Unit 8 - Financial Crime 2 (18 of 80 Flashcards
What did the Economic Crime Act 2022 Introduce regarding property interests?
> public register requirement for overseas entities purchasing 25% direct or indirect ownership, or significant influence/ control after 1 Jan 1999
> Criminal offence - Failure to register, or submitting false information and will prevent individuals and or companies entering into property transactions
> an annual compliance requirement - file statement listing
1) any changes to registrable beneficial owners
2) confirmation beneficial owners have not changed.
What are the 5 offences and punishments under the POCA (2002)?
- Concealing
- Arrangements - it could include advising on a transaction.
- Acquisition, use and possession of criminal property.
** a fine and a jail term of up to 14 years**
- Failure to disclose
**a fine and a jail term of up to five years**
- Tipping off
** a fine and a jail term of up to five years (two years regulated sector).
What are 3 stages of money laundering?
- Placement – introduction into the financial system (bank)
- Layering – moving the criminal proceeds around the financial system, through a series of complex transactions
- Integration – ultimate beneficiary appears to be holding legitimate funds
What is a valid defence against money laundering?
if disclosed to their firm’s money laundering reporting officer (MLRO), or if the MLRO reports to the NCA
How are people and firms verified during due diligence?
Firms = MoA/Governing Docs check with Companies House
People = verified ID e.g. Passport
What is Enhanced Due Diligence (EDD)?
Increased requirements for examining the background or purpose of a transaction and increasing the degree of monitoring, If
- there is a high risk of ML or TF
- where a transaction or business relationship is established in a high-risk third country
- or any other circumstances where complex/ large/ unusual transactions are involved with no apparent economic or legal purpose
Who are Politically Exposed Persons (PEPs)?
‘an individual who is or has, at any time in the preceding year, been entrusted with a prominent public function, other than as a middle-ranking or more junior official’
The firms’ obligation to apply EDD measures to an individual ceases after they have left office for one year, or a longer period if the firm considers that it might be appropriate
What is the punishment for false statements during ML due diligence?
a fine and/or up to two years’ imprisonment
What should a firm do if it cannot verify a customer’s identity?
not proceed with the business relationship, and should consider whether this should cause it to make a report to the NCA
When must EDD be applied?
- where there is a high-risk of ML/TF
- a person in a high-risk third country
- client has not been physically present for identification
- correspondent banking relationships
- dealing with PEPs, or a family member or known close associate of a PEP
- in any case where a customer has provided false or stolen identification documents
- in any case where a transaction is complex and unusually large or there is an unusual pattern of transactions.
What is the difference between a MLRO and a Nominated Officer (NO)?
> FCA = MLRO
> ML Regulations = NO
> IN PRACTICE THE MLRO AND NO ARE THE SAME PERSON AND KNOWN AS JUST THE MLRO
What are the FCA’s 3 expectations with regard to MLROs?
- appropriate level of authority and independence
- access to resources and information sufficient enough to enable them to carry out their responsibilities.
- based in the UK.
What is the NCA and how is it managed?
> The NCA is responsible for tackling organised crime, defending the UK’s borders, fighting fraud and cybercrime, and protecting children and young people.
> led by a senior chief constable and is accountable to the Home Secretary.
What is the definition of ‘cybercrimes’ and what are the 2 types?
‘Cybercrimes are those crimes committed through the use of ICT devices, including mobile or ‘smart’ phones. Cybercrimes can be defined in two ways:
- Pure cybercrimes (or computer-dependent crimes) – when a criminal act can only be committed through the use of computers or other ICT devices.
- Cyber-enabled crimes are those that may be committed without ICT devices, but are changed by use of ICT in terms of scale and reach. e.g. online fraud; theft or sexual offending
What are the responsibilities of firms with regard to Suspicious Activity Reporting (SAR)?
Notify the MLRO who will assess if suspicious, and if so, report in a timely manner to the NCA
