Conduct/Ethics - Bribery / Money Laundering / Terrorist Financing Flashcards
What statute in place for Bribery?
Bribery Act 2010
What can you tell me about the Bribery Act 2010?
- Came into force July 2011
- Carries robust penalties
- Previous laws dated back to 1889
- Law delayed due to disagreement on whether “fair and proportionate” corpoorate hospitality could be deemed bribery. (agreed in favour of companies who offer on a genuine basis).
How would you define a Bribe?
- Act defines as: “giving or receiving a financial or other advantage” in connection with the “improper peformance in a position of trust”
- RICS Professional Statement defines as: “The offer, promise, giving, demanding or acceptance of an advantage as an inducement for an action that is illegal, unethical or a breach of trust”.
The Bribee can be guilt of the offence just as is with the Briber.
What are the offences under the Act? what constitutes a bribe?
- Bribing another person
- Being bribed by another person
- Bribing a foreign/public official
- Failing to prevent bribery (not having systems in place to prevent)
What does the RICS publish on Bribery?
Professional Statement: Countering bribery and corruption, money laundering and terrorist financing (2019).
- Effective 01 Sept 2019.
What is corruption?
The misuse of public office or power for private gain, or misuse of private power in relation to business practice and performance.
What are the penalties under the Act?
- Unlimited fines
- Up to 10 years imprisonment.
What procedures can companies put in place to prevent bribery on their behalf?
There are six principles of prevention companies should put in place:-
- Due Diligence
- Top Level Commitment
- Monitoring and Review
- Communication
- Proportionate Procedures
- Risk Assessments.& contactable person
- Under the Bribery Act, under what circumstance is a facilitation payment permitted?
The only circumstance in which it is OK to make a facilitation payment is when you are under duress.
* For example if there is a real and present risk or danger to “life, limb or liberty”.
* If you or your companions are under immediate physical threat.
* You should put safety first, make the payment and report the matter immediately.
* Or as soon as is practicable to your manager or your ethics compliance contact.
What Must a regulated firm to in relation to bribery and corruption?
(1.3 of Professional Statement)
- Not offer or accept, directly or indirectly anything constituting a bribe
- Have plans in place to comply with law and ensur rules are followed
- Report activity tantamount to breaching anit-bribery and corruption laws, or record if no access to local legislation/contact
- Act with due diligence and perform periodic evaluations which business could face as a risk
- Retain information how business has met with requirements of the professional statement.
What Must members do for Bribery?
(1.3 of prof statement)
- Not offer or accept, directly or indirectly anything constituting a bribe
- ensure that they have adequate knowledge of bribery and corruption to be able to
comply with the requirements of this professional statement - report any activity they are aware of that breaches applicable anti-bribery and
corruption laws to the relevant authorities (as specified in local legislation); where
there is no local legislation the activity should be recorded and, if possible, reported
to a senior manager.
What should regulated firms do in relation to bribery and corruption?
(2.1 Prof Statement)
- Written policy/risk assessment
- Appropriate governance/systems in place
- Encourage transparency
- Clear guidance to staff
- Appoint a contactable person to discuss/address matters
- Publish a code of behaviour
- due diligence on third party suppliers to ensure acting appropriately.
What should you do as a member on the matter of bribery and corruption?
- Declare where necessary to my employer
- Attend relevant training
- Familiarity and compliance with employer’s policy and processes
- If a senior manager, take leadership role in ensuring employer has appropriate regime in place.
What is money laundering?
(defined in: Professional statement on Countering bribery and corruption, money laundering and terrorist financing.)
Concealing source of proceeds from criminal activity to disguise their illegal origin.
- Can be through hiding, transferring, and/or recycling illicit money. Converting criminal proceeds into seemingly legitimate property.
What is terrorist financing?
The solicitation, collection or provision of funds intended to support terrorist acts or organisations.
(defined in: Professional statement on Countering bribery and corruption, money laundering and terrorist financing.)
What regulations are in place for AML?
The Money Laundering, Terrorist Financing and Transfer of Funds (information of payer) Regulations 2017
Who is the supervisory body for AML?
HMRC
Why firms need to register for AML?
o Estate Agents
o Letting Agents rent exc $10k euros per month
o High value dealers (auctioneers/art dealers) deal in transactions of at least $10k euros in either one or series of linked transactions
What systems have to be in place as per the The Money Laundering, Terrorist Financing and Transfer of Funds (information of payer) Regulations 2017
Reg 8 – Relevant persons to register with supervisory body and follow AML laundering regs
Reg 21 – Relevant persons appoint money laundering reporting officer (MLRO) responsible AML compliance
Reg 18 – Firms must identify and assess the risk of ML and TF in business. Risk Assessment must be provided
Reg 19 – Firms must establish and maintain policies, controls and procedures to mitigate ML/TF risks
Reg 24 – provide training on how to recognise and deal with potential ML activities
Reg 27 – Customer due diligence (CDD) to establish and verify identity of customer and nature of transaction (SDD/EDD).
What obligations do you have regarding modern slavery?
Rule 4 (4.4) - Firms must check that supply chain does not engage in modern slavery or other abuses of workforce.
- Section 52 on the modern-day slavery states you have a duty to report it.
What is an MLRO / MLCO.
- Money Laundering Reporting Office (senior manager/director)
- Money Laundering Compliance Officer (required if size and scope of business requires)
What does the RICS publish on the matter of AML?
