Client Money Flashcards
Where is it stated firms shall preserve the security of clients’ money?
Rule 8 of RICS conduct for firms
How must regulated firms hold clients’ money?
In a separate account containing only the clients’ money and titled with the firms name and the word ‘client’. Also to ensure that no interest is taken out of the account and all money is returned to the client
What information must a regulated firm provide the client in regards to client money?
Confirmation of the account, account details, that the regulated firm has control over the account, disclosure of all commission earned, how unidentified sums are dealt with, copy of the firms procedures for handling client money
What must RICS firms do in relation to the receipt of client money?
- Paid into client account promptly
- All benefits accruing from clients’ money are received by the client
- Where the owner of client money can’t be identified then pay this into a registered charity
- Ensure a receipt is received for the money paid to a registered charity in case the owner is found
What must RICS firms do when paying from a client account?
- Only use money for client matters
- Return money as soon as it’s no longer required
- All payments are made on behalf of the client
- Receive permission from the client for any standing orders or direct debits set up
What must RICS firms do in relation to accounting records and controls?
- Keep records of all dealings with clients money
- Ensure procedures are in place to ensure compliance with instructions
- Review client accounts regularly
- Ensure overdrawn balances are prevented by the firms systems
How must RICS firms ensure compliance with client money regulations?
- Compliance with all anti money laundering legislation
- Ensure compliance with the mandatory requirements of the latest edition of the RICS professional statement Countering bribery and corruption, money laundering and terrorist financing
- Ensure any breach is investigated and remediated promptly
- Record any breach in writing
What are the requirements for members when dealing with client money?
- Ensure compliance with all anti-money laundering legislation, rules and regulations for all receipts of client money
- Ensure compliance with the mandatory requirements of the latest edition of the rics professional statement countering bribery and corruption, money laundering and terrorist financing
- Follow all procedures for handling client money at the firm where they work
- Not override any controls in place to protect client money
- Make appropriate disclosures to a senior member of the firm or a regulator immediately if they become aware of any risk of or actual misappropriation of client money and to keep a written record of that disclosure.
What must an employee do before using client money?
Receive a joint signature from an authorised person in the firm
What is reconciliation and what must firms ensure they do?
- This is the process of comparing internal financial records with external sources
- A client account should be checked once every month
- If there are only 1-2 transactions a month than accounts should be checked every quarter
What must firms do with surplus client money
- All effort should be made to trace money and hand back
- The surplus money should be held in a client suspense account
- Surplus money should be held for at least 3 years before donating to charity
What are the rules regarding signatories?
- Typically every firm should have a member who will countersign any transaction where client money is taken out
- All signatories must understand the firms policy on client money and must be covered by the firms PII
What must firms’ written policy on client money include?
o How and where client money is held
o Access to funds being restricted to principals or senior employees
o Timescales for payment of cash and cheques into a client account
o Controls for authorisation of payments from a client account
o How interest and bank charges are handled
o Information about reconciliation of accounts and checking of reconciling items and
o What information will be provided to clients about monies held on their account and the frequency of any reports.
What is the client money protection scheme
A mandatory requierment for registered firms whereby protection is given for the loss of any client money
How long must a firm be part of the client money protection scheme
for as long as they are registered with the RICS
