Money Laundering and Bribery Flashcards
When are AML checks required to be undertaken?
- If I am appointed as a selling or buying agent, immediately upon confirmation of instruction and updated whenever the situation changes
- On the buyer/vendor, following issue of HoTs,
Who is the Money Laundering Nominated Officer in your company? and what is their role?
Jason Honisett
- review and consider reports of suspicious acitvities
- make reports to National Crime Agency if any suspects arise or if any ML offence has been committed
- Act as the key liason point with NCA and law enforcement agencies
What procedures do companies have to prevent ML?
- Appoint AML management board
- Risk management practices
- Internal controls
- Customer due diligence
- Record keeping
- Monitor and management of compliance through internal comms and policies
- Staff awareness and training
What are the red flag in AML checks?
- complex or unusual large transactions
- unusual patterns of transactions
- transactions involving Politically Exposed Persons (PEPs)
- transaction that involve party from high risk third country
-transactions which have no apparent economic or legal purpose
-any other activity which the relevant person regards as particulary lkley by its nature to be related to ML or terrorist financing - transactions that involve companies or individuals that are on the Gov Consolidation Sanction lists
What are the sanction if a company/individual fails to establish appropriate AML checks?
It’s a criminal offence punishable by up to 2 years in jail, unlimited fine or both
Which organisation supervise AML regulations?
HM Revenue and Customs (HMRC)
Are AML checks all similar for any type of activity?
No, checks are on a risk-base approach; meaning that different levels of checks are undertaken based on the level of risk/the likelihood to launder or fund terrorism
Are firms AML systems required to be tested?
Yes, regular tests on procedures is required by companies and full compliance review is required to be performed annually through an A1 form,
How long are AML CDD required to be kept by a company?
at least 5 years from the end of a transaction or business relationship (whichever is greater)
Can you store ID documents and other info relating to CDD checks in your job file?
No, I would normally send all this data to the AML team to be securely stored for avoiding GDPR breaches
Whose responsibility is to report ML suspicious activities?
All member of staff and it doesn’t matter who is it and how this came up. Any knowledge of suspicion obtained (irrespective of business activity) must be reported to to the ML Nominated Officer who will assess it and eventually report it to the National Crime Agency
Whose responsibility is to report ML suspicious activities and what is the procedure?
All member of staff and it doesn’t matter who is it and how this came up. Any knowledge of suspicion obtained (irrespective of business activity) must be reported to to the ML Nominated Officer who will assess it and eventually report it to the National Crime Agency
How does the Proceed of Crime Act 2002 apply to AML?
This states that by entering or participating even indirectly within a project that I know/suspect facilitates the acquisition or control of criminal property, I commit an offence.
- Accept a payment i cash to avoid tax and VAT
- Being part of a development project which you know has obtained planning permission through the bribing of the planning officer
What are the activities which are regulated by AML checks?
- Freehold acquisition and disposals
- Lettings or lease renewals/regears/assignments that equate to £10,000 or more per months
- Auctions - both client and bidders
- Investment management work
- Anything that leads to involvement in acquisition or disposal, or lease with CV over £120k pa.
What activities are do not require AML checks?
- Property valuations
- Rent reviews
- Property management services
- CPO
Under the ML regs 2017 and 2019, risk assessment should occur at four different levels.. what are these?
- National risk assessment performed by gov
- Risk assessment by the regulators in each industry sector highlighting the greater risk areas (in our case HMRC)
- Risk assessment for the firm taking into account the regulator recommendations and how these apply to the services provided
- Risk assessment for each client
What is the purpose of Customer Due Diligence(CDD)?
It’s to obtain identity information regarding the clientv(counterparty) and satisfy myself that I have full info for going ahead with he transaction.
What info do I need for ID checks do I need for CDD?
- If individual, ID/ passport/ driving licence and copy of bank statement/utility not more than 3 months old for proving address
- make reasonable endeavors to identify beneficial owners (and Person of Significant Control on CH)
- Company number and name of directors unless the company is listed on stock exchange
- Country of residence or registered address
What other info do I need to provide regarding the transaction for CDD?
- Nature of relationship / If my company has previously worked with the person
- Proposed funding
- What is the transaction about?
- Is the transaction consistent with the entity normal business
- Have I met the individual face-to-face
- Do I have any concerns about the entity or anything that want to bring to CDD team attention?
What are EDDs and why should I do these?
Enhanced Due Diligence checks, which are required for any transaction involving a person established in a “high risk third country” or for PEP (or family member). Essentially, these checks require additional evidence and monotoring
Define bribery
A bribe can include offering, promising, giving, demanding or receiving an advantage (i.e. gift, payment, hospitality) in exchange of an action that is illegal, unethical or a breach of trust.
What legislation relates to bribery? and what RICS document?
A
- The Bribery Act 2010
- Proceeds of Crime Act 2002
(- RICS Professional Statement: Countering Bribery and Corruption, Money Laundering and Terrorist Financing (September 2019))
What are the offences for bribery?
4 offences:
1. Bribing
2. Receiving a bribe
3. Bribing a foreign public official
4. Failing to prevent bribery
Who is bribery policed by? What are the punishments?
- Policed by Serious Fraud Office
- Max 10 years in prison & unlimited fine
What are the principles of the Bribery Act 2010?
PTR DCR:
- Proportionality
- Top level commitment
- Risk assessment
- Due diligence
- Communication
- Monitoring and Review
What is Part 1 of the RICS Countering Bribery and Corruption, Money Laundering and Terrorist Financing Professional Statement (Sep 2019)?
