Regulatory processes, systems, & controls Flashcards
What do regulators require to show compliance with regulation?
Data evidence.
This evidence may be accompanied by any monies for taxes in certain countries.
What is the meaning of solvency?
The balance between assets and liabilities.
What is solvency relative to?
Solvency is relative to the class of business being written.
More volatile classes of insurance would require a heavier weighting on the assets side of the equation.
What is Solvency II?
The name given to the EU’s Europe-wide solvency rules.
What is the most important system & control for ensuring Solvency?
Training & education.
(of underwriters & brokers)
What is a Sanction?
It is a ‘ban’ from doing business with certain individuals, businesses, governments, or whole countries/regimes.
Who can sanctions apply to?
- individuals
- companies
- governments
- regimes
What is the main reason sanctions are imposed?
Sanctions are imposed to control the access to funds for regimes, companies or persons who are felt to be less than desirable because they have links to terrorism or other unlawful behavior.
Name some fundamental reasons sanctions are imposed?
- political pressure
- enforce respect for democracy
- enforce respect for human rights
- maintain/restore peace in a country/region
What are the 2 main types of sanctions that affect insurers?
- financial
- trade
What does OFSI stand for?
The Office of Financial Sanctions Implementation.
What does OFSI do?
OFSI is responsible for implementing international financial sanctions imposed by the UK.
Is it possible to have sanctions lifted?
Yes - there is a list of ‘lifted regimes’ on the OFSI website.
What insurers must comply with US sanctions too?
Any London Market insurer with a US parent company must comply with US sanctions too.
What act restricts US entities conducting business with Cuba?
The Helms-Burton Act 1996.
What is ‘piracy’?
Involves capturing a ship and her cargo and demanding a ransom for its return.
How do Lloyd’s insurers and brokers find out about sanctions?
Crystal system.
How does the London Market include sanctions in its policies?
Sanctions clauses.
What is an Embargo?
A trade ban.
What does the Export Control Order (2008) do?
Requires a license to be obtained for the movement of arms or military goods between 2 overseas countries.
When did the Data Protection Act (2018) & General Data Protection Regulation (GDPR) come into force in the UK?
Came into effect in the UK in May 2018 and replaced pre-existing data legislation.
What does a data ‘controller’ do?
Says how & why personal data is processed.
What does a data ‘processor’ do?
Processes personal data on the behalf of the controller.
What information does the GDPR apply to?
GDPR applies to personal data.
Name some examples of special categories of personal data?
- race
- ethnic origin
- politics
- religion
- genetics
- health
- sexual orientation
- sex life
- trade union membership
How do individuals find out if an organisation is using or storing their personal data?
By submitting a ‘subject access request form (SAR)’.
Under GDPR what locations can personal data not be transferred to?
- outside the EU
- third countries
- international organisations
Who imposes fines for non-compliance with the GDPR?
Information Commissioner’s Office (ICO)
How much can an organisation be fined for non-compliance with GDPR?
£17,500,000 or 4% of global revenue.
(fined by ICO)
What is money laundering?
Concealing the origins of illegally obtained money.
Usually done by depositing illegally obtained cash into a seemingly legal arrangement.
What is the 3-stage-process of money laundering?
- placement
- layering
- integration
What is placement?
Placing cash into other financial assets.
What is layering?
Creating a series of complex transactions so the money can’t be traced back to its original, illegal origins.
What is Integration?
Where the criminal finally gets access to the ‘clean’ money.
What legislation extended the range of offences for money laundering?
Proceeds of Crime Act (2002) (POCA).
What are the ‘principal’ money laundering offences under POCA (2002)?
- concealing, transferring, converting, or removing criminal property
- making arrangements in respect of criminal property
- acquiring, using, or possessing criminal property
(max prison sentence of 14 years, an unlimited fine, or both)
What 2 additional offences are included in POCA (2002) as the money laundering legislation?
- failing to report suspected money laundering
- ‘tipping off’ about a money laundering disclosure
(max fine of 5 years, an unlimited fine, or both)
What is the role of the Money Laundering Reporting Officer (MLRO)?
They are responsible for anti-money laundering systems and controls within an organisation.
How often must an MLRO report?
At least annually.
To whom must an individual report suspicion of money laundering within an organisation?
The Money Laundering Reporting Officer (MLRO).
To whom must the MLRO report suspected money laundering?
The National Crime Agency (NCA).
Establishing ‘proof of a client’s identity’ is an essential part of an insurers duty when complying with what act?
Money Laundering Regulations 2017.
What is the name of the act relating to bribery?
The Bribery Act 2010.
What 4 offences are included in the Bribery Act?
- bribing others
- receiving a bribe
- bribing a foreign public official
- cooperate offence of failing to prevent bribery