Professional statement: countering bribery and corruption, money laundering and terrorist financing (2019)
What Must firms do regarding AML/TF
- not facilitate or be complicit in money laundering or terrorist financing activities
- have systems and training in place to comply with these laws, and ensure these are
followed - report any suspicions of money laundering or terrorist financing activities to the
relevant authorities (as specified in local legislation); where there is no local legislation
the activity should be recorded and, if possible, reported to a senior manager - evaluate and review periodically the risks that prospective and existing business
relationships present in terms of money laundering or terrorist financing offences
taking place - ensure that their responses to the risks identified are appropriate, including
conducting appropriate checks on clients and customers - use reliance only where there is an appropriate level of confidence in the quality of
the information provided by the third party – reliance should only be taken from third
parties with standards conforming to the legal requirements, that provide the obliged
market participant with a complete exchange of all legally required AML information
regarding the identified party and only by confirming the identity and verification
of identity of the client or counterparty in question; ultimate responsibility for the
assessment of risk and actions taken based on this remain with the member or
regulated firm - take appropriate measures to understand the client and the purpose of the
transaction - verify the identity of their client by undertaking basic identity checks
- record and retain information detailing how the firm has met the requirements of this
professional statement.
What Must members do regarding AML/TF (part 1 mandatory requirements)
- not facilitate or be complicit in money laundering or terrorist financing activities
- report any suspicions of money laundering or terrorist financing activities to the
relevant authorities (as specified in local legislation); where there is no local legislation
the activity should be recorded and, if possible, reported to a senior manager
What Should firms do regarding AML/TF (part 2 guidance)
- have a written policy addressing money laundering and terrorist financing risks that
covers the following issues:
– in high risk situations where enhanced due diligence is required, understanding the
source of funds in a transaction
– identifying PEPs, PSCs and any potential breaches of sanctions
– the process to be followed for customer due diligence
– the situations in which simplified due diligence, standard/ordinary due diligence, or
enhanced due diligence will be appropriate (see 3.6)
- have appropriate governance and systems controls in place, proportionate to the
type of work the firm does - provide appropriate, recurring training for staff, to ensure they are familiar with the
risks associated with money laundering and terrorist financing and the firm’s systems
to counter these risks - keep reports of suspicion of money laundering and terrorist financing activity
confidential (for guidance surrounding whistleblowing see 3.11) - identify the beneficial owner of a company/client involved within a transaction
- appoint a senior person to be responsible for ensuring anti-money laundering and
counter-terrorist financing policies are in place and complied with.
What Should members do regarding AML/TF (part 2 guidance)
- keep abreast of current training/regulation offered to them either by their employer or
by a regulator addressing money laundering or terrorist financing - comply with their employer’s policy and process relating to money laundering and
terrorist financing - keep reports of suspicion of money laundering and terrorist financing activity
confidential - if in a senior management position, take a leadership role in attempting to ensure that
their employer has an appropriate regime in place for addressing money laundering
and terrorist financing risks.
What is a Red Flag regarding AML/TF?
Common characteristics that either individually or in combination may indicate potential misuse of real estate sector for ML/TF purposes.
What is a Trigger Event?
An event that necessitates a firm re-evaluating the risk level of a customer, client, partner, third party provider or employee, and possibly conducting enhanced due diligence.
- PEP could be a trigger.
Talk to me about Risk Assessments for ML/TF?
Required under Regulation 18 of the Regs
Ever evolving process / cornerstone of ML/TF management
- Type and number customers
- Geographical business locations
- Types of product
- Value and Type of transactions
- Potential Conflicts of Interest where MLRO/MLCO maybe fee earners.
What are Departures in the AML/TF matter?
- circumstance where specific legislative, regulatory or court order differs from some of the requirements of this professional statement
What do you do regarding Departures?
record such conflict(s) in writing and any additional reporting or controls implemented to achieve Departure.
What is a risk based approach? (3.5 Prof Statement)
Consider the 3 Ws:
- Who do I act for
- What am I doing for them
- Why am I being asked to do it.
What is Customer due diligence (CDD):
AKA - Know your customer (KYC)
- Taking appropriate steps to know who the customer is.
- Required under Regulation 27 of The Money Laundering, Terrorist Financing, and Transfer of Funds (information of payer) Regulations 2017.
How would you carry out CDD?
- identify the transacting party/parties
- verify the identification is valid and
- carry out additional checks where necessary, according to certain risk factors.
What is a PEP?
Politically Exposed Person
What is a Facilitation Payment?
A payment to a government official to expediate an administrative process. In some countries it is not illegal.
What is SDD and EDD and when would it be used?
Simplified Due Diligence
- basic CDD requirements
Enhanced due diligence
- if rules or regs require
- Example would be if PEP involved due to their position of influence.
What statute is in place?
Proceeds of Crime Act (2002)
- Part 7/s330 requires firms to submit suspicious activity report (SAR) to the National Crime Agency (NCA)
- Concealment / Arranging / Aquisition/use/possession / 3rd party offence (tipping off)
- NCA will respond to grant or reject permission for the transaction to proceed
- Part7/s333 - makes it offence for firms/staff to advise their clients/customers that their activity has been reported to an MLRO or the NCA (“tipping off”)
- Failure to disclose criminal offence or “Tipping-off” can result in fines or prison sentence.
