Money Laundering and Bribery

Question 1

What is the procedure for money laundering risk?

Answer 1

The assessment will be carried out using online client and purchaser identification and verification system (SmartSearch) and by gathering current government issued documents that photographically identifies the client.

The responsible Partner will judge into which of three categories the client and the business to be conducted falls:

• the range normally dealt with by the firm, requiring the firm’s normal level of client due diligence
• an exceptionally high level of risk requiring an enhanced level of client due diligence
• a negligible level of risk requiring only simplified client due diligence. 3.

The SmartSearch record and any related documentation must be saved in the client file. In the case of Agency, the record should be held on the RPS system. 4.

The assessment of the overall Money Laundering risk will be completed by the MLRO and in the absence the Deputy MLRO. This in turn, will decide our risk appetite on the client we interact with and whether a further risk assessment on an induvial will need completing.

Question 2

What are the requirements of RICS-regulated firms, with regards to Money laundering and terrorist financing?

Answer 2

Facilitate - not facilitate or be complicit in money laundering or terrorist financing activities

Systems and training - have systems and training in place to comply with these laws, and ensure these are followed

Report and record - 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

Risk Review- evaluate and review periodically the risks that prospective and existing business relationships present in terms of money laundering or terrorist financing offences taking place

Risk Response - ensure that their responses to the risks identified are appropriate, including conducting appropriate checks on clients and customers

Reliance on AML Information - 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

Measures to understand client - take appropriate measures to understand the client and the purpose of the transaction

Identity checks - verify the identity of their client by undertaking basic identity checks

Record and retain - Record and retain information detailing how the firm has met the requirements of this professional statement not facilitate or be complicit in money laundering or terrorist financing activities

Report Suspicions - 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.

Question 3

What requirements for members for money laundering?

Answer 3

Report Suspicions - 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.

Not Facilitate - not facilitate or be complicit in money laundering or terrorist financing activities

Question 4

What should regulated firms do in respect to preventing money laundering?

Answer 4

Written Policy - 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)

Governance and Systems controls - have appropriate governance and systems controls in place, proportionate to the type of work the firm does

Training - 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

Confidential - keep reports of suspicion of money laundering and terrorist financing activity confidential (for guidance surrounding whistleblowing see 3.11)

Identify - identify the beneficial owner of a company/client involved within a transaction

Senior Person - appoint a senior person to be responsible for ensuring anti-money laundering and counter-terrorist financing policies are in place and complied with.

Question 5

What is RICS guidance for regulated members in respect to prevention of money laundering?

Answer 5

Employer Training - keep abreast of current training/regulation offered to them either by their employer or by a regulator addressing money laundering or terrorist financing

Comply - comply with their employer’s policy and process relating to money laundering and terrorist financing

Confidential - keep reports of suspicion of money laundering and terrorist financing activity confidential

Senior Management Position - 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.

Question 6

What are RICS-regulated firms required to do, with respect to Bribery and corruption?

Answer 6

Strict Tolerance - not offer or accept, directly or indirectly, anything that could constitute a bribe

Compliance with Statute - have plans in place to comply with applicable laws governing bribery and corruption, and ensure that these are followed

Report Activity - report any activity they are aware of that breaches 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

Due Dil - act with due diligence to perform periodic written evaluations of the risks that face the firm and that may lead to the facilitation of bribery or corruption; in determining Countering bribery, corruption, money laundering and terrorist financing 6 RICS professional statement Effective from 1 September 2019 the appropriate level of due diligence, the firm may consider the type of business activities they engage in and the environment in which they operate

Retain information demonstrating compliance - retain information detailing how the firm has met the requirements of this professional statement.

Question 7

What are the six principles of the Bribery Act 2010

Answer 7

Proportionality

Top Level Commitment

Risk assessment

Due Diligence

Communication

Monitor and Review

Question 8

What are members required to do, with respect to Bribery and Corruption prevention?

Answer 8

Zero Tolerance - not offer or accept, directly or indirectly, anything that could constitute a bribe

Knowledge - ensure that they have adequate knowledge of bribery and corruption to be able to comply with the requirements of this professional statement

Report Breach - 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.

