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RICS APC - YN > Ethics, Rules of Conduct and Professionalism - Part 2: Professional Practice Issues > Flashcards

Ethics, Rules of Conduct and Professionalism - Part 2: Professional Practice Issues Flashcards

1
Q

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

A

Bribery Act 2010

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2
Q

What do hospitality events seek to do?

A

Usually they seek to genuinely promote and improve the image of a firm

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3
Q

What is the main aim of the Bribery Act 2010?

A

To reduce bribery in business in UK and abroad

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4
Q

What is a bribe?

A

It can be the giving, offering, promising or receiving of an advantage e.g. payment, gift or a service for an action which is illegal or a breach of trust

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5
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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6
Q

What are the four offences of the Bribery Act 2010?

A
  1. Bribing
  2. Receiving a bribe
  3. Bribing a foreign public official
  4. Failing to prevent bribery
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7
Q

Who polices the Bribery Act 2010?

A

Serious Fraud Office

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8
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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9
Q

Are companies responsible for their employees corrupt acts?

A

Yes - they are responsible for employee’s corrupt acts unless they can show that they had adequate policies and procedures in place to combat bribery

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10
Q

Is hospitality prohibited under the Bribery Act 2010?
(submission)

A

No - It states that offering a client reasonable and proportionate hospitality will not constitute an offence as long as it is accurately recorded on the gift/hospitality register

The gov. states that hospitality is not prohibited by the Act.

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11
Q

What steps can companies take to prevent bribery?

A
  1. Identification of potential risks
  2. Staff training
  3. Provision of clear policies
  4. Regular reviews
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12
Q

What is the government legislation on Money Laundering, Terrorist Financing etc?

A

Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations, 2017 (as amended in 2022)

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13
Q

What is money laundering?

A

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

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14
Q

What does Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations, 2017 (as amended in 2022) cover?

A

The regulations cover:

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

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15
Q

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

A
  1. Requirement to have a money laundering and terrorist financing risk assessment
  2. Implement systems, policies + controls + procedures to address money laundering + terrorist financing risks + meet the requirements under the regulations
  3. Adopt appropriate internal controls
  4. Provide staff training
  5. Comply with new customer, enhanced + simplified due diligence requirements
  6. Comply with the requirements relating to PEPs
  7. Ensure appropriate record keeping, policies + procedures
  8. AML checks - confirming identity of proposed purchaser + source of funds
  9. Additional high-risk factors e.g. assessing the need for enhanced due diligence
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16
Q

Why is action needed for additional high risk factors?

A

CHECK

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17
Q

Can you list some high-risk third countries?

CHECK WITH VICKY WHAT IS THE DIFFERENCE BETWEEN A HIGH RISK COUNTRY AND A HIGH RISK THIRD COUNTRY

A

Iran, Syria, Uganda,and Yemen

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18
Q

What are CDD checks & who are they undertaken on?

A

Customer Due-Diligence Checks - they need to be undertaken on vendors, purchasers, landlords + tenants will have to be undertaken on new sales and any letting or reletting

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19
Q

What are EDD checks who are they undertaken on?

A

Enhanced Due Diligence Checks = additional procedures required for any transaction or business relationship involving a client deemed to be high risk:

A client could be classed as high risk for a range of reasons but the main reasons would be:

  • Suspicious activity (such as selling a property very shortly after purchasing or paying cash for a property of high value with no real evidence of source of wealth)
  • Country of residence (for example Nigeria has high levels of corruption so we would automatically complete EDD checks on someone wo lives in Nigeria).
  • If the client is a politically exposed person or PEP family
  • Also, they need to be undertaken if red flags pop up
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20
Q

When did the Money Laundering Regulations get amended? And what changes did it make?

A

10 January 2020
From 10 January 2020, letting agents are added to the definition of relevant persons under the 2017 regulations but to a minimal extent. (the 2017 regulations only applied to estate agents)
It required 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 (£8,500) per month

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21
Q

Why must AML checks be undertaken?

A

To confirm the identity of the proposed purchaser of a property and check the purchaser’s source of funds by the vendor’s agent before contracts are exchanged

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22
Q

What are the legal obligations for Estate Agents?

