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RICS APC > Ethics, Rules of Conduct and Professionalism - Part 3 > Flashcards

Ethics, Rules of Conduct and Professionalism - Part 3 Flashcards

1
Q

What is the key legislation with regards to Gifts, Bribery and Corruption?

A

Bribery Act (2010)

Proceeds of Crime Act (2002)

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2
Q

What sort of activities would need to be registered on a Firms Anti-Bribery Procedures

A

Hospitality

Promotional

Low value business expenditure

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3
Q

What do hospitality events seek to do?

A

Most cases they seek to genuinely promote and improve the image of the firm

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4
Q

Aims of the Bribery Act 2010

A

Reduce bribery in business in UK and abroad

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5
Q

What is a bribe?

A

Giving / Offering / Promising / Receiving of an advantage such as a payment, gift or a service for an action which is illegal or a breach of trust

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6
Q

What are the six principles of the Bribery Act 2010

A
  1. Proportionality
  2. Top level commitment
  3. Risk Assessment
  4. Due diligence
  5. Communication
  6. Monitoring and review
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7
Q

The four offences under the Bribery Act 2010 are?

A
  1. Bribing
  2. Receiving a bribe
  3. Bribing a foreign public official
  4. Failing to prevent bribery
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8
Q

Are companies responsible for their employees corrupt acts?

A

Yes - unless they can show that they had adequate policies and procedures in places to combat bribery

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9
Q

Is hospitality prohibited under the Bribery Act 2010

A

Government guidance states that hospitality is not prohibited under the act

As long as it is reasonable and proportionate and recorded in a gift/hospitality register

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10
Q

What steps can companies take to prevent bribery?

A

The identification of potential risks

Staff training

Provisions of clear policies

Regular reviews

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11
Q

Who is the Bribery Act policed by?

A

Serious Fraud Office

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12
Q

What is the maximum penalty for breaching the Bribery Act 2010

A

10 years imprisonment and or an unlimited fine for individuals

Companies face an unlimited fine

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13
Q

What is the government regulations on Money Laundering, Terrorist Financing etc

A

Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations, 2017 (as amended in 2019)

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14
Q

What do the regulations cover

A

Estate Agency work and relevant financial business work inside and outside the UK by a firm

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15
Q

What is money laundering?

A

Where proceeds of criminal activities are disguised or converted and then realised as legitimate assets

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16
Q

What are the key provisions of the ML, TF & TF regulations?

A
  1. Requirement to have written money laundering and terrorist financing risk assessment
  2. Implement systems, policies, controls and procedures to address ML, TFR and meet the req under the regulations
  3. Adopt appropriate internal controls
  4. Provide staff training
  5. Comply with new customer, enhanced and simplified due diligence requirements
  6. Comply with requirements relating to politically exposed persons (PEPs)
  7. Ensure appropriate record keeping, policies and procedures
  8. AML Checks
  9. Additional High Risk Factors
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17
Q

Why must AML checks be undertaken?

A

To confirm the identity of the proposed purchaser of a property

To check the purchasers source of funds by the vendors agents before contracts are exchanged

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18
Q

Action needed for additional high risk factors?

A

Enhanced DD

Seek additional information and monitor certain cases

Eg. where there are transactions between parties based in high risk third countries

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19
Q

When were the amended regulations effected from?

A

10 January 2020

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20
Q

Why were the regulations amended?

A

To require letting agents to register with HMRC within 12 months of May 2020 if they let individual properties for more than the equivalent of 10,000 Euros a month

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21
Q

What are the legal obligations for Estate Agents?

A
  1. Individuals and businesses need to be approved and remain registered by HMRC to trade
  2. CDD checks on vendors, purchasers, landlord and tenants for new sales/letting/re-lettings
  3. EDD checks for red flags
  4. Firms must have policies to identify and scruntinise transactions
  5. Firms must have group wide procedures to share relevant info, train anyone capable of identifying or preventing ML / TF risks
22
Q

Firms should scrutinise transactions which:

A

Complex or unusually large

Contain unusual patterns or transactions

Are without apparent economic or legal purpose

23
Q

What have the RICS published on this?

