises or gives financial or other advantage to another person to induce or reward them for improperly providing a relevant function or activity
Does the bribe need to be offered to the person who performs the function?
No
Can the benefit of the bribe be to a third party?
Yes. E.g. someone lets your child into the school of your choice.
Must the bribe be given before or after the improper performance?
Either
What does being bribed involve?
Requesting, accepting or receiving financial or other advantage as a reward for improper performance of a relevant function or activity
What is a relevant function or activity in terms of bribery?
Where the person performing the function is in a position of trust
What are examples of a relevant function or activity in relation to bribery? Does it need to be connected to the UK?
- Any activity of a public nature
- Any activity related to business
- Any activity in the course of employment
- Need not have any connection with UK
What is improper in relation to bribery?
Does not meet the standard which a reasonable person in the UK would expect
What is involved in bribing a foreign official?
Where a person offers, promises or gives any financial or other advantage to the official or a third party with the official’s consent and that official is not permitted by law to be influenced.
In relation to bribing a foreign official, must you intend to influence them and obtain a business advantage as a result?
Yes
What is involved in corporate failure to prevent bribery?
Any commercial organisation which fails to prevent and offence being committed by anyone who performs a service for the company. Includes employees, agents and subs.
In terms of corporate failure to prevent bribery, are hospitality and gifts allowed?
Yes, if they are to encourage good business relations and not to persuade the other party to award business favours.
What is the defence for corporate failure to prevent bribery?
The company can show that it had adequate procedures in place to prevent persons associated with it from committing bribery
What is the punishment for bribery
10 years imprisonment and/or
an unlimited fine
In what three ways can fraud be committed in terms of the Fraud Act 2006?
- False representation
- Failing to disclose information
- Abuse of position
What two things must be in place for fraud to have taken place?
- You acted dishonestly
- You had the intention to make a gain
Does fraud by false representation have to be related to a gain made by you or can it be a gain made by another?
Can be another
What is the maximum penalty for fraud?
10 years imprisonment and
an unlimited fine
Does the Fraud Act make it an offence to make, supply or possess any article used in fraud? What type of fraud does this often implicate?
Yes
Cyber crime
What are the six types of cyber enabled fraud?
- Electronic financial fraud
- Fraudulent sales through online auction or retail sales
- Phishing scams
- Pharming
- Online romance or social networking/dating website fraud
What are the five Cyber Essentials controls that can provide protection against low level cyber risks?
- Firewalls
- Applying most secure settings
- Controls to access
- Protection against virus/malware
- Keeping devices/software up to date (patching)
What is the aim of Accountancy Sector Fraud Charter and who entered into it?
Better understanding of fraud
Law enforcement agencies
Professional supervisory bodies
UK government
What are the key points of the Accountancy Sector Fraud Charter?
- Improved information regarding fraud
- Fraud awareness toolkit
- Reducing fraudulent data on CH
- Increase fraud awareness and change customer behaviour
What is the aim of the Computer Misuse Act
To protect computer material from being misused or modified
Under the Computer Misuse Act, what is now illegal and punishable by fine or imprisonment? Five thigns. Unauthorised access…
- Unauthorised access to computer system (hackers, even ethical hackers)
- Unauthorised access with intent to commit or facilitate further offences
- Unauthorised access with intent to impair, or recklessness as to impairing, the operation of a computer
- Unauthorised acts causing or creating risk of serious damage
- Making or supplying articles for use in the above e.g. virus or malware
Is fraudulent trading a criminal or civil offence?
It can be both
What is fraudulent trading?
Where a business is carried on with the INTENT of defrauding creditors
Does fraudulent trading only apply when the company is in liquidation?
Fraudulent trading applies whether or not the company is in liquidation.
Who does fraudulent trading apply to?
ANY person who is knowingly a party to the fraudulent manner of trading
Is a positive act and/or neglect required for fraudulent trading to take place? What else is required?
A positive act is required plus some element of dishonesty
INTENT
What can the court do if someone is found guilty of fraudulent trading?
Disqualified for up to 15 years from acting as a director or being involved in management of companies
What else can the court do if someone is found guilty of fraudulent trading?
Unlimited fine and/or
imprisonment for up to 10 years
When does the civil offence of fraudulent trading apply?
ONLY when in liquidation
What can the court ask the person to do in relation to the civil offence of fraudulent trading?
Put funds back into the company
Which Act covers insider dealing?
The Criminal Justice Act 1993
What three offences does the Criminal Justice Act 1993 cover?
- Dealing in securities (buying or selling shares) while in possession of insider information as an insider, the securities being price-affected by the information
- Encouraging another to deal in them
- Disclose information other than in the proper performance of one’s employment, office or profession
What are the three defences for insider dealing?
- You did not EXPECT the price to change
- Had reasonable grounds to believe information was widely disclosed
- Would have behaved that way anyway
What are the two defences to disclosing information in relation to insider dealing?
- Did not expect there to be a profit/avoidance of loss
- Did not expect the person to deal
What is the penalties for insider dealing?
7 years in prison and/or an unlimited fine
What makes insider dealing (a criminal offence) hard to convict?
Because it is a criminal offence, the burden of proof is high (beyond reasonable doubt).
To overcome the difficulty of convicting people of the criminal offence of insider dealing, there is also what?
The civil offence of market abuse (lower standard of proof (balance of probabilities)
What are the penalties for market abuse?
Unlimited fines
What are the key points of the Economic Crime (Transparency and Enforcement) Act 2022?
- Register of Overseas Entities (identify true owners of property in UK)
- Strengthens NCA to use Unknown Wealth Orders. Can confiscate criminal assets without having to prove that the asset was obtained through criminality. NCA has more time/is not liable for legal costs
- Strict liability for busting sanctions. Significant fines for businesses even if unknowing/no reasonable cause to know
What are the steps you should follow if you suspect criminal activity is occurring in the course of your work? 6 steps.
- CHECK understanding/surrounding circumstances
- CONSULT MLRO/NCA/prescribed body (whistleblowing)/police (fraud)
- REFER to ICAEW guidance
- LEGAL advice
- Preliminary DISCUSSION with senior at work
- ICA Ethics ADVISORY Service
WITH WHISTLEBLOWING, DOES THE WRONGDOING BEING REPORTED HAVE TO BE OF A CRIMINAL NATURE?
No
What does the whistleblowing Act ensure?
A worker has the right to not suffer detriment as a result of making a protected disclosure
What qualifies as a protected disclosure? 3 things
- Qualifying disclosure
- Made in public interest
- To appropriate person
What is a qualifying disclosure? If in the reasonable belief of the worker, the information disclosed shows tends to show one or more of the following:
- CRIMINAL offence has/is/is likely to be committed
- Person has failed/is failing/is likely to fail with any LEGAL obligation
- MISCARRIAGE of justice has/is/is likely to occurred
- HEALTH AND SAFETY has/is/is likely to be endangered
- ENVIRONMENT has/is/is likely to be damaged
- Related information has/is/is likely to be CONCEALED
Are rumours/unfounded suspicions enough to whistleblow?
No. Need evidence
Who should you disclose to (appropriate person)?
- Internally
- Legal adviser
- Minister (e.g. for NHS)
- Prescribed person/regulator
- Wider: media, police, non-prescribed regulators
Is a gagging act valid if it conflicts with the act if you signed it?
No - void