A
  1. Individuals + businesses need to be approved + remain registered by HMRC in order to trade
  2. CDD checks on vendors, purchasers, landlord and tenants
  3. EDD checks need to be undertaken if red flags occurs
  4. Firms must have policies to identify and scruntinise transactions which are: complex or usually large or contain unusual patterns of transactions, or are without apparent economic or legal purpose
  5. Firms must have group-wide procedures to share relevant information, and to train anyone capable of identifying or preventing money laundering or terrorist financing risks
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23
Q

What would you do for Customer Due Diligence checks?

A
  1. Identify the client + verify their identity based on a reliable independent source (e.g. passport, driving license or electronic identification)
  2. Make reasonable endeavors to identify the beneficial owners of the client (and to verify the identity of the person responsible for managing it if not able to do so in the Persons of Significant Control register at Companies House)
  3. For a company, its name, company number and address of the registered office is required
  4. The names of the directors are required unless the company is listed on a regulated market (e.g. the London Stock Exchange)
  5. Obtain information on the purpose + intended nature of the business relationship + proposed funding arrangements as appropriate
24
Q

What would you do for Enhanced Due Diligence Checks?

A

You would require additional evidence and monitoring for example more detailed examination of the background and the purpose of the transaction and increased monitoring

  • Googling the individual to see if they show up in any negative media
  • Checking sanctions lists
  • Finding source of wealth
25
Q

Why do PEPs present higher risks for bribery and corruption?

A

A PEP by virtue of their position and the influence that they may hold

26
Q

Other requirements of the regulations include?

A
  1. There is a limit of 10,000 Euros for the acceptance of cash
  2. The on-going business relationship with client should be monitored
  3. Detailed record keeping of the procedures undertaken is required
  4. A senior member of staff/board member must be appointed to take responsibility for all compliance
  5. A nominated person (the Money Laundering Reporting Officer) must be appointed to report any suspcions with a Suspicious Activity Report (SAR) to the National Crime Agency
  6. A Firm to maintain records for minimum of 5 years and to report to Companies House any discrepancies between the information the firm holds on their customers compared with the information held in Companies House Register
27
Q

What are the penalties for not complying with Money Laundering Regulations?

A
  1. Maximum 14 years prison sentence and/or unlimited fine for assisting with money laundering
  2. Maximum 5 years prison sentence and/or unlimited fine for tipping off a person by informing them that they are under suspicion for money laundering or for failing to report suspicion
28
Q

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

A

London Stock Exchange listing

29
Q

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

A

Government ownership/control

30
Q

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

A

Certificate of Incorporation
Full name, registered number, registered office, business address, names of all directors and names of all shareholders with 25% or more holding. Identification of a higher risk client
N.B Report any discrepancies to Companies House

31
Q

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

A

Copy of valid passport or driving licence with photo
Copy of a bank statement, credit card bill, council tax statement or utility bill to show evidence of address, not more than 3 months old

32
Q

What is constantly evolving with regards to Money Laundering?

A

Law, procedures + guidance

33
Q

What ML directive has the UK implemented?

A

The UK has implemented the 6th EU Anti-Money Laundering Directive into regulations e.g. for letting agents

34
Q

What is Cluttons’ anti-bribery policy towards Corporate hospitality, entertainment, gifts + favours?

A

The firm accepts that low value gifts and reasonable levels of hospitality are part of everyday business, however the following are not acceptable:
- any form of money vouchers and/or cash;
- tickets, invitations or passes for any function or event where the donor or representative of the donor is not present;
- use of donors properties (such as a holiday home);
- extension of business trips abroad for leisure purposes which are funded by the host;
- payment of any travel or accommodation expenses funded by the host where it is not an existing relationship
- payment of any travel or accommodation costs for any family member or friends; and
- any visits to a location which is not necessary or related to a genuine business purpose.
A gift register will be held of all “material corporate hospitality” where such a judgement is made.

35
Q

If asked about the acceptance of any cash, gift or hospitality in your interview, what should you consider?

A
  1. Bribery Act 2010
  2. The RICS Professional Standard - Countering Bribery and Corruption, Money Laundering + Terrorist Financing 1st Edition (Feb 19)
  3. Cluttons anti-corruption procedures
  4. Professional objectivity, openness + transparency
  5. Proportionality
  6. Tax implications
  7. Sanctions
  8. Employment contract details
36
Q

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

A

Countering Bribery And Corruption, Money Laundering And Terrorist Financing, 1st Edition (February 2019)
(This document was reissued in July 2023 as a professional standard, previously been published in February 2019 as a Professional Statement.)

