Chapter 6 (9 exam questions) Principles And Rules As Set Out In The Regulatory Framework Flashcards
(126 cards)
1
Q
What is general prohibition
Being in breach of general prohibition is a criminal offense. What charges can it carry?
A
2
Q
A
Firms who were regulated under the Financial Services Act 1986, were ‘grandfathered’ over automatically to be regulated by the FSA when the FSMA 2000 came into force
Exceptions:
Activities that at the time were not classed as regulated activities such as mortgage and general insurance advice were not grandfathered across. Instead, they became regulated in MCOB and ICOBS respectively
Firms previously authorised through membership of Recognised Professional Bodies (RPBs). Most of these were accountants and solicitors who had little regulatory involvement and did not want to be regulated under the perceived constraints of the FSA.
3
Q
Authorisation is not required if regulated activities are ‘incidental’ to an individual or firm’s professional services
Explain this
A
An example is where an accountant may give factual information on the taxation of an investment bond. The advice is ‘incidental’ to his usual accountancy advice. They can only give factual information
These are known as Exempt Professional Firms
4
Q
What are Exempt Professional Firms
What are Authorised Professional Firms
A
Both are members of Designated Professional Body (DPB).
Exempt Professional Firms are those which do not require authorisation because the regulated activity they carry out is ‘incidental’ to an individual or firm’s professional services. For example, where an accountant gives factual information on the taxation of an investment bond. The advice is ‘incidental’ to his usual accountancy advice
Authorised Professional Firms are those that do require direct authorisation by a regulator (part4 permission) on a regulated activity they carry out. This is because the activity is ‘by way of business’ meaning it takes a lot of their time and resources they do it to generate income or profits. For example, a firm who gives pension advise.
5
Q
A
6
Q
Why do many individual’s and firms choose to work under an authorised person and appointed representative framework.
You are an agent for a firm (principle) who is responsible for their actions
A
Because direct authorisation is expensive
An example of this model is St James’s Place Wealth Management
7
Q
Tell me the different bodies, companies and individuals to whom exempt status applies. Ie, those who do not need to gain part 4a permission
A
8
Q
Question
A
9
Q
When requesting authorisation from the FCA, the FCA may send you a Scope of Permission. What is this?
A
Means you application has been successful
It is the formal Part 4a permission.
It states the start date and the permissions granted.
10
Q
Do those acting as an approved person (outside the scope of the SM&CR regime) need to apply for authorisation?
A
Yes, they would need individual authorisation
11
Q
The principal firm (authorised person) takes full responsibility for all their appointed representatives actions or inactions related to regulated business.
An AR cannot be an authorised person as well. There is no dual authorisation. True or false
A
True
12
Q
Can an appointed representative have multiple principles?
A
Yes an AR may work within the parameters of several principal firms.
A mortgage AR for example may have one principle for residential mortgages and another for lifetime mortgages.
It does require a ‘multiple principal agreement’ to be in place, where one principal must be identified as the lead principal, who is responsible for handling all complaints received about the AR, regardless of which type of advice the complaint relates to
13
Q
If, for example, an already-authorised sole-trader or partnership changes to a limited company, does the new entity need to apply for authorisation?
A
yes
This is because the FSMA 2000 does not permit the transfer of authorisation from one party to another
14
Q
What is the difference between an authorised person and an approved person
A
Authorised person - Usually the business that carries on regulated activities.
approved person - the individual who had been approved to carry out one or more controlled functions within the authorised person. They are known as the appointed representatives
15
Q
What are controlled functions:
A
Controlled functions apply to non SM&CR regime. It is those:
whose roles have significant influence on the conduct of an authorised person’s affairs. (a firms compliance officer)
dealing with customers in connection with regulated activities (mortgage advisors)
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Q
A
17
Q
For understanding
A
18
Q
Give me different examples of approved persons ie controlled functions (do not be confused with the term authorised person)
A
Remember, controlled functions apply to non SM&CR firms whos role carries great significance for the firm
Any individual classed as an approved person is bound by APER
19
Q
Tell me the timeline of the introduction of the SM&CR regime
What was the introducing this regime?
