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IMC Unit 1 > Chapter 5 > Flashcards

Chapter 5 Flashcards

1
Q

What act defined money laundering as a crime?

A

The proceeds of crime act 2002

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2
Q

What is money laundering

A

Where criminals attempt to hide the illegal nature of the funds they hold

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3
Q

What is a predicate crime

A

The crime that the criminal Carrie’s out to give rise to the proceeds used for money launderimg

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4
Q

What are the 3 stages of money laundering

A

Placement
Layering
Integration

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5
Q

What is placement

A

Where the proceeds of a crime is placed into a bank or building society

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6
Q

What is layering

A

Where the money is taken out of the bank and transferred into different investments in other companies or countries

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7
Q

What is integration

A

Where the money is now withdrawn and used

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8
Q

What does the money laundering regulations 2017 require

A

Financial services companies to put proper rules into place to try and make money laundering as difficult as possible

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9
Q

What does the money laundering regulations 2017 act say

A

Firms should take a risk based approach to anti money laundering
Requires customer due diligence to be carried out

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10
Q

What is CDD

A

Customer due diligence
Where you obtain evidence regarding the identity and source of customers funds as soon as reasonably practicable

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11
Q

Who is enhanced CDD for

A

High risk customers

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12
Q

Examples of high risk customers

A

politically exposed persons
Non face to face business

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13
Q

Who is a politically exposed person

A

A customer who has held high political office now or over the last 12 months

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14
Q

Who does the MRLO report to

A

The national crime agency

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15
Q

How long does a business have to keep all money laundering prevention info for

A

5 years

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16
Q

What is the consequence of failing to comply with money laundering regulations

A

2 year and / or an unlimited fine

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17
Q

What are the different money laundering offences

A
  • participating and assisting
  • failure to report
  • tipping off
  • making false or misleading statements to money laundering
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18
Q

What is the charge for participating / assisting

A

14 years
Unlimited fine

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19
Q

Charge for failure to report

A

5 years
Unlimited fine

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20
Q

Charge for tipping off

A

2 years
unlimited fine

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21
Q

Making false or misleading statements

A

2 years

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22
Q

When are firms required to carry out identification procedures on new customers?

A

Where a new business relationship is to be established
Where the value of the transactions exceed $7,500

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23
Q

What does the Uk bribery act 2010 say about location of bribery

A

So long as the person accused of breaking the law is a UK citizen or they work for a UK company then the offense is treated as if it happens in the UK

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24
Q

What are the 4 offences under the UK bribery act 2010

A

Paying or offering bribes
Receiving or soliciting bribes
Failure to prevent bribery
Bribery of foreign officials

