6. PC, ML and FSMA

Question 1

What is a reg activity under 19(1)

Answer 1

22 FSMA states specified investments and activities

Question 2

IB(1.25) says what

Answer 2

advises S ensures authority given to 3rd to instruct, if instructed by 3rd

Question 3

When is it common for S to act for Lender and why

Answer 3

In residential, as usually no negotiation

Question 4

What is a business relationship for Reg 28

Answer 4

Between RP + customer, out of RP business + BR expected to last

Question 5

When should S not act, generally, under CoI (IBs)

Answer 5

If direct conflict, if negotiating on substance, or if parties unequal

Question 6

What principle is triggered if given instructions from 3rd party

Answer 6

P(4)

Question 7

What should you explain (in Q) when dealing w/ conflict between O(4.1) and O(4.2)

Answer 7

Why confidentiality is in BI of one party, and how it conflicts w/ disclosure and BI of other party

Question 8

What Ps are relevant if mortgage fraud suspected

Answer 8

P(1) and P(2)

Question 9

Three kinds of specified activity under Part II RAO

Answer 9

Arranging investment, advising on merits or investment, or merits of RMC

Question 10

What is occasional transaction for Reg 28

Answer 10

Transaction carried out not as part of BR

Question 11

Why is it generally impossible to act for Lender and Borrowr

Answer 11

Interest in end result is not the same

Question 12

IB applying to residential transaction, acting for Lender and Borrower

Answer 12

IB(3.7)

Question 13

When is S released from duty under O(4.1), to do with mortgages

Answer 13

If fraud suspected

Question 14

What does explaining issue and obtaining written consent from clients for exception to 3.5 obtain

Answer 14

P(4)

Question 15

Exception in O(3.7)

Answer 15

Competing for same objective

Question 16

Reg on timing for CDD

Answer 16

Reg 30

Question 17

What defines specified investments for 19(1) FSMA

Answer 17

Part III RAO

Question 18

What is standard CDD under Reg 28

Answer 18

Requires identification and verification of customer identity and obtaining info on purpose of intended BR/OT

Question 19

Two kinds of clients which might fall under O(3.6)

Answer 19

Acting for Buyer/Landlord and Seller/Tenant; or for Lender and Borrower

Question 20

When can CDD be carried out later than before relevant transaction

Answer 20

During BR (ONLY BR), if necessary to avoid disrupting course of business, low risk, and ASAP

Question 21

What exceptions apply when conflict between 4.1 and 4.2?

Answer 21

O(4.4), continue to act if can safeguard info, both give informed consent, and reasonable to act

Question 22

O(1.3) says what?

Answer 22

Consider if can comply w/ CoC

Question 23

Two Outcomes on own and client conflict of interest

Answer 23

O(3.4) and (3.5)

Question 24

What is CML CoT

Answer 24

Certificate of Title for mortgage

Question 25

When can a regulated activity be carried out, and not contravene 19(1) FSMA

Answer 25

If authorised or exempt

Question 26

Where is the general prohibition under FSMA

Answer 26

19(1)

Question 27

Why must you cease acting for 1 if conflict between 4.1 and 4.2

Answer 27

Cannot comply w/ CoC (per O(1.3))

Question 28

What does specified activity under Part II RAO NOT include

Answer 28

Giving generic advice or only info - need opinion and recommendation

Question 29

Why is M of commercial property not covered by FSMA

Answer 29

Not a dwelling for RMC definition under 61(3)(a)

Question 30

Four elements to RMC

Answer 30

Lender provided credit, borrower is individual, obligation to repay secured as 1st legal M of land, and at least 40% to be used as dwelling

Question 31

Where are two exceptions to O(3.5)

Answer 31

O(3.6) and (3.7)

Question 32

What must M be for S to act for Lender and Borrower (under IB(3.7))