A
Its aim was to make individuals and companies more accountable for conduct and competence and, as a result, reduce possible harm to consumers and strengthen market integrity.
20
Q
Under SM&CR, firms are divided into three categories: What are they and what do each entail?
A
21
Q
How did SM&CR change from the Approved Persons Regime
A
Under the SM&CR, controlled functions were changed to ‘senior management functions’.
22
Q
What are certified functions (cf)
What are senior manager functions (smf)
Who authorises them? What do they need to be classed as in order to be approved for the role.
A
Both are under the remit of the SM&CR
Certified functions =
Employees that are not SMs but whose role has a significant impact on consumers, the firm and/or market integrity. They are also known as ‘significant harm functions’. The firm itself approves them as ‘fit and proper’, not the FCA (like it does for SMFs). They are allocated to a SMF. CFs are roles like mortgage advisers.
Senior manager functions =
Those who have senior roles within the organisation. They are equivalent to controlled functions as seen in the approved persons regime. They require FCA pre-approval. For example, CEO or COO
To be approved they have to be deemed fit and proper. For CF the authorisation is granted by the firm. For SMF it is authorisation is granted by the FCA
22
Q
What is the Directory?
A
A central directory published by the regulator which includes details of all directors and senior managers, all ‘fit and proper’ individuals and individuals that conduct business with clients and require a qualification to do so.
A bit like the registers that Authorisation division used to keep of all approved persons, and those that had this status removed.
22
Q
Under SM&CR you have ‘senior management functions’. What is this?
A
These are the equivalent to ‘controlled functions’ which was under the approved person regime
It is those who hold great influence of a firm and therefore can present significant risk
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Under the SM&CR there are 3 pillars:
-The senior manager regime
-The certification regime
-Conduct rules
Tell me specifically about conduct rules
What happens if these rules are breached?
These outline conduct rules that must be adhered to by all those subject to SM&CR
They are enforceable, high level rules, and must be applied across the whole of the authorised person (ancillary staff, such as cleaners and cooks, are exempt).
There are 2 tiers:
Tier 1: Applies to most employees (except ancillary staff)
Tier 2: Applies to senior managers specifically
Breaches of these conduct rules must be reported to the FCA (If it involves a senior manager it must be reported within 7 DAYS of concluding any disciplinary action. If the breach involves any other category beside senior managers, it must be reported ANNUALLY
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Summary
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After successfully being granted Part 4a permission, with all controlled functions and senior roles approved, the individual, firm, or market must then ensure they meet certain key responsibilities.
There are obviously many responsibilities that an authorised person must meet. Two big ones though are 'fighting financial crime' and 'protection of data'
Tell me about
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What is money laundering. What are the stages of money laundering?
The process by which criminal proceeds are 'washed' to disguise their illicit origins and made to appear legitimate
The stages:
Placement - Adding the illicit funds into the financial system. ie, depositing into a bank account
Layering - Moving the illicit funds around in a complex way in order to hide its origin. ie, mixing with legit money or taking out an investment to surrender it early
Integration - Money is placed back into the system where it now appears legitimate. It has been 'washed' . ie, purchasing a house or car
34
What did the Proceeds of Crime Act 2002 introduce in relation to Money Laundering?
Made 'failing to disclose' an offence
Made 'tipping off' an offence
Made multiple other offences in relation to ML. For example, concealing criminal property, acquiring etc. (WONT READ IT ALL)
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What did the Fourth Money Laundering Directive (4MLD) do?
What did the fifth Money Laundering Directive (5MLD) do?
4MLD = Introduced a risk-based approach to ML, by removing automatic exemptions from due diligence and gave guidance on Anti Money Laundering.
5MLD = Increased transparency around beneficial ownership information and the source of funds
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How did the 4MLD directly affect the UK. In other words, what role did firms have to have now?
