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Chapter 4 - COBS and CASS > Chapter 3 - Money Laundering > Flashcards

Chapter 3 - Money Laundering Flashcards

1
Q

What does Part 1 of the FCA’s Financial Crime guide detail? What topics?

A
  1. Financial Crime - Systems and controls
  2. Money Laundering and Terrorist Financing
  3. Fraud
  4. Data Security
  5. Bribery and Corruption
  6. Sanctions and Asset Freezes
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2
Q

What does Part 2 of the FCA’s Financial Crime guide detail?

A

It has the thematic reviews conducted by the FCA since 2006 and details good and bad practice.

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3
Q

What extra powers did the Criminal Finances Act 2017 provide the NCA?

A

The NCA can apply up to 6 extra 31 day extensions onto the initial 31 day moratorium period in order to carry out an investigation from a SAR. This builds on POCA which did not allow extensions.

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4
Q

What are the 7 areas covered by MLR 2017?

A
  1. Risk Assessments
  2. Policies + Controls to manage risk
  3. Customer Due Diligence
  4. Enhanced Due Diligence
  5. Simplified Due Diligence
  6. Reliance
  7. PEPs
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5
Q

What are special measures introduced by Part 3 of the MLR Customer Due Diligence section?

A
  • Memorandum of Association for firms needs to be obtained.

- If the firm is unable to identify the beneficial owner, they can appoint a senior manager.

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6
Q

When does Enhanced Due Diligence need to be applied?

A
  • Correspondent Banking

- PEPs

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7
Q

What new measure was introduced with SDD?

A
  • Pooled client accounts can longer be automatically subject to SDD
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8
Q

Under MLR, how soon must ID documents be provided?

A

At the latest within 2 working days

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9
Q

What is the new criminal offence introduced by the 4MLD?

A

Reckless statements regarding ML or TF which are false or misleading - penalty of a fine or 2 years imprisonment.

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10
Q

What requirement does Section 24 of the MLR detail?

A
  • employees are to be made aware of the laws on ML and TF and the requirement to protect against them.
  • employees are to be given training on how to recognise money laundering transactions
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11
Q

What are the 5 offences under POCA 2002?

A
  1. Concealing
  2. Arrangements
  3. Acquisition, use and possession
  4. Failure to disclose
  5. Tipping off
  6. Part 7 - prejudicing an investigation
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12
Q

What offences under POCA are punishable by 14 years imprisonment or a fine?

A

Concealing, arrangements, acquisition+use+possession

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13
Q

What offences under POCA are punishable by 5 years imprisonment or a fine?

A

Failure to disclose - test:

  1. Has suspicion
  2. Info leading to suspicion has been obtained during the course of regulated business.
  3. A disclosure to the MLRO or NO has not been made.
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14
Q

What offences under POCA are punishable by 2 years imprisonment?

A

Tipping Off - disclosing a SARs or investigation.

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15
Q

What is the penalty for infringing Part 7 POCA

A

5 years imprisonment or a fine

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16
Q

What is the defence for the offences of concealing, arranging and possession, use, acquisition?

A

That the person had informed the MLRO or Nominated Officer

17
Q

What is the defence for the offence of disclosure?

A

That you no knowledge to suspect ML or TF

18
Q

What is the objectivity test?

A

To test whether someone under POCA had reasonable grounds to suspect ML or TF but did not.

19
Q

What do Parts 1,2 and 3 of the JMLSG Guidance refer to?

A

1 - General guidance for all FS firms - sets out UK and international legislative framework

2- Sectoral guidance geared to firm types.

3- Specialist guidance for electronic payments and the UK financial sanctions regime.

20
Q

The JMLSG recommends a ML and TF policy statement. What are the two categories that should be addressed?

A

Guiding principles

Risk mitigation approach

21
Q

For SDD what forms of ID are acceptable for personal customers?

A

Driving license, passport

22
Q

For SDD what forms of ID are acceptable for non-personal customers?

A

Public register checks e.g. Companies House

23
Q

SDD can be conducted for which types of firms?

A
  • other regulated firms
  • listed companies
  • pooled accounts held by notaries and legal professionals
  • UK public authorities
  • community institutions
  • low risk products - life assurance, pension funds and CTFs.
24
Q

Under what circumstances must EDD be applied?

A
  • Firm risk assessment identifies high risk
  • Transaction for persons in a high risk third country
  • client has not been physically present for ID&V purposes.
  • Correspondent banking
  • PEP, family member of PEP or close associate
  • Customer provided false or stolen ID documents
  • Complex and unusually large transaction and unusual pattern of transactions.
25
Q

What is a PEP?

A
  • Any time in the past year, the person has been entrusted with a prominent public function other than middle-ranking or junior official.
26
Q

When can EDD not be applied to PEPs?

A

When a PEP stops carrying out a public role, EDD must not be applied to family members or close associates.

27
Q

Which laws must the MLRO ensure compliance with?

A
  • MLR 2017
  • POCA 2000
  • Terrorism Act 2000 + Anti-Terrorism Crime Security Act 2001
28
Q

What is the penalty for the failure to report TF suspicions under the Terrorism Act 2000 and Anti Terrorism Crime Security Act 2001?

A
  • 5 year jail term or fine
29
Q

What powers did the Counter Terrorism Act 2008 provide HM Treasury with?

A

The power to issues directions to firms in the financial sector regarding non EEA person or firms. Directions can relate to CDD and monitoring, systematic reporting and limiting or ceasing business.

30
Q

What are the 4 new offences introduced by the Bribery Act 2010?

A
  1. Offering and Promising a bribe
  2. Accepting, agreeing to accept or requesting a bribe
  3. Bribing a Foreign Public Official
  4. Corporate offence of failing to prevent bribery.
31
Q

What is the maximum penalty for offences 1 to 3?

A

10 years imprisonment

32
Q

What is the penalty for a firm which fails to prevent bribery?

A

Unlimited fine

33
Q

With regards to hospitality, when is it not a bribe?

A

When provided when there is a legitimate business interests and where the hospitality is reasonable and proportionate to the business.

34
Q

Are facilitation payments illegal?

A

Paying facilitation payments to a foreign public official is illegal unless it is legal in written law for that official to accept the payment or if payment was made under the threat of violence.

35
Q

What are the 6 defences for bribery provided by the Ministry of Justice?

A
  1. Proportionality - relates to failure to prevent bribery.2
  2. Top level commitment
  3. Risk Assessment
  4. Due Diligence
  5. Communication
  6. Monitoring and Review

Chapter 4 - COBS and CASS (8 decks)

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