Bribery/AML

Question 1

What is a bribe?

Answer 1

• Giving, receiving or promising an advantage (e.g. item/money/service) for an action which is illegal or a breach of trust
• Companies are responsible for their employees’ corrupt acts unless they prove they had adequate policies in place to combat bribery
• Some lavish corporate entertainment is considered a bribe

Question 2

When can you accept an inducement?

Answer 2

• Hospitality, promotional or other ‘low value’ business expenditure which seeks to genuinely promote and improve the image of a firm is an acceptable and key part of doing business and registered, if required, if accordance with the firm’s anti-bribery procedures
• Hospitality is not prohibited by the act
• Tickets to major sporting event and taking clients for meals is ok as long as it is recorded in gift/hospitality register
• There’s a defence if you can show adequate procedures put in place to prevent bribery

Question 3

What is the key legislation to consider that governs bribery and inducements?

Answer 3

• Bribery Act 2010 and Proceeds of Crime Act 2002
• Under guidance, companies also must prove they have undertaken steps to prevent bribery:
  o Staff training
  o Identification of potential risks
  o Provision of policies
  o Regular reviews

Question 4

What does the Bribery Act 2010 aim to do?

Answer 4

Reduce bribery in business in UK and abroad

Question 5

What are the 6 principles of the Bribery Act?

Answer 5

1. Monitoring and review – risks to company will change over time – review will help mitigate risks
2. Communication – employers need to communicate their policies and procedures to staff, including additional training
3. Due diligence – a risk based approach to your business relationships
4. Risk assessment – identify potential areas of exposure
5. Proportionality – action taken should be proportionate to risk and size of organisation
6. Top level commitment – senior management need to ensure an organisation conducts business without bribery

Question 6

What are the four offences under the Bribery Act 2010?

Answer 6

1. Bribing
2. Receiving a bribe
3. Bribing a foreign public official
4. Failing to prevent bribery

Question 7

Who policies the Bribery Act?

Answer 7

Serious Fraud Office

Question 8

What are the penalties for accepting bribes?

Answer 8

Maximum of 10 years imprisonment and/or unlimited fine

Question 9

What is your companies gift handling procedure?

Answer 9

• Logged in gift register
• Bribery Officer must be informed

Question 10

If a client offers to take you out for dinner/get you a bottle of wine for your efforts, can you accept their hospitality?

Answer 10

You need to think about the value of the gift, the timing of the gift and whether or not it might affect any commercial decisions as far as you are concerned

Question 11

If a client offers to take you out for dinner after having completed a rent review for them, would you accept?

Answer 11

f you have just completed a rent review for a client and you’ve done a particularly good job, the fee account has been paid to our company and the client wants to say thank you very much for your efforts, it probably is acceptable.

Question 12

If you were invited to the launch of new offices and there were JL vouchers there, is that acceptable?

Answer 12

Yes because the gift is being offered to a group of us and it is not considered to be a personable bribe.

Question 13

A contact made through work offers you tickets to centre court tickets at Wimbledon, can you accept?

Answer 13

• It is very nice to be offered that but I need to think carefully about the Bribery Act 2010, my firms policies on gifts and hospitality, is it ethical, is it professional?
• Timing, proportionality, capable of reciprocation?
• You can accept and not have to register it if it’s below a value of £100 but if it’s above, you have to register it

Question 14

What is the legislation that governs money laundering?

Answer 14

Terrorist Financing and Transfer of Funds Regulations, 2017 (amended 2023)

Question 15

What is money laundering?

Answer 15

When proceeds of criminal activities are disguised or converted and then realised as legitimate assets

Question 16

What are the key provisions of the Terrorist Financing and Transfer of Funds Regulations (2017)?

Answer 16

• Provide staff training
• AML checks
  o Must be undertaken to confirm the identity of the proposed purchaser of the property and check the purchaser’s proof of funds before contracts are exchanged
• Written ML&TF risk assessment
• Implement systems and policies to address ML&TF risks and meet requirements
• Adopt appropriate internal controls
• Customer due diligence requirements
• Record keeping of procedures undertaken
• Seek additional info for high-risk cases
• Limit of 10,000 euros for the acceptance of cash
• On-going business relationship should be monitored
• Senior staff member must be appointed to take responsibility for all compliance
• The nominated Money Laundering Reporting Officer must be appointed to report any suspicions with a Suspicious Activity Report (SAR) to the National Crime Agency
• Firm must hold records for a min of 5 years and report to Companies House any discrepancies between info the firm holds on their customers compared to info on Companies House Register

Question 17

What legal obligations do estate agents have when it comes to ML?