Firms must have a Money Laundering Reporting Officer (MLRO) who reports into the National Crime Agency (NCA) where necessary
NOTE: National Crime Agency (NCA) role is to bring to justice serious / organised criminals who present the highest risk to the UK
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The 4th Money Laundering Directive Introduced a risk-based approach to ML
What does this mean specifically or in practise?
This means that every client case must be assessed and the extent of AML checks required established. For example, a bank asking someone if they are a Politically Exposed Person
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The Money Laundering Regulations which came as a result of the 4th Money Laundering Directive, introduced a risk based approach to ML in the UK
It also widened the types of businesses that are subject to these rules. What were the business types that now had to adhere to this regualtion?
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The Money Laundering Regulations which came as a result of the 4th Money Laundering Directive, introduced a risk based approach to ML in the UK
It also widened the types of businesses that are subject to these rules.
Then the Money Laundering and Terrorist Financing Regulations 2019 came about due to the escalation of terrorist groups and the atrocities they carry out (which need funding) so AML rules required a further update.
These new rules came into force on the 10th January 2020, and further expanded the scope of persons and firms subject to AML rules.
Because of the above 2 regulations what firms and persons are now subject to AML rules?
The Money Laundering Regulations =
Anyone with a casino licence
Anyone within a professional role (ie, audit)
Any finance providers, including dealers in goods who receive more than £10000 in cash
Money Laundering and Terrorist Financing Regulations 2019 =
Letting agents
Those who trade in or act as an
intermediary when purchasing works of art
Crypto asset exchange providers
40
When is enhanced due diligence or 'extra' due diligence required to be carried out on customers
When is simplified due diligence required?
There are several obvious ones...
Not so obvious ones...
An ‘occasional transaction’ worth €10,000 or more is carried out.
they accept or make high value cash payments of €10,000 or more (or equivalent in any currency) in exchange for goods.
Simplified due diligence (SDD) is an option if the transaction / business relationship is assessed as ‘low risk
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Certain high-risk individuals, such as politicians, will require enhanced validation as they are deemed to be ‘Politically Exposed Persons’ (PEPs).
What does this enhanced validation look like in practise?
This enhanced validation includes the requirement for additional signed verification documentation from a professional organisation, such as a bank or a solicitor.
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Can physically entering someone’s home be used as address verification for CDD
Yes
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After CDD has been carried out, how long must records be kept?
For at least 5 years after the end of the customer relationship
Or 5 years after the transaction has taken place.
Records of the transactions themselves must also be kept for a minimum of 5 years
Such records can be paper-based (original or photocopies) or electronic.
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An annual report from the MLRO is mandatory. true or false
True
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SUMMARY OF AML
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Firms must have a Data Protection Compliance Officer. What is this role also known as?
A controller.
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What was the purpose of the General Data Protection Regulation (GDPR)?
It is an EU legislation
It was created because of concerns that the application of data protection across the EU was inconsistent. It was introduced to align the processes and improve consistency ie harmonise data protection legislation
This act brought much harsher penalties for anyone that breaches its terms.
49
In relation to consent of sharing your personal data with did GDPR change?
GDPR made it no longer acceptable for an individual to have to ‘opt out’ of receiving emails/test (that was so annoying!)
Now consent:
must be freely given, specific and informed.
cannot be inferred, there MUST be a positive opt in.
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How can individuals access their personal data?
Any individual can access their personal data through a Subject Access Request (SAR)
They also have these other rights as stated in GDPR
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GDPR applies to both controllers and processers. What is the difference between the two terms?
A controller decides how and why data is processed. The ultimate responsibility of the data is with them. Ie they cannot pass on responsibility to any processor.
A processor acts on behalf of the controller. They keep records of data and their processing activities.
52
What is the Data Protection Act 2018
This came into force in 2018 and aimed to modernise data protection law in addition to GDPR requirements.
UK national security is outside the scope of GDPR, so this Act introduced rules concerning areas such as immigration and crime prevention.
