Chapter 8: Financial Crime

Question 1

What is the legislation for insider dealing

Answer 1

Criminal justice act 1993 S52

Question 2

What is the legislation for market abuse

Answer 2

UK mar and FCA sourcebook

Question 3

What is the legislation for misleading statements and impressions

Answer 3

FSA 2012 S89-S91

Question 4

What is insider dealing activities on

Answer 4

Dealing on
Encouraging others to deal
Disclosure of

Question 5

What instruments are covered for insider dealing

Answer 5

Shares 
ADRs
Warrants
Debts
Options 
Futures
CFDs

Question 6

What are the excluded investments for insider dealing

Answer 6

Assets with no secondary market e.g bank account, unit trusts
Commodities
Commodity derivatives
Spot and forward FX
Insurance products

Question 7

What are the general defences for insider dealing

Answer 7

No advantage was expected
Believed info was widely disclosed
Would’ve dealt anyway
Didn’t expect recipient to deal

Question 8

What are the special defences for insider dealing

Answer 8

Stabilisations
Market information
Market makers in the ordinary course of business

Question 9

What are the defences for misleading statements and impressions

Answer 9

Belief it wasn’t false or misleading
Conformity with price stabilisation rules
Conformity with control of info rules (Chinese walls)
Share buy-back rules

Question 10

What is the wider scope of MAR

Answer 10

Applies to FIs- MTF, OTF, OTC if it affects price of value of previous 
Emission allowance 
For market manipulation:
-commodity derivatives 
-commodity spot markets

Question 11

What are the FCA sanctions for market abuse

Answer 11

Withdrawal
Financial penalties
Public statements
Prosecution

Question 12

What are the statutory exceptions for market abuse

Answer 12

Share buy back
Stabilisation
FCA rules
Takeover code
Market sounding
Accepted market practises (none for the UK)

Question 13

What is the PDMR trading limit

Answer 13

De minimus value of €5000 per calendar year, calculated without netting of transactions

Question 14

What is the legislation for ML

Answer 14

The proceeds of crime act 2002

Question 15

What are the penalties for ML

Answer 15

Concealing, arranging, acquiring/ possessing (14 years/UL fine)
Knowing or prejudicing investigation (5y/ UL fine)
Failure to disclose (5y/ unlimited fine)
Tipping off (2 years/ UL fine)

Question 16

What are the criminal offences for directors or senior managers

Answer 16

Failure to comply with MLR - 2y or UL fine

Recklessly making a statement for ML which is false or misleading- 2 y or UL fine

Question 17

When are identification procedures not required

Answer 17

• Instructions from UK authorised firm
• Instruction from person in listed MLD (UK, EU or other)
• Certain transactions worth less than €7500

Question 18

Who do MLRO report to for MAR, insider dealing and misleading statements and impressions

Answer 18

FCA

Question 19

Who does MLRO report to for ML and TF

Answer 19

NCA

Question 20

What is the legislation for terrorist financing

Answer 20

Terrorism Act 2000

Question 21

What activities do suspicions have to be reported for terrorist financing?

Answer 21

Provision of funds
Use and possession of funds
Laundering money for terrorist activities

Question 22

What is the penalties for failing to report for terrorist financing

Answer 22

5 years or unlimited fine

Question 23

What is the Counter Terrorism Act 2008

Answer 23

Gives extra powers to HMT to impose directions on firms suspected of handling funds used for terrorist activities

Question 24

What are the powers of the Counter Terrorism Act 2008 (CTA 08)

Answer 24

CDD and monitoring
Increasing identification requirement
HMT can require info without application to courts
Limit of cease business where FATF requires or HMT believes there is significant threat to National interests

Question 25

What is the legislation for Bribery

Answer 25

Bribery act 2010

Question 26

What are the offences for bribery

Answer 26

Receiving, paying, bribery of foreign officials, failure to prevent bribery

Question 27

What are the defences for bribery

Answer 27

Foreign officials- local written law required the payment to be made Failure to prevent bribery- adequate procedures in place for bribery are shown

Question 28

What are the penalties for bribery

Answer 28

Individual- 10 years or unlimited fine | Company- unlimited fine

Question 29

What are the principles for the DPA 2018

Answer 29

``` Lawful and fair Specified explicit and legitimate Adequate relevant and not excessive Accurate and up to date No longer than necessary Secure manner of processing ```

Question 30

What should you do if DPA 2018 is breached

Answer 30

Contact the ICO without delay | If not done within 72 hours, the data controller must explain why

Question 31

What are the penalties for breaches of the DPA 2018

Answer 31

4% of the annual turnover £17.4m Or whichever is greater

Question 32

What must a data controller provide their subjects with

Answer 32

``` Purpose of data processing Identity and contact details of controller and data protection officer Existence of rights Legal basis for processing Retention period ```

Question 33

When should a Public Interest Disclosure (PIDA) 1997 be made

Answer 33

``` Criminal offence Breach of legal requirements Miscarriage of justice Endangering health and safety Damage to environment Deliberate concealment of any of the above ```

Question 34

What legislation is whistleblowing under

Answer 34

PIDA 1998

Question 35

What is the whistle blower champion

Answer 35

- Level of independence and authority - Resources and info sufficient to do job - Doesn’t need to be main job can be anywhere as long as can do function effectively