37
Q

If asked about AML, what should you consider?

A
  1. Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (as amended)
  2. The RICS Professional Standard - Countering Bribery And Corruption, Money Laundering And Terrorist Financing 1st Edition (February 2019) - LAW COMES FIRST THOUGH
  3. Government guidance for Estate Agents
  4. DD procedures
  5. Professional objectivity, openness + transparency
  6. “Red flags”
  7. HM Treasury’s OFSI
38
Q

What is the HM Treasury’s OFSI?

A

Office of Financial Sanctions Implementation - it provides regularly updated guidance regarding financial sanctions against countries, companies and individuals

39
Q

What is HM Treasury sanctions list?

A

It provides a consolidated list of persons and organisations under financial sanctions, including those under the Sanctions Act and other UK legislation.

40
Q

What red flags should property professionals be aware of?

A
  1. Inability or unwilligness of parties to provide identity documents
  2. Changes to parties involved in transactions
  3. Wanting to move on with transactions with unexpected urgency
  4. Payment of fees, purchase or rental monies in unusual currencies
41
Q

What guidance does RICS provide on sanctions?

A

“Anti-money laundering sanctions update, March 2022”

42
Q

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

A

A reminder about sanctions + estate agent’s role in enforcing these

43
Q

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

A
  • Risks of your business when considering AML procedure
  • Understanding risk factors and red flags
  • 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
44
Q

What level of due diligence checks are there?

A
  1. Simplified Due Diligence
  2. Customer Due Diligence
  3. Enhanced Due Diligence
45
Q

What does the Proceeds of Crime Act 2022 provide?

A
  • It provides powers for enforcement authorities in the UK to recover money and other assets which are deemed to be the proceeds of crime (in criminal and civil proceedings)
  • It creates a set of criminal offences intended to combat money laundering (AML offences)
46
Q

What is the Proceeds of Crime Act?

A

Relates to the recovery and confiscation of proceeds made from criminal activities and money laundering

47
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
48
Q

Please can you describe the Concealing Criminal Property offence?

A

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

49
Q

Please can you describe the Arrangements offence?

A

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

50
Q

Please can you describe the Acquisition use and possession offence?

A

If a person acquires, use of has possession of criminal property

51
Q

What does the RICS Professional Standard: Countering bribery, corruption, money laundering and terrorist financing, 2019 sets out?

A

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

52
Q

What are the 3 sections of the RICS Professional Standard: Countering Bribery, Corruption, Money Laundering and Terrorist Financing, 2019?

A
  1. Mandatory requirements for anti-bribery, corruption, anti-money laundering and terrorist financing
  2. Guidance setting out supporting good practice
  3. Supplementary guidance on some of the concepts set out in Parts 1 & 2
    - There is also a useful glossary
53
Q

Please could you outline what Part One of the RICS Professional Standard: Countering Bribery, Corruption, Money Laundering and Terrorist Financing, 2019 covers? With regards to B&C

A
  1. Bribery and Corruption
    - RICS Regulated Firms must:
    Not offer or accept anything that could constitute as 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 have the firm has met the requirements of this Professional Standard
54
Q

Please could you outline what Part 1 of RICS Professional Standard: Countering Bribery, Corruption, Money Laundering and Terrorist Financing covers? With regards to ML & TF

A
  1. Money Laundering & Terrorist Financing
    - RICS Regulated Firms must:
    Not facilitate or be compliant 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 checks only where there is a level of confidence for the quality of information provided by the third party
    Take appropriate 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 has met the requirements of the Professional Standard
55
Q

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

A

Guidance
- Practical guidance is provided such as:
Have a written policy in place
Publish a code of behaviour
Encourage transparency
Set up a gift register
Keep up to date with the legislation

56
Q

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

A

Supplementary guidance
- Provided on a range of issues, including:
Establishing a ‘risks-based approach’
Who you act for
What you are doing
Why you are being asked to do something
Dealing with PEPs - higher risk
The need to identify the beneficial ownership of a company, partnership or trust

RICS APC - YN (22 decks)

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