Question 9

What guidance is provided by the RICS in relation to prevention of bribery and money laundering?

Answer 9

• Professional Statement not guidance.
• Countering bribery and corruption, money laundering and terrorist financing 1st edition, February 2019

Question 10

What is recommended procedure for managing risks in the firm with respect to bribery prevention?

Answer 10

It is good practice for firms that consider they have higher risks to appoint a person or team to be responsible for assessing these risks, before designing and testing controls that can be put in place to mitigate against them. Those with lower risks still will need to assess their risks and monitor these for change. Periodic review is necessary to make sure the risks and the controls are still in line with the assessment.

Regardless of risk exposure, all firms are expected to have some clear rules about what is acceptable, and appropriately set limits that all their staff know and can easily access.

For firms with lower risk, very extensive policies and procedures are not necessarily needed. Reminders to staff (and agents) of what is expected in business process and a clear threshold set by those at the top of each firm will be sufficient for many firms, except those with higher risks.

Question 11

What are the three stages involved in money laundering?

Answer 11

Placement

Layering

Intergration

Question 12

How is your firm at risk from money laundering?

Answer 12

Using the proceeds of crime to purchase a legal asset such as real estate, held in the name of an individual or a more complex structure, such as a legal trust or a group of companies. The asset is held onto and eventually either used for lifestyle purposes or sold and converted into cash. This is how criminals recycle their proceeds and why firms and individuals are exposed to high risk in the property and real estate sectors.

Question 13

What are PEPs?

Answer 13

• Politically Exposed Persons
• PEPs are high risk from a money laundering and corruption perspective because they hold positions of influence – indeed many jurisdictions specifically legislate for this.

Question 14

What is customer due diligence?

Answer 14

The process of identifying customers and checking they are who they say they are.

In practice, this means obtaining the customers name, photograph on an official document which confirms their identity, residential address and date of birth.

Question 15

What are the three levels of customer due diligence?

Answer 15

Standard

Simplified

Enhanced

Question 16

What is standard customer due diligence?

Answer 16

Involves idenifying the customer, and ensuring information is based from a reliable independent source. The purpose and nature of the business relationship or transaction must be assessed and further information obtained if appropriate.

Question 17

What is simplified customer due diligence?

Answer 17

Where the risk assessment has identified a negligable or low risk of money laundering.

The only requirment is to identify the customer and there is no need to verify the customer’s identity.

Question 18

What is enhanced customer due diligence?

Answer 18

Where risk of money laundering is high (e.g. if customer is PEP or PSC) enhanced due diligence must be applied. Measures can include:

• Additional identification information from the customer.
• Information on the source of funds or source of wealth.
• The intended nature of the business relationship.
• The purpose of the transaction.
• Subjecting the customer to additional on going monitoring procedures.

Question 19

How would you report suspicious activity?

Answer 19

I would report suspicions in accordance with our company policy, which requires the reporting of such activity to the MLRO, who will then escalte by submitting a suspicious activity report (SAR) to the National Crime Agency (NCA).

Question 20

What happens following the submission of a suspicious activity report (SAR)?

Answer 20

Following submission, the NCA has 7 working days to respond to the SAR.

Response will either give consent or require a further “moratorium period” of 31 calander days to investigate the matter before giving or refusing consent.

If no response, there is deemed consent and relevant indiviuals / entities who made the SAR will have defence if they proceed with activities.

Question 21

What is the latest money laundering legislation?

Answer 21

The Money Laundering and Terrorist Financing Regulations 2019

Proceeds of Crime Act 2002

The Terrorism Act 2000

Question 22

What are the consequences of non compliance with AML?

Answer 22

Financial penalties

Up to 14 years imprisonment

Question 23

How do you comply with AML?

Answer 23

AML program - Firms must have in place AML / CFT compliance program which includes measures for:

• Customer due diligence
• Transactional monitoring measures

Reporting Obligations - Firms must submit suspicious activity reports (SAR) to the NCA when potential money laundering activity is detected.

Money Laundering Reporting Officer (MLRO) - An individual must be appointed as the firms MLRO to oversee firm’s AML compliance program.

