Professional Practice Issues Flashcards
What is the Bribery Act 2010?
It aims to reduce bribery in the UK and abroad.
It is based on 6 principles:
1. Proportionality.
2. Top level commitment.
3. Risk assessment.
4. Due diligence.
5. Communication.
6. Monitoring and review.
The 4 offences are:
1. Bribing.
2. Receiving a bribe.
3. Bribing a foreign public official.
4. Failing to prevent bribery.
The Act is policed by the Serious Fraud Office. If it is breached, the max. penalty is 10 years imprisonment and/or an unlimited fine.
What is your firms gifting policy?
It is dependent on the value of the gift:
Under £29.99, no action is required, this moves up to £200+ where I would input details on a register which requires line manager and compliance Director approval in advance.
The gifting of cash or cash equivalent is unacceptable.
I would consider whether it is an actual briber or likely to be illegal, and whether a regular person on the street would consider it extravagant, lavish, or excessive.
What is Money Laundering, and how do you carry out an anti-money laundering check?
Money laundering is the process of concealing the origin of money obtained from illegal activities e.g., corruption or drug trafficking.
The legislation around M.L is Money Laundering, Terrorist Finance and Transfer of Funds Regulations, 2017 (amended 2023).
AML Check Process:
- At the outset of a transaction and before marketing commences (where applicable) I upload details of the client on Salesforce.
- This triggers the necessary AML processes which is undertaken by my firms compliance department.
- They conduct online searches and use publicly available info, plus an online portal which clients and counterparties are given access to in order to submit their info and relevant identity documentation.
- I am aware they check the clients firms of ID, check where their money is coming form by speaking with banks, checking statements, and identities of beneficial owners (those with 25% or more ultimate ownership).
What are the different levels of Due Diligence checks for Money Laundering, and what do they comprise?
- Customer Due Diligence Checks (CDD):
- Identify client & verify their identity based on passport / drivers licence etc.
- Try to identify the beneficial owners of the client.
- For a company, its name, company number and address of the registered office.
- The names of Directors required unless the company is listed on a regulated market (London Stock Exchange).
- Obtain info on the purpose and intended nature of business relationship and proposed funding arrangements. - Enhanced Due Diligence (EDD):
- Additional procedures are required for transactions or business relationships involving a person established in a ‘high risk third country’ or ‘politically exposed person’ (PEP) or a PEP family member / associate.
- PEPs pose higher risks for potential involvement in bribery and corruption by virtue of their position and influence.
- More detailed examination of the background and purpose of transaction and increased monitoring.
What are some Red Flags for money laundering, and what are the penalties if the regulations are breached?
Red Flags associated with potential money laundering include:
1. Inability or unwillingness of parties to provide identity docs.
2. Changes to parties involved in transactions.
3. Unusual transaction features e.g. unexpected urgency required, potential loss-making, unusual transaction for client.
4. Payment of fees, purchase or rental monies in unusual currencies.
Penalties for railing to comply with the regulations:
1. Max. 14 years imprisonment and/or unlimited fine for assisting with money laundering
2. Max. 5 years imprisonment and/or unlimited fine for tipping off a person by informing them that they are under suspicion for M.L or failing to report suspicion.
What are the UK Government Sanctions relating to Money Laundering?
RICS provides guidance in ‘Anti-money laundering sanctions update, 2022’, refers to sanctions and estate agents’ role in enforcing these:
- Consider risks to a business as part of the AML procedure, noting the sanctions lists include UK citizens and people who live in the UK.
- Understand Red Flags and risk factors.
- Use software as part of DD if a firm is likely to engage with higher risk clients or assets
- Check individual clients of higher risk against HM Treasury’s ‘consolidated list’
- Check existing clients regularly where they present a higher risk.
If my client is a possible match, contact the Office of Financial Sanctions Implementation (OFSI) for assistance.
Proceeds of Crime Act 2002 provides powers for enforcement authorities in the UK to recover in criminal / civil proceedings money and other assets which are deemed to be the proceeds of crime, plus creates a set of criminal offences intended to combat AML:
1. Concealing criminal property.
2. Arrangements where they know or suspect facilitates the acquisition, use etc or criminal property.
3. Acquisition, use and possession.
Economic Crime (Transparency & Enforcement) Act 2022 includes measures for a beneficial ownership register of overseas entities owning property in the UK. It strengthens investigation powers on unexplained wealth orders (UWOs) and allows easier prosecution.
Can you tell me when you may need to breach a Non-Disclosure Agreement?
An NDA is a legally binding contract that prohibits one party from disclosing certain confidential info to third parties. However, there are situations where breaching an NDA may be necessary or justified:
- Legal Obligations - compliance with the law (e.g., revealing info if required by court order), and public safety (if the info poses a risk to public safety, like defective products or environmental hazards).
- Whistleblowing - unethical or illegal activities, such as fraud, safety violations, discrimination, money laundering.
- Impossibility or Futility - If the NDAs purpose becomes impossible to achieve e.g., due to changes in circumstances.
- Mutual agreement - both parties agree to waive or modify the NDA terms.
- Expiration - once the NDAs duration expires, the obligation to maintain confidentiality no longer applies.
What is a bribe?
Bribery is the act of promising, giving, receiving, agreeing, or soliciting of an advantage as an inducement for an action which is illegal, unethical, or a breach of trust.
Can you be negligent and not wrong at the same time?
Yes - negligence and being wrong are distinct concepts, although they can intersect.
Negligence refers to a failure to exercise reasonable care or caution, resulting in harm or damage to others. It involves a lack of proper attention or care that a reasonable person would have exercised in similar circumstances.
Being wrong simply means having an incorrect belief, opinion, or judgment. It does not imply negligence - people can be wrong without being negligent, for instance by making a honest mistake or misinterpreting information doesn’t automatically make someone negligent.
How do you define ethical behaviour?
Ethical behaviour involves adhering to a strong moral standard and maintaining consistent value system. It can be motivated by personal beliefs, or a desire to improve the world.
If you were faced with an ethical dilemma, what would you do?
If I were faced with an ethical dilemma, I would consider the facts and analyse the associated risks.
I would rely on my firms training concerning the dilemma whilst also having regard to the RICS Rules of Conduct, and the RICS Ethical Decision Tree.
I would report the issue to my firms Head of Compliance, Zoe Harris, so that the problem can be dealt with and the appropriate action taken.
If a client was prepared to pay you in advance for services you were providing, how would you ensure this was dealt with?
- Set up a separate client account that’s properly names and clearly identifiable.
- Provide the client with a statement of account.
- Inform and agree drawdowns.
- Prior to drawing monies, send a statement of how much is to be withdrawn and what services and associated fees are made up of. Send updated statement of account.
- Once complete, show a final statement, ensure everything is complete, and transparent.
What’s the difference between ethics and integrity?
Ethics are moral values that affect a person’s behaviour or the conducting of an activity.
Integrity is the quality of being honest and having strong moral principles.
How can professional practices look to encourage ethical environments with high standards of integrity?
- Setup confidential whistleblowing procedures
- Raise awareness and provide CPD on ethical matters.
- Become an RICS accredited practice.
- Establish monitoring of ethical performance amongst staff members.