- Set out mandatory requirements for RICS member and firms:
Part 1 (mandatory requirements for Bribery)
- Not offer or accept anything that constitute a bribe
- Have procedure in place to comply with laws
- Report any suspicions to relevant authority
- Reform periodic written evaluations of risk that the firm faces
- Retain records to demonstrate how firm has met requirements
Part 1 (ML)
- Not facilitate or be complicit in ML & TF
- Have system in compliance with laws
- Report suspicion
- Evaluate and review the risks presented to the firm
- take appropriate measures to understand the purpose of the client’s instructions
- Retain records
What are the key principles of the Money Laundering Terrorist Financing and Transfer of Funds Regulations, 2017?
- Cash limit of £10,000
- Enhanced DD on all clients (Suspicious Activity Reports)
- Check purchaser as well as vendor
- Seek evidence of funds
- Maintain records for 5+ years
*All companies must have a MLRO
What AML checks are required?
Due Diligence - Customer, Enhanced (PEPs), Simple
What does Customer Due Diligence involve? (CDD)
- Identify client by passport or drivers licence
- Identify Ultimate Beneficial Owners (UBOs)
- Company name, number and address
- Names of any directors
- Business relationship
- Funding arrangements
What is required for enhanced due diligence?
- Additional procedures for PEPs and majorly sanctioned countries
- Detailed examination of their background and the purpose of the transaction
- More detailed monitoring
What is a PEP?
A Politically Exposed Person is:
- An individual with a prominent public function
- High risk of bribery or corruption
- Eg Members of Parliament, Ambassadors etc
What are the current third high-risk countries for ML?
- Albania
- Barbados
- Burkina Faso
- Cambodia
- Congo
What are the money laundering penalties?
Assisting:
- 14 years in prison
- Unlimited fine
Tipping off/failure to report:
- 5 years in prison
- Unlimited fine
What is the Proceeds of Crime Act 2002?
Provides power for enforcement authorities to recover money and assets deemed to be the proceeds of crime
What are the main areas of offence under the proceeds of Crime Act 2002?
- Concealing criminal property: if a person conceals, disguise or transfers criminal property
- Arrangements: if a person gets involved in an arrangement that facilitated or facilitate a criminal property
- Acquisition, use and possession: if person uses or control criminal property
What is Part 2 of the RICS Countering Bribery and Corruption, Money Laundering and Terrorist Financing Professional Statement (Sep 2019)?
- Set out mandatory requirements for RICS member and firms:
Part 2 (Practical guidance)
- Have written policy in place
- Publish a code of behaviors and provide training
- Set up gift register
- Keep up to date with legislation
What is Part 3 of the RICS Countering Bribery and Corruption, Money Laundering and Terrorist Financing Professional Statement (Sep 2019)?
Part 3 (supplementary guidance)
- Establishing a risk based approach (three Ws, who you act for etc)
- Dealing with PEP
- Identify the beneficial ownership of a company
Whose responsibility is when a bribery is committed ? company or employee
- Companies are responsible for their employees corrupt acts unless they can show that they had adequate policies and procedures in place to combat bribery
Is hospitality prohibited when under the Act?
No, it states that offering a client reasonable and proportionate hospitality will not constitute an offence such as tickets to a sporting event, taking client for meals, as long as this accurately recorded in a gift/hospitality register.
- Hospitality, promotional, or other “low value” business expenditure which seeks to genuinely promote and improve the image of a firm is an acceptable and key part of doing business
What is the objective of the Bribery Act 2010?
To reduce bribery in business
What is money laundering?
Proceeds of criminal activities are disguised/ converted and then realised as legitimate assets.
What is terrorist financing?
The financing of terrorist acts, and of terrorists and terrorist organisations
Name some legislation relating to money laundering?
Money Laundering, Terrorist Financing, and Transfer of Funds Regulations 2019
What are the key components of the Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2019?
- Adopt appropriate internal controls
- Provide staff training
- AML checks
- Ensure appropriate record keeping, policies and procedures
- Comply with the requirements relating to PEP checks
When is enhanced due diligence required?
- Red flags.
- PEP (politically exposed person)
Name some red flags which would trigger enhanced DD
- Unwillingness to provide documents
- Unusual patterns of transaction i.e. undue urgency, potential loss making
- Changing currencies
- Changes to parties involved
- Third risk country
What are the penalties under the Money Laundering, Terrorist Financing and Transfer of Funds Regulation 2019?
- Assisting: Max 14 years imprisonment and/or unlimited fine
- Tipping off/not reporting: max 5 years imprisonment and/or unlimited fine
What are some key requirements for firms regarding money laundering?
- Annual registration with HMRC
- 10,000 euros is the maximum cash payment
- Detailed record keeping
- Enhanced DD on all clients with suspicious activity reports
- Keep records for min 5 years
- Check purchaser as well as vendor
- Report discrepancies to Company House Register
What money laundering checks do you need to do for private individuals?
- Passport/drivers licence
- Utility bill from last 3 months
What money laundering checks do you need to do for public bodies?
Government ownership / control
What money laundering checks do you need to do for private limited companies?
- Certificate of incorporation
- Full name
- Registered Office
- Registered number
- Business address
- Name of all shareholders with over 25% stake.
(report discrepancies to Companies House)
What happens if you suspect money laundering?
Report to relevant authority. I would not say anything to the purchaser or client - it would be tipping off. Criminal offence to say anything to the purchaser or client. Relevant authority would likely be in touch within 5 days, they have to catch them in the act - if you tip them off it’s gone. It’s the act of money laundering they want to capture.
What ate the ML key provision relating to estate agency?
- Letting of more than 10,000/month must undertake a CDD
- CDD checks on vendors and purchasers (before exchange)
- EDD checks will eed to be undertaken is red flags occur (high risk country, non-face-to-face business relation ship)
- Scrutinise transactions which are comples, unusually large and without an apparent purpose