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This UK legislation came into force in 2018 and aimed to modernise data protection law in addition to GDPR requirements.
UK national security is outside the scope of GDPR, so this Act introduced rules concerning areas such as immigration and crime prevention.
What legislation is the above referring to?
What did it introduce?
Data Protection Act 2018
Key bits it introduced:
Age 13 for when parental consent is not required to process personal data
Criminal proceedings can be bought against processors and controllers
54
Data is broken down into two groups –
- Personal data
- Sensitive personal data (also known as special category data).
What are the differences?
Personal data is, in short, any information which can be used to identify an individual. From the launch of GDPR, the definition is more detailed to reflect changes in technology.
Sensitive personal data is information in relation to, for example, an individual’s race, health and sexuality.
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56
Question
The general principle is that, unless you provide permission, there is very little that firms can do with data they hold about you, and they should only store data for as long as they need to.
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Under UK GDPR firms must identify a lawful basis (this is complying with a legal obligation) before they can both process and document an individual’s personal data. These six bases include: WHAT
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Individuals can ask to see data held about them. How do they do this and how quickly must controllers/processors respond to this request?
Can processers and controllers charge for the request?
This is called a subject access request (SAR).
It must be complied with without undue delay. Firms have a maximum of 1 month to complete the request
You are entitled to a copy of all data held, but sometimes not for free! Data protection processors and controllers may charge to provide it. This must be a reasonable fee for any administration costs associated with the request ( NOTE: The ICO expects there to be no fees charged in the MAJORITY of cases)
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Summary of DATA Protection
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An authorised person is responsible for ensuring everyone working within it is, and continues to be, deemed competent.
Firms need to meet competence requirements in three principal areas: assessing competence, maintaining competence and record keeping.
This is required by the training and competence rules
If the individual is self employed under the authorised person how does this differ?
It makes no difference if individuals are employed, self-employed, or on a contract. Their ‘competence’ is still the responsibility of their authorised person.
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After recruiting a new employee who will be facing retail clients, the authorised person must train their employee on what topics?
Training must cover off:
Market
Legislative
Regulatory and
Product changes and updates.
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Details of training records must be retained by the authorised person for how long?
NON-MidFID firms: 3 years after employee leaves
MidFID firms: 5 years after employee leaves
Pension Transfer Specialists: Indefinitely
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Question
65
How much CPD do employees who advise clients need to carry out?
How much CPD do pension transfer specialists need to carry out?
Employees who advise clients =
35 hours of continuous professional development, of which at least 21 hours must be structured continuous professional development
Pension Transfer Specialists:
15 hours of pension transfer specific CPD annually, 9 hours of which must be structed, 5 hours of which with an external body.
66
Without holding an appropriate qualification, a financial adviser is not permitted to see retail clients, even if accompanied by a supervisor. True or false
A supervisor must always hold a qualification ‘at least an equivalent to’ the adviser under supervision. True or false
Both are true
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A manager who supervises their advisor has no qualifications but there advisor is adequately qualified. Is this okay
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Can a trainee financial advisor see a retail client unsupervised?
No
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Firms must report certain changes in an individual’s competence status directly to the FCA.
What must firms report specifically?
They must report any adviser who:
Was previously assessed as competent, but is no longer considered competent.
Has failed to attain an appropriate qualification within the time limit permitted (often 48 months maximum).
Has failed to comply with a Statement of Principle in carrying out their duty.
Has advised the public without appropriate supervision.
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Question
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Question
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Summary or T&C rules
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Record Keeping Requirements
Promotions = advert= 6 letter = 6 years
Non mifid = non = 3 letters = 3 years
Mifid = 5 letters = 5 years
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What are pension transfers?
Pension transfers are where individuals transfer their pension benefits from one pension scheme to another.
Usually this is from an employer-sponsored scheme into a personal plan, such as a stakeholder pension.
All records relating to this are kept kept indefinitely due to high risk
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What are pension opt-outs?