Answer 17

• Letting agents must register with HMRC if they let individual properties for more than 10,000 euros/month
• Individuals and businesses need to be approved and remain registered by HMRC to trade
• CDD checks on vendors, purchasers, LL&T on new sales, letting, re-letting
• EDD checks needed if red flags occur (involving high risk countries/non face-to-face business relationships)
• Firms must have policies to identify transactions which are:
  o Complex/unusually large
  o Contain unusual patterns of transactions
  o Are without apparent economic/legal purpose
• Government guidance ‘Estate agency business guidance for ML supervision’ updated in 2021 which also includes requirements for sales agents as well

Question 18

What are the levels of checks you’d do?

Answer 18

• Customer Due Diligence (CDD)
  o ID Client (e.g. passport, driving licence, electronic identification)
  o Identify the beneficial owners of the client
  o Company background checks (e.g. company name, number, address of registered office)
  o Names of directors (unless registered on London Stock Exchange)
  o Get info on purpose and intention of business relationship and proposed funding arrangements
• Enhanced Due Diligence (EDD)
  o Additional procedures required for transactions/business relationships involving “high risk” person or third world country (e.g. Afghanistan) or politically exposed person
  o Additional evidence and monitoring
• Simplified Due Diligence

Question 19

What is PEP and why might a PEP present a high risk of bribery?

Answer 19

Politically exposed person – someone who has been entrusted with a prominent public function – higher risk due to their potential involvement in bribery and corruption because of their position and influence (e.g. a politician)

Question 20

What are the penalties for ML?

Answer 20

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

Question 21

What are the typical requirements for ML checks for CDD?

Answer 21

• Public limited company: London Stock Exchange listing
• Publicly accountable body: Government ownership/control
• Private limited company: Certificate of Incorporation, Full name, registered number, registered office, business address, names of all directors and names of shareholders with 25% or more holding. Identification of a higher risk client. Report any discrepancies to Companies House
• Private individual: Copy of valid passport/driving license with photo
  Copy of bank statement, credit card bill, council tax statement or utility bill to show evidence of address, not more than 3 months old

Question 22

What are RICS red flag indicators to alter surveyors of potential ML activities?

Answer 22

• Inability/unwillingness to provide identity documents
• Changes to parties involved in transactions
• Unusual transaction features (e.g. unexpected urgency required by parties, potential loss-making or an unusual transaction for a client)
• Payment of fees, purchase or rental monies in unusual currencies

Question 23

What are the UK Government Sanctions for ML?

Answer 23

• Issued in light of Ukraine conflict
• RICS Guidance – “Anti-money laundering sanctions update, 2022” which provides a reminder about sanctions/estate agents’ role in enforcing these
  o Considering risks to a business as part of AML procedure, noting sanctions list include UK citizens and people who live in UK
  o Understanding risk factors and red flags
  o Using software as part of due diligence if a firm is likely to engage with higher risk clients/assets
  o Check high risk clients against HM Treasury’s consolidated list

Question 24

What is the Proceeds of Crime Act 2002?

Answer 24

• Gives power to authorities in the UK to recover criminal and civil proceedings money and other assets which are deemed to be proceeds of crime
• creates a set of criminal offences:
  o Disguising criminal property
  o Entering an arrangement which they know/suspect facilities the acquisition, retention, use or control of criminal property by or on behalf of another person
  o Acquisition use and possession

Question 25

What is the Economic Crime (Transparency & Enforcement) Act 2022?

Answer 25

• Includes measures for a beneficial ownership register of overseas entitles owning property in the UK
• Strengthens the investigation powers regarding unexplained wealth orders
• Allows easier prosecution

Question 26

What is the RICS Paper that governs money laundering?

Answer 26

RICS Professional Standard – Countering Bribery, Corruption, ML and Terrorist Financing (2019)

Question 27

What is the RICS Professional Standard – Countering Bribery, Corruption, ML and Terrorist Financing (2019)?

Answer 27

• Part 1
  o Bribery and corruption
   Must not offer/accept anything that constitutes a bribe
   Have procedures in place to comply with the law
   Report suspicion to relevant authority
   Retain records
   Act with due diligence
  o ML & TF
   Must not facilitate or be complicit in ML or TF
   Have systems in place to comply with the laws
   Report suspicion
   Evaluate and review risks presented to the firm
   Use 3rd party reliance for checks where you are confident in quality of info provided by 3rd party
   Take appropriate measures to understand the client and purpose of instruction
   Verify client by undertaking basic ID checks
   Retain records
• Part 2
  o Guidance
   Have written policy in place
   Encourage transparency
   Provide staff training
   Set up gifts register
   Keep up-to-date with legislation
• Part 3
  o Supplementary Guidance
   Consider the 3 ‘W’s when assessing risks
• Who you act for
• What are you doing
• Why are you being asked to do something
   PEP are higher risk as they hold positions of influence so enhanced due diligence is required
   Identify beneficial ownership of company/partnership/trust (e.g. request recent annual return for a company)