Chapter 3 - revisited Flashcards

Question

The MLRO and nominated officer

Answer 1

* Must be a responsible person (senior manager etc) * POCA, The terrorism act and MLR require a nominated officer * FCA requires an MLRO * Generally the same person does both roles and is referred to as the MLRO * MLRO reports to the National Crime Agency (NCA)

Answer 2

* powerful body of operational crime fighters * Objective is to tackle organised crime, defend UK borders, fight fraud/cyber crime and protect children and young people * led by a senior chief constable * Accountable to the home secretary

Answer 3

**Obligations to report suspicions of TF under Terrorism act 2000 and Anti-terrorism crime security act 2001** * Provision of funds for terrorism * Use and possession of terrorist funds * Laundering moeny that is terrorist property Failure to report the above = 5 years in prison and/or an unlimited fine.

Answer 4

Gives extra powers to the treasury to impose directions on firms suspected of handling funds to be used for terrorist activites. The powers include: * Customer due dilligence and monitoring - increased identification requirements * systematic reporting - HMT can require info without having to apply via the courts * Limiting or ceasing business - where required by FATF or where the treasury believes there is significant threat to national interest.

Answer 5

* Under the bribery act 2010 there are 4 offences 1. Paying bribes (offering) 2. Recieving bribes (soliciting) 3. Bribery of foreign officials (defence of this is to prove that the payment was required to be made by that country's local written law. Faciliation payments are also bribes under the act. 4. failure to prevent bribery - firms are liable if they fail to prevent bribery. Defence is possible if the firm can prove adequate procedures to prevent bribery. Hospitality is not prohibited Penalties: * Individual max = 10 years in prison and/or unlimited fine * Firm = unlimited fine

Answer 6

**data protection act 2018** Personal data = any data that can be used to identify a data subject (i.e. a living individual) **6 principles:** 1. Processing must be lawful and fair 2. Purposes of processing must be specified, explicit and legitimate 3. Personal data must be adequate, relevant and not excessive 4. Personal data must be accurate/kept up to date 5. personal data must be kept for no longer than is necessary 6. personal data must be processed in a secure manner. The **Information Commisioners Office (ICO) oversees the regs** their penalties for breaching the regs are: * Higher - max £17.5 million or 4% of global turnover (whichever is greater) for failure to comply with 1. data protection principles 2. data subjects rights 3. transfer of data to third countries * Standard - max £8.7 million or 2% of global turnover for other failures (admin, eetc)

Answer 7

**Notifiable interests are** * Personal shares * shares held by a spouse/partner or children. * shares held by a company you own 1/3 shares in * Concert parties **EU transparency irective disclosure thresholds** * 5%, 10, 15, 20, 25, 30, 50, 75%

Answer 8

Requires disclosure to the issuer within **2 business days** when: * OWnership reaches 3%, falls below 3% or any change (+/-) to the holding by a whole % point. * Fund managers - at 5%, 10% and every % point after 10 * mkt makers - exempt below 10% * Custodians, bare nominees and shares held as collateral are exempt. Once notified, the issuer will then tell the market of the ownership change. **Enquiry notice** - companies act 2006 s793 letter requires disclosure of shares hel currently and shares held in the last 3 years.

Answer 9

* Administered by the Takeover Panel (Panel on Takeovers and mergers - PTM) * **Ensures shareholders are treated fairly and aren't denied the opportunity to decide on benefits of a takeover** * Does not cover fin/commercial advantages/disadvantges or competition policy as that is covered by the competition and markets authority (CMA) 6 principles: 1. all shareholders given equal treatment + are protected 2. shareholders given sufficient time and info to decide. 3. board of the target are to act in the best interests of the company as a whole 4. false mkts must not be created 5. predator to make a bid only after ensuring they can meet cash requirements of the bid 6. target must noot be hindered in it's business affairs any longer than neccessary.

Answer 10

* MiFID post trade transparency * issued by the senior selling firm * should be sent within 3 minutes of the trade being executed (as clsoe to immediately) * Trade reports sent to the exchange *

Answer 11

* Used for market surveillance by the regulator * both counterparties to a trade should create transaction reports * Must be sent within a T+1 timeframe * To be sent to the regulator via an approved reporting mechanism (TRAX, UnaVista)

Answer 12

**EMIR** * OTC deriv regulation to improve transparency and increase risk mgmt. * All derivative cotnracts must be reported to a trade repository * applies to financial and non-financial counterparties **Short selling regulations (SSR)** * Requirement to disclose net short positions - can be private or public depending on the size of the short **Securities financing transaction regulation** * securities financing transactions must be reported to a trade repository * specific disclosures for rehypothecated assets * only applies to financial counterparites in the UK

Answer 13

* Implements the Basel Framework - 3 pillars 1. minimum capital requirements foor credit, market and operational risks 2. Supervisory review - discussions with the regulator whether additional capital should be held 3. Disclosure of risks and risk mgmt to improve mkt discipline **The capital resources of an authorised firm must always be greater than the capital adequacy requirements set by the FCA/PRA.**