Where an individual is eligible to join an employer-sponsored scheme, but chooses not to.
High risk because any personal scheme they set up instead is unlikely to receive employer contributions and all charges must be met by the individual
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What are Additional Voluntary Contributions (AVCs)
Additional Voluntary Contributions (AVCs) are offered by employers.
The employer meets any charges and matches the higher employee contributions, up to a set level. (LIKE TSB when i raised my pension contribution)
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What are Free Standing Additional Voluntary Contributions (FSAVCs)
The individual makes the contributions
The scheme is held with an insurance company as a private pension arrangement.
They receive no extra employer contributions and the individual meets all costs (AVC’s are the opposite of this)
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What do Additional Voluntary Contributions (AVCs), Pension opt-outs, pension transfers, and Free Standing Additional Voluntary Contributions (FSAVCs) all have in common
All are related to pension
NOTE. It will come up in the exam asking how long records need to be kept. Remember it is indefinitely
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WAYS TO REMEMBER SOME OF THE RECORD KEEPING REQUIREMENTS:
Non-MiFID
‘non’ has 3 letters = 3 years’ minimum requirement.
MiFID
has 5 letters = 5 years’ minimum requirement.
Financial promotions are adverts
‘adverts’ has 6 letters = 6 years’ minimum requirement.
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QUESTION
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QUESTION
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What is RegData?
An electronic reporting system used by the FCA so firms can report certain required information
For example, any breaches of conduct rules or details of shareholdings and control of the firm: ie staff turnover, structure.
83
Complaints are reported twice a year to the FCA.
What requirements must the report meet and why?
The way the report is set up is with each complaint being in different categories. These are
Complaints resolved within:
4 weeks
8 weeks
more than 8 weeks
The total numbers closed and upheld
Firms have 30 days after the end of the reporting period to submit these results
The reason for this is so the FCA can be proactive in its supervision as complaints are a good sign of any issues or developing issues
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The FCA expect to be notified of any significant developments in an authorised person’s working patterns or standing.
These reports fall under to types
What are they? Give examples of the kind of thing that would be reported under each
'Immediate'
- Any matter that could have a significant regulatory impact.
- Serious crime or fraud.
- Major breach of authorisation.
- A firm’s insolvency.
- Incorrect information has been provided to the regulator
'Reasonable Advance Notice'
- Changes to core information such as a registered office address.
- A business name change.
- Changes to business telephone number
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Record Keeping Summary
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Any complaint should initially be made to the service or product provider, to give them the opportunity to put things right.
If an intermediary is involved, the complaint should go through them.
What about in cases where there is appointed representative involved?
What about an IFA?
the complaint should go to the authorised person if an AR is
involved
If the complaint involves an IFA it must go to them first
87
The FCA requires every authorised person to have, and publish, an appropriate and written complaints-handling process, but not everyone is able to complain!
Who is able to complain. In otherwords, Who is classed as an 'eligible complainant'?
A consumer
A micro-enterprise (fewer than ten employees, and a turnover/balance sheet total of no more than €2 million)
A charity with an annual income of less than £6.5 million
A trustee of a trust with a net asset value of less than £5 million
A consumer buy-to-let consumer (accidental landlords)
A small business (fewer than 50 employees, and an annual turnover of less than £6.5 million or a balance sheet total of less than £5 million)
A guarantor
So, only individuals or entities falling into one of the above categories is eligible to complain, firstly through an authorised person’s complaints process, and from there on to the FOS.
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What are the complaint handling timescales?
A written acknowledgement should be sent promptly on receipt of the complaint
A progress reports should be provided within 4 weeks and a written response should be provided within 8 weeks, ideally earlier than this however (This is to ensure the complainant is kept informed throughout the investigation process)
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Where the firm receiving the complaint has reasonable grounds to suspect that another firm may be solely responsible what must they do?
They must refer the complaint on, in writing, within 5 business days of the complaint, informing the complainant what they have done.
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After issuing a final response letter, what must the firm tell the complainant?
