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Ethics - Level 1 > Money Laundering, Bribery and PII > Flashcards

Money Laundering, Bribery and PII Flashcards

1
Q

What money laundering regulations or legislation are you aware of?

A
  • Money Laundering and Terrorist Financing (Amendment) Regulations 2019
  • RICS Professional Statement Countering Bribery, Corruption, Money Laundering, Terrorist Financing 1st Edition September 2019
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2
Q

What is a red flag of money laundering?

A
  • Secretive new clients that avoid personal contact
  • Unusual transactions
  • Unusual source of funds
  • Transaction has unusual features like size, nature or frequency
  • Geographic concerns
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3
Q

What bribery legislation are you aware of?

A

Bribery Act 2010

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4
Q

What is a bribe?

A

The offer, promise, giving, demanding or acceptance of an advantage as an inducement for an action is illegal, unethical or a breach of trust

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5
Q

What are the penalties for accepting a bribe?

A
  • Strict liability offences means criminally liable for a bribe no matter how small
  • Conviction of a bribe is up to 10 years prison and / or unlimited fine
  • Directors convicted of bribery disqualified from acting for large period of time
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6
Q

What are the penalties for being involved in money laundering?

A
  • Max 14 years in prison or unlimited fine for assisting ML
  • Max 5 years in prison for tipping off a person by informing them that they are under suspicion for ML and / or failing to report suspicion
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7
Q

What constitutes an offence under the Bribery Act 2010?

A

Four offences are: bribing, receiving a bribe, bribing a foreign public official and failure to prevent bribery

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8
Q

What constitutes an offence under the current money laundering regulations?

A

Specific ML offences defined by Proceeds of Crime Act 2002: concealing criminal property, being involved in relation to criminal property, acquisition, disclosing tipping off

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9
Q

How long should you keep anti money laundering records for?

A
  • 5 years beginning from the date a business relationship ends
  • 5 years beginning from the date a transaction is completed
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10
Q

What is Professional Indemnity Insurance (PII?)

A
  • Ensures that if the firm faces a claim it is protected from financial loss that it cannot meet from its own resources
  • Protect insured member / firm against consequences of its liability to pay damages to third parties for breaches of professional duty commitments through professional activities
  • Ensure firm’s clients don’t suffer financial loss that the firm cannot meet
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11
Q

Can you tell me about the RICS requirements in relation to PII?

A

Guidance note is Risk Liability and Insurance April 2021
Nature and extent of the insurance must be adequate and appropriate having regard to:
* Any one claim or aggregate
* Unlimited round the clock reinstatement basis
* RICS minimum policy wording or more comprehensive wording. As a minimum, you should ensure policy wording is written on a full civil liability basis
* Minimum level of indemnity required on turnover is:
1. £100k turnover or less minimum £250k
2. £100k-£200k minimum £500k
3. £200k + minimum £1m
* Maximum level of uninsured excess required by RICS is:
◦ Liability up to £500k - greater of 2.5% insured sum or £10k
◦ Liability over £500k - 2.5% of insured sum

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12
Q

What is a PII aggregation clause?

A

Aggregation clause limits the total amount of financial cover to the amount specified in the policy schedule, arising within the specified period of insurance

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13
Q

What does ‘claims made’ mean in terms of PII?

A

Claims Made is a term used to describe an insurance policy which only provides cover for claims which are notified during the term of the policy. This is not necessarily the same time period when the actual incident or error causing the claim occurred

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14
Q

Is a PII excess usually paid for per claim?

A
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15
Q

In a negligence claim, what would help to show that you acted with consideration and due process?

A
  • Understand client objectives and confirm precise instructions
  • Ensure competent to undertake instruction
  • Undertake work in accordance with RICS Standards and Guidance
  • Take detailed notes and photos
  • Up to date with legislation and market knowledge
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16
Q

If you were providing services outside of your usual scope to a client, what might you need to do in relation to your PII cover?