A

Anti-money laundering sanctions update (March 2022)

24
Q

What does the RICS outline in Anti-Money Laundering Sanctions Update?

A

Reminder about UK sanctions and estate agents role in enforcing these

25
Q

What areas can be considered to help compliance with UK sanctions?

A
  • Risks of your business when considering AML procedure
  • Red flags and risk factors
  • Using software as part of DD if dealing with higher risk clients/assets
  • Subscribing to HM Treasury’s Sanction Notices
  • If your client does match the sanction list it is important to contact the Office of Financial Sanctions Implementation (OFSI) for assistance
26
Q

What level of due diligence checks are there?

A
  1. Customer Due Diligence (CDD)
  2. Enhanced Due Diligence (EDD)
27
Q

What would you do for Customer Due Diligence checks?

A
  1. Identify the client and verify their identity based on a reliable independent source (eg. passport)
  2. Make reasonable endeavours to identify the beneficial owners of the client
  3. Verify the identity of the person responsible for managing - if not able to do so can use Persons of Significant Control register at Companies House
  4. For a company: name, company number and address of registered office is required, names of the directors required unless the company is listed on a regulated market eg. London stock
    exchange
  5. Obtain information on the purpose and intended nature of the business relationship and proposed funding arrangement as appropriate
28
Q

What is EDD?

A
  1. Required for any transaction or business relationship involving a person in a high risk third country or politically exposed person (PEP) or a PEP family member/business associate
  2. EDD requires additional evidence and monitoring
  3. More detailed examination of the background and purpose of the transaction and increased monitoring
29
Q

What is a PEP?

A

Politically Exposed Person

Term used to describe someone who has been entrusted with a prominent public function

30
Q

Why do PEPs present higher risks for bribery and corruption?

A

By virtue of their position and the influence they may hold

31
Q

Other requirements of the regulations include?

A
  • Limit of 10,000 Euros for the acceptance of cash
  • Ongoing business relationship with client should be monitored
  • Detailed record keeping of the procedures undertaken is required
  • Senior member of staff / Board member must take responsibility for compliance
  • The Money Laundering Reporting Officer must be appointed to report any suspicions with a Suspicious Activity Report (SAR) to the National Crime Agency
  • Firm to maintain records for minimum of 5 years
  • Report to Companies House any discrepancies between the info they hold v Companies House Register
32
Q

Penalties for not complying with Money Laundering Regulations?

A
  • Maximum 14 years prison sentence / unlimited fine for assisting with ML
  • Maximum 5 years prison sentence / unlimited fine for informing a person they are under suspicion for ML or failure to report suspicion
33
Q

What Money Laundering Checks for CDD are required for a Public Limited Company?

A

London Stock Exchange Listing

34
Q

What Money Laundering Checks for CDD are required for a Publicly Accountable Body?

A

Government Ownership / Control

35
Q

What Money Laundering Checks for CDD are required for a Private Limited Company?

A

Certificate of Incorporation
Full Name
Registered Number & Office
Business Address
Name of all directors and names of a shareholders with 25% or more holding
Identification of a higher risk client

NB - Report any discrepancies on companies house

36
Q

C

A
37
Q

What Money Laundering Checks for CDD are required for a Private Individual?

A

Copy of valid passport or driving licence with a photo

Copy of bank statement, credit card bill, council tax statement or utility bill to show address - no more than 3 months old

38
Q

What is constantly evolving with regards to Money Laundering?

A

Law, procedures and guidance

39
Q

What ML directive has the UK implemented?

A

The UK has implemented the 5th EU Anti Money Laundering Directive into regulations

Further guidance is due from the government on the implementation of these

The UK government has not implemented the 6th EU Anti Money Laundering Directive but it is expected that some of the provisions may be adopted

40
Q

What red flags should property professionals be aware of?