The complainant can either accept the final response letter but if still not happy, they can refer it to FOS
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The complainant must be advised of their right to complain to the FOS within six months
True or false
True
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Records of all complaints must be kept for a minimum period
What are the timeframes?
5 years for MiFID firms and 3 years for non- MiFID.
Any complaint records relating to pension transfers must be kept indefinitely
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What are Rapid resolution complaints?
Complaints resolved in 3 days
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QUESTION
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QUESTION
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Question
99
What is the Pension Protection Fund (PPF)?
What is The Fraud Compensation Fund?
The Pension Protection Fund (PPF):
A compensation scheme for members of defined benefit pension schemes, whose sponsoring employer has experienced a ‘qualifying insolvency event’.
The Fraud Compensation Fund:
Compensates pension schemes where dishonesty results in losses.
Both are pension, complaints related
100
What are the relevant timescales for referring a complaint to FOS?
Complaints must be referred to FOS within the earliest of:
6 months after the authorised person’s final response.
6 years after the complaint event.
3 years after the complainant knew, or should have known, they had cause to complain.
NOTE: if the complaint is in relation to any high-risk areas, such as pension transfers, opt outs or FSAVCs, there is no maximum time limit.
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1) The person doing the complaining is the
WHAT?
2) person/firm or market being complained about is the WHAT
1) Complainant.
2) Respondent.
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What can you do once you have received the decision from the FOS regarding your complaint?
Does the authorised person have to listen to the FOS decision?
103
How much does the FOS charge for complaints?
With a question...
FOS jurisdiction is compulsory for all authorised firms and is funded by levies on them, plus a case fee as explained below.
The first 25 complaints referred to FOS are ‘free’ for firms but thereafter, each case attracts a £650 fee. This acts as an incentive to have fewer complaints.
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Summary of complaints
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Question
106
Question
Not C because it must be 'within' 4 weeks. Not just necessarily 4 weeks
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What are the compensation limits under FSCS?
Protection for long-term insurance (pensions and life assurance) has two protection levels:
Product provider: 100% of the claim with no upper limit.
Intermediary: 90% of the claim with no upper limit
Long term insurance includes:
Investment bonds
Annuities
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QUESTION
111
In relation to FSCS what are temporary high balances?
What directive implemented this?
Allows temporary deposit protection for balances above £85,000.
Things like higher FSCS protection for house sale proceeds, inheritances or redundancy monies, temporarily placed on deposit.
capped temporary protection of £1,000,000 for a maximum 6 months from date deposited.
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Question
113
Generally, FSCS protection applies to UK providers.
Deposits held by UK firms in the EEA are no longer protected by the FSCS. TRUE OR FALSE
True
but may be covered by the relevant EEA state deposit guarantee scheme instead.
Some areas of the UK such as the Isle of Man and Gibraltar have their own deposit protection schemes.
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Question
115
There are 4 main protection schemes/bodies available for members of a pension scheme. What are they and how do they work
The Pensions Advisory Service (TPAS) - Offer free advise. (now part of ‘The Money and Pensions Service’ or MaPS )
The Pensions Ombudsman (TPO), this body deals with administration and management complaints regarding pensions. Can award compensation with no upper limit
The Pension Protection Fund- Provides compensation to members of defined benefit (DB) pension schemes where the scheme is underfunded, and the sponsoring employer has gone bust. It is funded by compulsory levies on DB schemes.
Fraud Compensation Fund - This provides compensation to pension schemes members who suffer a loss due to dishonesty.
116
John is an appointed representative for his authorised person; Sense Network. Who is ultimately responsible for the John’s acts or omissions?
Sense Network’s board of directors.
Sense Network.
John himself.
Sense Network’s compliance officer.
Sense Network.
An AR can be an employee, or just someone with a tie to the firm. Most banks have ARs selling their own products. An AR is appointed by the firm (authorised person or principal) who take ultimate responsibility for their actions. So, Sense Network, as the authorised person, are responsible for John’s acts or omissions.