A

Confirm with insurer that you are adequately covered to provide services

17
Q

What is run-off cover?

A

‘Run off’ insurance is professional indemnity insurance covering claims arising from the past liabilities of a business when a business is acquired or ceases trading

18
Q

What RICS requirements are there relating to run off cover?

A
  • Regulated firms are required to put run-off cover in place and failure to do this may be a disciplinary matter
  • Insurers should provide a £1m aggregate limit in all policies for a period for 6 years from the expiry date of the policy / cessesion
19
Q

What changes did RICS recently make to the Minimum Approved PII wording?

A
  • The new Minimum Policy Wording and insurance rules will mean that from 1 May 2021, PII policies will provide greater fire safety cover for chartered surveyors
  • Under the new rules insurers are not permitted without specific dispensation to exclude fire safety claims on a property four storeys or less and fire safety coverage must be provided as a minimum on an aggregate, defence cost inclusive basis
20
Q

What precedent has caselaw set in terms of keeping adequate site notes (and therefore providing a defence in a PII claim?)

A

Hart v Large 2021
* The relevant findings are that new RICS Home Survey Standards came into effect on 1 March 2021
* Being clear on the report about the scope of inspection including limitations, caveats and actions available to the client
* Recommending justifiable further investigation
* Taking all reasonable steps to ensure clients understand different levels of service and the extent / limitations of each option

21
Q

Explain PII requirements relating to fire safety cover and cyber cover

A
  • The minimum terms now state that any exclusion to fire safety cover in a PII policy ‘will not apply to professional work relating to buildings four storeys or under’
  • The minimum terms now exclude claims relating to the use of, or inability to use, a computer system arising from the receipt or transmission of malware, or from so-called ‘cyber acts’ including damage to or destruction of programs, software or stored data
22
Q

How long can a PII claim arise after the work is undertaken?

A

A claim can be brought up to six years after the work was completed - Limitation Act 1980. Or 3 years after the date on which the claimant learned about their entitlement to bring the claim (added in 1986)

23
Q

What is the Assigned Risk Pool (ARP)?

A
  • The assigned risks pool is for firms that are unable to obtain professional indemnity insurance (PII) in the insurance market
  • It provides emergency cover for a period of up to two years so that firms can continue to practise
24
Q

Who might need to access the ARP?

A

The ARP is open to all UK RICS regulated firms that are unable to obtain PII, which meets the minimum requirements of the RICS, in the insurance market

25
Q

Explain your understanding of the RICS Guidance Note Risk, Liability and Insurance (1st Edition).

A
  • Effective 1 April 2021
  • Sets out breach of contract claims and negligence claims - the difference is that breach of contract can only be brought by a party to the contract, negligence claims can be any third party who has assumed a duty of care
  • Sets out damages / remedy - puts claimant back in the position they would’ve been in without the negligence
  • Sets out how long after the services a claim can be brought
  • Sets out liability caps
26
Q

Explain when you might agree a liability cap.

A

A liability cap is an agreement (usually contained within the engagement letter) which limits the amount for which a professional may be sued by his client in the event of any negligence/breach of contract

27
Q

What is the RICS guidance relating to bribery, corruption or money laundering?

A

Countering Bribery, Corruption, Money Laundering and Terrorist Financing 2019

28
Q

What status does it hold?

A

Professional Statement

29
Q

What are some of the key principles of Countering bribery, corruption, money laundering and terrorist financing?

A
  • Firms must conduct written AML and ATF assessments
  • Implement systems for AML and ATF
  • Adopt internal controls
  • Comply with new Customer DD, Enhanced DD and Simplified DD requirements
  • Ensure appropriate record keeping, policies, procedures
  • AML checks must be undertaken to confirm identity of proposed purchaser of property and check source of funds (vendor’s agent) by point of exchange
  • Firms must register with HMRC annually
  • Nominated person appointed to complete Suspicious Activity Report

Ethics - Level 1 (5 decks)

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