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25
What is a defense for bribery
Showing that there were adequate procedures in place
26
Is business hospitality a bribe
No
27
What are facilitation payments
Small cash payments made to local or public officials to get them to do their jobs
28
Are facilitation payments bribes
Yes
29
What is max punishments for a bribe
Individual -10 years jail Company - unlimited fine
30
What act defines insider dealing as an offence
Criminal justice act 1993
31
When can insider dealing be defined as a criminal offence
If you can prove intent beyond all reasonable doubt
32
What is the charge of insider dealing
7 years in prison / unlimited fine
33
What consequences for misleading statements
Same as insider dealing 7 years in prison and unlimited fine
34
How do you prove misleading statements
Beyond reasonable doubt
35
What type of offence is market abuse
A civil offence
36
How do you prove market abuse
It’s an effect based offence and the burden of proof is the balance of probability
37
What is the charge for market abuse
Unlimited fine No jail time
38
Who can be accused for insider dealing
Only individuals not firms
39
What are the 3 offenses of insider dealing
Dealing on insider info Encouraging others to deal Disclosure of insider info
40
When is disclosing of insider info an offence
Only when the person disclosing the info believes that the recipient is likely to deal on the strength of that info
41
What info qualifies as insider info
Unpublished, price sensitive info
42
Who is a primary insider
Someone who has acquired their info due to their connection with the company
43
Who is a secondary insider
Someone who has come across the info
44
What range of instruments does insider dealing cover
Shares Warrants Gilts bonds and debentures Option futures and CFD all when traded on an exchange or via professional intermediaries
45
What transactions are covered by insider dealing
Only transactions on an exchange or via a professional intermediary
46
Examples of excluded assets from insider dealing
Assets with no secondary market Commodities Foreign exchange markets Insurance products
47
What are the general defenses for insider dealing
Info was passed on in proper course of employment Did not expect recipient of info to deal on the insider Info Deal was not to make a profit or to avoid a loss Info was publicly available
48
What are the special defenses for insider dealing
Stabilization Market info Market makers
49
What is stabilization
Done to maintain the office of new issues
50
Who enforces the insider dealing law
The FCA and exchanges monitors The FCA prosecutes
51
What makes misleading statements a criminal offence
S89 makes misleading impressions a criminal offecnr
52
What is an abusive squeeze
Where a market trader unfairly and secretly corners a market in a financial instrument
53
Market rigging
Where market participants agree to trade together in a pattern
54
What does s91 relate to
Misleading statements in relation to benchmarks
55
What are the defenses for misleading statements
- reasonably believed that the statement was not false - acting in conformity with price stabilizing rules or control of info rules
56
Who had responsibility for prosecution for misleading statements
FCA
57
Penalty for misleading statement
£5000 fine and 6 months jail if magistrates court Unlimited one and 10years jail if crown court
58
what type of offence is market abuse
it is a civil offence
59
what offences does market abuse cover
- insider dealing - market manipulation
60
on what financial instruments does Market abuse apply to
all financial instruments traded on a prescribed market
61
what is a prescribed market
- an EU regulated market - MTF - Organised trading facility - OTC
62
what does the code of market conduct mean
requires local regions to create guidance on what constitutes market abuse.
63
what is the FCA guidance on what constitutes market abuse
insider dealing improper disclosure manipulating devices dissemination
64
what is improper disclosure
when an insider discloses info to another person other than someone in the proper course of business
65
what is an example of manipulating transactions
a wash trade - repeatedly buying and selling the same instrument over and over again at the same price to push up reported volume of trading
66
what can the regulator sanction against the code of market conduct
withdrawal of regulated status financial penalty public statement applying to courts for injunctions
67
under money laundering scheme how long are firms required to keep records for
5 years
68
who does the MLRO need to report things to
the NCA
69
on what venues does insider dealing apply to
regulated markets or via a professional intermediary
70
market abuse is an offence under
EU legislation
71
does a breach of the JMLSG guidance notes constitute a breach of FCA rules
no it provides guidance not law
72
which legislation contains details that a firm would face if breaking money laundering rules
the FSMA 2000
73
what function is an MLRO defined to have
Senior Manager function
74
at what stages of the money laundering process are fund managers most vunerable
layering and integration
75
where does the FCA get the power to prosecute
FSMA 2000
76
who commits insider dealing
offences committed by individuals
77
who is insider dealing defined by
Criminal Justice Act 1993
78
what is the jail time for insider dealing and misleading statements / impressions
10 years / unlimited fine
79
what do you need to prove in a civil matter
lighter burden of proof effect based
80
what financial instruments does market abuse regulation relate to
- financial instruments traded on an EU regulated market or an MTF or OTC - for market manipulation this also applies to commodity derivatives and commodity spot markets
81
what are the sanctions for market abuse
withdrawal of regulated status financial penalty public statement applying to court for injunctions
82
what stage of the money laundering process requires the most due diligence
the placement stage
83
what is the sanction for participating in money laundering
14 years unlimited fine
84
what is charge for failing to report money laundering
5 years unlimited fine
85
what is charge for tipping off (money laundering)
2 years unlimited fine
86
what is charge for making false / misleading statements in relation to money laundering
2 years this applies to directors and senior managers
87
who is the JMLSG
the joint money laundering steering group they are a combo of UK trade associations including the BBA
88
what is the scope of the UK bribery act 2010
worldwide
89
what is the max punishments for individuals and firms for bribery
individual - 10 years (bribery has 10 letters) firm - unlimited fine
90
what act contains the details surrounding money laundering
the proceeds of crime act 2002
91
the JMLSG notes are approved by who
the treasury
92
is a decision not to deal based on insider information an offence
no

IMC Unit 1 (11 decks)

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