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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Where the money is now withdrawn and used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
Q

What is a defense for bribery

A

Showing that there were adequate procedures in place

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26
Q

Is business hospitality a bribe

A

No

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27
Q

What are facilitation payments

A

Small cash payments made to local or public officials to get them to do their jobs

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28
Q

Are facilitation payments bribes

A

Yes

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29
Q

What is max punishments for a bribe

A

Individual -10 years jail
Company - unlimited fine

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30
Q

What act defines insider dealing as an offence

A

Criminal justice act 1993

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31
Q

When can insider dealing be defined as a criminal offence

A

If you can prove intent beyond all reasonable doubt

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32
Q

What is the charge of insider dealing

A

7 years in prison / unlimited fine

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33
Q

What consequences for misleading statements

A

Same as insider dealing
7 years in prison and unlimited fine

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34
Q

How do you prove misleading statements

A

Beyond reasonable doubt

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35
Q

What type of offence is market abuse

A

A civil offence

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36
Q

How do you prove market abuse

A

It’s an effect based offence and the burden of proof is the balance of probability

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37
Q

What is the charge for market abuse

A

Unlimited fine
No jail time

38
Q

Who can be accused for insider dealing

A

Only individuals not firms

39
Q

What are the 3 offenses of insider dealing

A

Dealing on insider info
Encouraging others to deal
Disclosure of insider info

40
Q

When is disclosing of insider info an offence

A

Only when the person disclosing the info believes that the recipient is likely to deal on the strength of that info

41
Q

What info qualifies as insider info

A

Unpublished, price sensitive info

42
Q

Who is a primary insider

A

Someone who has acquired their info due to their connection with the company

43
Q

Who is a secondary insider

A

Someone who has come across the info

44
Q

What range of instruments does insider dealing cover

A

Shares
Warrants
Gilts bonds and debentures
Option futures and CFD

all when traded on an exchange or via professional intermediaries

45
Q

What transactions are covered by insider dealing

A

Only transactions on an exchange or via a professional intermediary

46
Q

Examples of excluded assets from insider dealing

A

Assets with no secondary market
Commodities
Foreign exchange markets
Insurance products

47
Q

What are the general defenses for insider dealing

A

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
Q

What are the special defenses for insider dealing

A

Stabilization
Market info
Market makers

49
Q

What is stabilization

A

Done to maintain the office of new issues

50
Q

Who enforces the insider dealing law

A

The FCA and exchanges monitors
The FCA prosecutes

51
Q

What makes misleading statements a criminal offence

A

S89 makes misleading impressions a criminal offecnr

52
Q

What is an abusive squeeze

A

Where a market trader unfairly and secretly corners a market in a financial instrument

53
Q

Market rigging

A

Where market participants agree to trade together in a pattern

54
Q

What does s91 relate to

A

Misleading statements in relation to benchmarks

55
Q

What are the defenses for misleading statements

A
  • reasonably believed that the statement was not false
  • acting in conformity with price stabilizing rules or control of info rules
56
Q

Who had responsibility for prosecution for misleading statements

A

FCA

57
Q

Penalty for misleading statement

A

£5000 fine and 6 months jail if magistrates court
Unlimited one and 10years jail if crown court

58
Q

what type of offence is market abuse

A

it is a civil offence

59
Q

what offences does market abuse cover

A
  • insider dealing
  • market manipulation
60
Q

on what financial instruments does Market abuse apply to

A

all financial instruments traded on a prescribed market

61
Q

what is a prescribed market

A
  • an EU regulated market
  • MTF
  • Organised trading facility
  • OTC
62
Q

what does the code of market conduct mean

A

requires local regions to create guidance on what constitutes market abuse.

63
Q

what is the FCA guidance on what constitutes market abuse

A

insider dealing
improper disclosure
manipulating devices
dissemination

64
Q

what is improper disclosure

A

when an insider discloses info to another person other than someone in the proper course of business

65
Q

what is an example of manipulating transactions

A

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
Q

what can the regulator sanction against the code of market conduct

A

withdrawal of regulated status
financial penalty
public statement
applying to courts for injunctions

67
Q

under money laundering scheme how long are firms required to keep records for

A

5 years

68
Q

who does the MLRO need to report things to

A

the NCA

69
Q

on what venues does insider dealing apply to

A

regulated markets
or via a professional intermediary

70
Q

market abuse is an offence under

A

EU legislation

71
Q

does a breach of the JMLSG guidance notes constitute a breach of FCA rules

A

no
it provides guidance not law

72
Q

which legislation contains details that a firm would face if breaking money laundering rules

A

the FSMA 2000

73
Q

what function is an MLRO defined to have

A

Senior Manager function

74
Q

at what stages of the money laundering process are fund managers most vunerable

A

layering and integration

75
Q

where does the FCA get the power to prosecute

A

FSMA 2000

76
Q

who commits insider dealing

A

offences committed by individuals

77
Q

who is insider dealing defined by

A

Criminal Justice Act 1993

78
Q

what is the jail time for insider dealing and misleading statements / impressions

A

10 years / unlimited fine

79
Q

what do you need to prove in a civil matter

A

lighter burden of proof
effect based

80
Q

what financial instruments does market abuse regulation relate to

A
  • 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
Q

what are the sanctions for market abuse

A

withdrawal of regulated status
financial penalty
public statement
applying to court for injunctions

82
Q

what stage of the money laundering process requires the most due diligence

A

the placement stage

83
Q

what is the sanction for participating in money laundering

A

14 years
unlimited fine

84
Q

what is charge for failing to report money laundering

A

5 years
unlimited fine

85
Q

what is charge for tipping off (money laundering)

A

2 years
unlimited fine

86
Q

what is charge for making false / misleading statements in relation to money laundering

A

2 years
this applies to directors and senior managers

87
Q

who is the JMLSG

A

the joint money laundering steering group
they are a combo of UK trade associations including the BBA

88
Q

what is the scope of the UK bribery act 2010

A

worldwide

89
Q

what is the max punishments for individuals and firms for bribery

A

individual - 10 years (bribery has 10 letters)
firm - unlimited fine

90
Q

what act contains the details surrounding money laundering

A

the proceeds of crime act 2002

91
Q

the JMLSG notes are approved by who

A

the treasury

92
Q

is a decision not to deal based on insider information an offence

A

no

IMC Unit 1 (11 decks)

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