A

Inability or unwillingness of parties to provide identity documents

Changes to parties involved in transactions

Unusual transaction features, unexpected urgency required, potential-loss making or an unusual transaction for a client

Payment of fees, purchase or rental monies in unusual currencies

41
Q

What does the Proceed of Crime Act 2022 provide?

A

Provides powers for enforcement authorities in the UK to recover money and other assets in Criminal and Civil Proceedings which are deemed to be the proceeds of crime

It creates a set of criminal offences intended to combat money laundering (AML offences)

42
Q

What are the three main areas of offence under the Proceeds of Crime Act 2002?

A
  1. Concealing Criminal Property
  2. Arrangements
  3. Acquisition use and possession
43
Q

Please can you describe the Concealing Criminal Property offence?

A

If a person conceals, disguises, converts or transfers criminal property

44
Q

Please can you describe the Arrangements offence?

A

If a person enters into or becomes concerned in the arrangement which they know or suspect facilitates the acquisition, retention, use or control of criminal property by or on behalf of another person

45
Q

Please can you describe the Acquisition use and possession offence?

A

If a person acquires, uses or has possession of criminal property

46
Q

What is the RICS guidance on Bribery, Corruption, Money Laundering and Terrorist Financing?

A

RICS Professional Statement - Countering bribery, corruption, money laundering and terrorist financing (2019)

47
Q

What does the RICS Professional Statement - Countering bribery, corruption, money laundering and terrorist financing (2019) do?

A

Sets out mandatory, globally applicable requirements for RICS members and regulated firms in relation to bribery, corruption, money laundering and terrorist financing

48
Q

What are the 3 sections of RICS Professional Statement - Countering bribery, corruption, money laundering and terrorist financing (2019)?

A
  1. Mandatory requirements - anti-bribery, corruption, anti-money laundering and terrorist financing
  2. Guidance setting out supporting good practice for the above
  3. Supplementary guidance on the concepts set out in Part 1 & 2

There is also a useful glossary

49
Q

Please could you outline what Part 1 of RICS Professional Statement - Countering bribery, corruption, money laundering and terrorist financing (2019) covers? With regards to B&C

A
  1. BRIBERY AND CORRUPTION (B&C)

RICS regulated firms must:

Not offer or accept anything that could constitute a bribe

Have procedures in place to comply with the law

Report suspicion to the relevant authority

Act with due diligence to perform periodic written evaluations of the risks the firm faces

Retain records to show how the firm has met the requirements of the Professional Statement

50
Q

Please could you outline what Part 1 of RICS Professional Statement - Countering bribery, corruption, money laundering and terrorist financing (2019) covers? With regards to ML & TF

A

Money Laundering and Terrorist Financing (ML & TF)
RICS regulated firms must:

Not facilitate or be complicit in ML and TF
Have systems in place to comply with the laws
Report suspicion
Evaluate and review the risks presented to the firm
Use third party reliance for check - ensuing there is confidence in the quality of info from third parties
Take app measures to understand the client and the purpose of the instruction
Verify the client by undertaking basic ID checks
Retain records to show have the firm met the requirements of the PS

51
Q

Please could you outline what Part 2 of RICS Professional Statement - Countering bribery, corruption, money laundering and terrorist financing (2019) covers?

A

Guidance
Practical guidance is provided such as:
Have a written policy in place
Have senior management to control the process
Publish a code of behaviour for staff and provide staff training
Encourage transparency
Set up a gifts register
Keep up to date with legislation

52
Q

Please could you outline what Part 3 of RICS Professional Statement - Countering bribery, corruption, money laundering and terrorist financing (2019) covers?

A

Supplementary Guidance on a range of issues:
Establish a risk based approach considering the three Ws:
- Who you act for
- What you are doing
- Why are you being asked to do something

EDD required for PEPs

The need to identify the beneficial ownership of a company/partnership and trust

This can be done through requesting a Certificate or Incorporation or Annual Return for a company

RICS APC (25 decks)

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