117
Sophie and Derek both come under the Senior Managers & Certification Regime (SM&CR). Sophie is a director of a financial services firm and Derek is a company chairperson. Who will need to have clearly defined responsibilities?
Neither. They are both covered by other areas of regulation.
Derek only, as he comes under the oversight function.
Sophie only, as she comes under the executive function.
Both, as they are each deemed to be a senior manager.
Both, as they are each deemed to be a senior manager.
Both Sophie and Derek will be registered with the FCA as senior managers, so both must have a statement of responsibilities (SOR) defining their responsibilities.
118
You have joined a new firm and are setting up their anti-money laundering procedures. What are the stages of the money laundering cycle?
Procurement, layering, integration.
Placement, layering, integration.
Placement, layering, integrity.
Placement, leverage, integration.
Placement, layering, integration.
Placement is the initial transaction using the ‘dirty’ monies. Layering is using multiple subsequent transactions with the aim of hiding the original source. Integration is an attempt to put the laundered monies back into the economy, so that the criminal can access them in what appears to be a legitimate manner.
119
John has 3 long-term insurance policies, each valued at £70,000, taken out direct via his product provider. His UK provider has just been declared insolvent. How much can John expect to receive in compensation from the FSCS?
Long-term insurance is 100% protected under the FSCS, if taken our direct via a product provider. Therefore, John would receive £210,000 in compensation.
120
Which of these bodies would NOT be exempt from authorisation, under the FSMA 2000?
A local authority.
The Bank of England.
A firm of solicitors giving regular advice on inheritance tax planning.
A funeral parlour giving advice on funeral insurance plans.
An Appointed Representative who has a contract with a bank.
2 ANSWERS (it is not incidental as they are giving straight advise about the products)
A firm of solicitors giving regular advice on inheritance tax planning.
A funeral parlour giving advice on funeral insurance plans.
explained: Firms such as governments, central banks and local authorities are exempt, as are AR firms where the authorised person takes responsibility
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The SM&CR regime applies to Core, Limited Scope and Enhanced firms. Which of the following are likely to come under these rules?
An appointed representative.
A national bank.
A building society.
A countrywide network.
3 answers
A national bank.
A building society.
A countrywide network.
EXPLAINED: Appointed representatives are still likely to come under approved person rules. All the other firms should now come under SM&CR.
122
Under the Proceeds of Crime Act 2002, which of the following activities are likely to lead to prosecution?
Arranging an investment for a politically exposed person.
Telling a client that you suspect money laundering and that they should stop immediately.
Not reporting a case where you should reasonably have known that money laundering was occurring.
Helping a casino manager insure his family.
Not checking why a customer wants to cancel their investment.
2 answers
Telling a client that you suspect money laundering and that they should stop immediately.
Not reporting a case where you should reasonably have known that money laundering was occurring.
EXPLAINED: Tipping off and not reporting suspicions along with aiding and concealing money-laundering may lead to prosecution. You would take extra care with a politically exposed person
123
Which of the following would be regarded as sensitive personal data under the Data Protection Act?
Noah’s political beliefs.
Jason’s religious beliefs.
Graham’s e-mail address.
Paula’s ex-directory telephone number.
Darren’s bank details.
2 ANSWERS:
Noah’s political beliefs.
Jason’s religious beliefs.
Sensitive data is political & religious beliefs, sexual orientation, and health information, not core details.
124
A Training and Competence scheme should provide details of…
The supervisory requirements of supervisors.
The supervisory requirements of advisers.
The acceptable qualifications for conducting a regulatory role.
A list of all Part 4a authorised staff.
The complaints handling process for the firm.
4 answers:
The supervisory requirements of supervisors.
The supervisory requirements of advisers.
The acceptable qualifications for conducting a regulatory role.
A list of all Part 4a authorised staff.
Explained: A Training and Competence scheme is all about competence and supervisory requirements. It will not contain a list of authorised staff, nor the complaints process. These will be held separately.
