Ethics, Rules of Conduct and Professionalism Part 2: Professional Practice Issues Flashcards
Key Legislation for gifts and Bribery
The Bribery Act 2010
What is a bribe
The giving, offering, promising or receiving of an advantage such as a payment, gift or a service for an action which is illegal or a breach of trust
Bribery Act 2010 SIX principles
- Proportionality
- Top level commitment
- Risk assessment
- Due diligence
- Communication
- Monitory and review
Bribery Act 2010 FOUR offences
- Bribing
- Receiving a bribe
- Bribing a foreign public officinal; and
- Failing to prevent bribery
Company responsibility to combat bribery
Companies are responsible for their employee’s corrupt acts unless they can show they have adequate measures in place
Bribery Act 2010 view on hospitality
Hospitality is not prohibited; offering a client reasonable and proportional hospitality will not constitute an offence as long as it is arcuately recorded in the gift hospitality register
Examples of company steps to prevent bribery
- identification of potential risks
- staff training
- clear policies
- regular reviews
Who polices the Bribery Act
Serious Fraud Office
Penalties for breaching the Bribery Act
Max penalty of 10 years imprisonments and/or unlimited fine for individuals
Companies face an unlimited fine
CBRE Policy on gifts
No cash or equivalent, gifts up to £100, must be declared.
When accepting a gift consider
- Consider the Bribery Act 2010.
- CBRE Procedures (up to £100, must be declared).
- Professional objectivity.
- Tax implications and sanctions.
- Contract details and proportionality.
What is money laundering
when proceeds of criminal activities are disguised or converted and then realised as legitimate assets
Regulation for Money Laundering
Terrorist Financing and Transfer of Funds Regulations, 2017
Why were the Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2017 amended in 2023
To clarify the differences between domestic and non-domestic politically exposed persons (PEPs) and establish that domestic PEPs pose a lower risk of money laundering and terrorist financing.
Key requirements of Terrorist Financing and Transfer of Funds Regulations 2017
- Written money laundering/ terrorist financing risk assessment
- Systems/procedures to address risk
- Appropriate internal controls
- Staff training
- Customer due diligence requirements
- Politically exposed person requirements
- Appropriate record keeping/ policies
- AML check
- Include additional high risk factors when additional DD may be required
Purpose of AML check
To confirm the identity of the proposed purchaser of a property and check the purchasers source of funds by the vendor’s agent before contracts are exchanged
Estate Agents Legal Obligations regarding money laundering
- Register with HMRC if they let properties over €10,000 pcm.
- Businesses need to be approved/ registered to HMRC to trade
- Customer DD checks on vendors, purchasers, landlords, tenants
- Enhanced DD checks if red flags occur
Example red flags for Enhanced DD checks
- Involving high risk countries
- non face to face business relationship
- Complex/ unusually large
- Unusual patterns of transactions
- No apparent economic or legal purpose
Two levels of DD checks
Customer DD
Enhanced DD
Customer DD checks
- Identify client + beneficial owners, verify based on reliable independent source / persons of significant control register
- For company - company number + address of registered office
- Directors names unless listed
- Purpose of the business relationship and funding arrangements.
Enhanced DD checks
Require additional evidence and monitoring, for any transaction/ business relationship involving a high risk country or PEP/ PEP family
What is a PEP - Politically exposed person
Someone who has been entrusted with a prominent public function; represent higher risk for bribery/corruption due to influence
Additional key requirements of AML regulations
- Cash limit of €10,000
- Business relationship monitored
- Detailed record kept
- ML Reporting Officer appointed
- Maintain records for 5 years
- Report discrepancies between information firm holds and info on Companies House Register
- Senior member of staff appointed - responsible for all compliance
Penalties for non compliance with AML regulations
- Maximum - 14 years and/or unlimited fine for assisting with ML.
- Maximum - 5 years and/or unlimited fine for tipping off a person they are under suspicion/ failing to report suspicion
What are the typical requirement for money laundering checks for CDD for a public limited company
London Stock Exchange listing
What are the typical requirement for money laundering checks for CDD for a publicly accountable body
Government ownership/control
What are the typical requirement for money laundering checks for CDD for a private limited company
- Certificate of incorporation
- Full name
- Registered number and office
- Business address
- Names of directors + shareholders with 25% + holding
- Identification of a higher risk client
What are the typical requirement for money laundering checks for CDD for a private individual
- Passport driving licence
- Bank statement/Credit card bill not + 3 months old.
Has the UK implemented the 7th EU Anti Money Laundering Directive into regulations
YES
What to consider if asked about AML
- Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2017
- RICS Professional Standard
- Gov guidance for estate agents
- DD procedures
- Professional objectivity
- Red flags
AML Red Flags
- Inability to provide identity documents
- Changes to parties involved in transaction
- Unexpected urgency/ unusual transaction
- Monies of unusual currencies
Anti-money laundering sanctions update March 2022; estate agent role in enforcing updates
- Consider risks to AML policy, e.g., sanction lists contain UK citizens.
- Understand risk factors/ red flags
- Use software as part of DD if a firm is more likely to engage with high-risk clients or assets.
- HM Treasury’s ‘consolidated list’, MLRO will have access.
- Subscribe to HM Treasury’s Sanction Notices - keep in the know re existing clients
- Office of Financial Sanctions Implementation (OFSI) for assistance if to think possible match.
Proceeds of Crime Act 2002 purpose
Enforcement authority (UK) to recover in criminal/ civil proceedings money/ assets which are deemed to be the proceeds of crime
Proceeds of Crime Act 2002 three main areas of offence
- Concealing criminal property.
- Arrangements – facilitates criminal property for a person.
- Acquisition/use/possession of criminal property.
Economic Crime (Transparency and Enforcement) Act 2022
- Includes measures for a beneficial ownership register of overseas entity
- Strengthens investigation powers regarding unexplained wealth orders (UWOs)
- Easier prosecution of those involved in sanctions busting inability.
What does RICS Professional Statement: Countering bribery, corruption, money laundering and terrorist financing 2019 set out
The mandatory, globally applicable requirements of members/ regulated firms in relation to bribery, corruption, ML and terrorist financing
What are the sections of the RICS Professional Statement: Countering bribery, corruption, money laundering and terrorist financing 2019
- Mandatory requirements
- Guidance for good practice
- Supplementary guidance
(4) Glossary
Part 1 of Countering bribery, corruption, money laundering and terrorist financing 2019 BRIBERY / CORRUPTION Requirements
- Not accept anything that could be a bribe
- Procedures in place to comply with law
- Report suspicions
- Review risks faced by firm
- Retain records
Part 1 of Countering bribery, corruption, money laundering and terrorist financing 2019 MONEY LAUNDERING / TERRORIST FINANCING Requirements
- Not facilitate/complicit in ML/TF
- Systems in place to comply with law
- Report suspicions
- Review risks faced by firm
- Use 3rd party reliance for checks if level of confidence is there
- Understand/ verify your client/ instruction
- Retain records - show compliance
Part 2 of Countering bribery, corruption, money laundering and terrorist financing 2019 - GUIDANCE
- Written policy in place
- Code of behaviour
- Encourage transparency
- Gifts register
- Up to date with legislation
Part 3 of Countering bribery, corruption, money laundering and terrorist financing 2019 - SUPPLIMENTARY GUIDANCE
WHO you act for
WHAT you are doing
WHY you are doing it.
Dealing with politically exposed persons (PEPs) is higher risk as they hold
positions of power and enhanced DD is required.
How to identify the beneficial ownership of a company, partnership of trust
Requesting:
1. A recent Certificate of Incorporation
2. Annual Return for a company