Answer 32

Residential, on standard terms, reasonable, CML CoT and in BI of both to act

Question 33

Outcome on exceptions to conflict between 4.1 and 4.2

Answer 33

O(4.4)

Question 34

When can S act for joint purchasers

Answer 34

If they hold as JTs

Question 35

What is a 'relevant person' for Reg 28

Answer 35

'Independent legal professionals'

Question 36

Glossary definition of competing for same objective

Answer 36

Obtained by one = unobtainable by other

Question 37

Reg on what is CDD

Answer 37

Reg 28

Question 38

No authorisation needed for specified activity under Part II RAO unless what

Answer 38

Carried out in relation to specified investment

Question 39

What IB advises S ensures authority given to 3rd to instruct, if instructed by 3rd

Answer 39

IB(1.25)

Question 40

What must S do for exception to O(3.5) be relied upon

Answer 40

Explain issues + obtain written consent from clients

Question 41

For how long does duty of confidentiality last

Answer 41

Indefinitely, unless waived, allowed or overridden

Question 42

What defines specified activities for 19(1) FSMA

Answer 42

Part II RAO

Question 43

Outcome on confidentiality

Answer 43

O(4.1)

Question 44

O(1.2) says what

Answer 44

Must protect client's interests

Question 45

When is CDD required under Reg 28

Answer 45

If relevant person establishes BR or carries out occasional transaction

Question 46

When can S act for A, despite holding material info on B

Answer 46

If info can be protected

Question 47

Where is RMC defined for Part II RAO

Answer 47

61(3)(a)

Question 48

When is CDD usually carried out

Answer 48

Before OT/BR

Question 49

Can Ss be liable if they receive laundered money, even w/o knowledge

Answer 49

Yes

Question 50

What IBs rule out substantially common interest

Answer 50

Possible prejudice, unequal bargaining, or end result differs

Question 51

What shows 4.1 takes precedence over 4.2

Answer 51

O(4.3)

Question 52

What happens if Borrower is lying on mortgage docs, and S acting for Borrower and Lender

Answer 52

O(4.1) takes precedence, so cease acting for Lender

Question 53

What is the procedure for money laundering

Answer 53

CDD required? What is CDD? Timing

Question 54

What outcome is triggered if instructions from 3rd

Answer 54

O(1.2)

Question 55

What does S disclose to Lender if must cease to act due to conflict between O(4.1) and (4.2)

Answer 55

Disclose only 'professional reasons'

Question 56

Exception in O(3.6)

Answer 56

Substantially common interest

Question 57

How do you rule out the application of two exceptions to O(3.5)

Answer 57

By IB or glossary

Question 58

How to deal w/ conflict Q

Answer 58

Is there a conflict under O(3.5) per IBs or facts? Does exception apply? Consider Glossary + if IBs exclude

Question 59

Outcome on disclosure

Answer 59

O(4.2)

Question 60

Two kinds of specified investments in Part III RAO

Answer 60

Rights under Cs of insurance and under RMCs

Question 61

What happens if S instructed to deal w/ more than one prospective B (contract race)?

Answer 61

Inform all Bs + confidentiality duty applies so requires consent

Question 62

Why is it unlikely S can act for Lender and Borrower in commercial

Answer 62

Not residential, nor CML CoT under IB(3.7), and potential negotiation

Question 63

How is a substantially common interest defined in glossary

Answer 63

Clear common purpose + strong consensus on means, so conflict = peripheral

Question 64

Reg on if CDD required

Answer 64

Reg 27

Question 65

What is breach of 19(1) FSMA

Answer 65

Criminal offence

Question 66

Why is it rarely possible to act for Buyer/Landlord and Seller/Tenant

Answer 66

Interest in end result differs

Question 67

Why must you cease acting for client if O(4.2) cannot be met

Answer 67

Can no longer give standard of care under O(1.5), against P(4)

Question 68

What is it important to note about IB(3.14)

Answer 68

It applies if there is a **_TRANSFER FOR VALUE_**