AML/CFT Training - Firms should ensure their AML/CFT employees have the knowledge and resources they need by implementing an ongoing training schedule and anticipating upcoming regulatory changes.

Question 24

What are the requirements for an MLRO?

Answer 24

They should have sufficient authority (Senior) and knowledge of money laundering risks to carry out their duties effectively.

Question 25

What are the requirements for the company risk assessment to comply with AML?

Answer 25

Company wide risk assessment as well as risk assessment for each customer and are of the business

Risk assessments must include:

• Requirement to demonstrate and document that risk assessments are conducted and kept up to date, taking into account risk factors including those relating to customers, countries or geographic areas, products, services, transactions and delvery channels.
• Written money laundering policies and procedures that take the firm’s risk assessment into consideration.
• Internal audit teams, where necessary, to test the internal policies, controls and procedures.
• Training on how to conduct risk-based CDD and ongoing monitoring.

Question 26

What documents might you request for enhanced due dil?

Answer 26

Bank statements

Recently filed business accounts documents confirming the source of the funds e.g. sale of house.

Question 27

When is it acceptable to accept a gift and when would you need to declare it?

Answer 27

The giving and receiving of gifts and hospitality, where nothing is expected in return helps to form positive relationships with third parties, where it is proportionate and properly recorded. However, the giving of gifts and hospitality could amount to bribes that give rise to liability under the corporate offence, if they are intended to induce the recipient to behave in a manner that breaches an expectation that they will act in good faith, impartially, or in accordance with a position of trust.

All gifts or hospitality which are given or accepted above the cost of £50 should be notified to the appropriate Divisional Managing Partner using the Declaration of Gifts and Hospitality form (see appendix one). Once this form has been authorised it should be returned to the HR team, who will record it on the central Gifts and Hospitality Register.

Gifts

The giving or receipt of gifts is not prohibited, if the following requirements are met:

• It is not made with the intention of influencing a third party to obtain or retain business or a business advantage, or to reward the provision or retention of business or a business advantage, or in explicit or implicit exchange for favours or benefits;
• If it is given in the Company’s name, not in your name;
• It does not include cash or cash equivalent (such as gift certificates or vouchers);
• It is appropriate to the circumstances and of the appropriate type and value e.g. small gifts at Christmas time
• It is given openly and not secretly

Question 28

When is it acceptable to give or receive hospitality?

Answer 28

You may give and accept reasonable hospitality which is in the legitimate interests of the business, for example, promoting good relations or following a business meeting.

Where no-one from the business offering the event attends to host guests, for example, at a sporting event, this will not be treated as hospitality but will be considered a gift, which falls under the rules on gifts above.

You must not give or accept lavish or frequent hospitality which is not hosted. An example of lavish hospitality would be weekend accommodation at an expensive hotel with spouses included.

Question 29

What would you do if you were offered a bribe?

Answer 29

If you suspect that there is an instance of bribery and corrupt activities in relation to …, you should raise your concerns at as early a stage as possible to your line manager in the first instance or the HR Director.

If you are a victim of bribery or corruption, you must tell your line manager or the HR Director as soon as possible if you:

• are offered a bribe by anyone
• are asked to make one
• suspect that you may be bribed or asked to make a bribe in the near future
• have reason to believe that you are a victim of another corrupt activity

Question 30

Political and charitable donations

Answer 30

do not make direct or indirect contributions to political parties.

ensure that all its transactions, including any sponsorship or donations given to charity, are made transparently and legitimately.

Question 31

What are facilitation payments?

Answer 31

Facilitation payments are typically small, unofficial payments made to secure or expediate a routine government action by a government official.

Question 32

What is your companys policy to facility payments and kickbacks?

Answer 32

My firm recognises there is a greater risk with international business for personnel to come under pressure to make such payments. However, no such payments are to be made by my firm, its agents and third parties who are instructed by the Company to represent its interests.

You must avoid being put in a position where you might be asked to make or accept a kickback or facilitation payment on our behalf. You must also avoid being put in a position from where it could be inferred that such a payment was available.

If anyone asks you to make a payment on behalf of the firm, you must consider carefully if what they are asking for is in proportion to the goods or services involved. Always get a receipt, and if you have any concerns you must discuss them with your line manager straight away.