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APC Revision > Money Laundering > Flashcards

Money Laundering Flashcards

1
Q

What is the law is the Anti Money Laundering governed by?

A

Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations, 2017 (as amended in 2023)

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2
Q

What is Money Laundering?

A

It is when proceeds of criminal activities are disguised or converted and then realised as legitimate assets.

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3
Q

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

A
  1. To have a written money laundering and terrorist financing risk assessment.
  2. To implement systems, policies controls and procedures to address money laundering and terrorist financing risks and meet the requirements under the regulations.
  3. Adopt appropriate internal controls
  4. Provide staff training
  5. Comply with new customer, enhanced and simplified due diligence requirements.
  6. Comply with the requirements relating to politically exposed persons (PEPs)
  7. Ensure appropriate record-keeping, policies and procedures
  8. AML checks must be done to confirm the identity of the proposed purchaser of a property and check the purchaser’s source of funds by the vendor’s agent before exchange.
  9. To include additional high-risk factors when assessing the need for enhanced due diligence, and seek additional info and monitoring in certain cases i.e. transaction with parties in high risk third countries.
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4
Q

What are estate agents legal obligations?

A
  • Require letting agents to register with HMRC if they let individual properties for more than 10,000 euros or equivalent per month
    -Gov guidance ‘Estate agency business guidance for money laundering supervision’ was updated in June 2021.
  • Individuals and businesses need to be approved and remain registered with HMRC in order to trade
  • CDD checks on vendors, purchasers, landlords and tenants will have to be undertaken on new sales and any letting or reletting as above.
  • EDD to be undertaken if red flags occur (e.g. involving high risk countries or non face-to-face business relationships.
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5
Q

What would lead you to scrutinise transactions?

A

Complex or unusually large transactions
Unusual patterns of transactions
Without apparent economic or legal purposes

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6
Q

What are the levels of Due Diligence Checks?

A
  1. Customer Due Diligence Checks (CDD)
  2. Enhanced Due Diligence Checks (EDD)
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7
Q

What is included in a Customer Due Diligence Check?

A
  • Identify the client and verify identification through a reliable independent source (passport)
  • Make reasonable endeavors to identify the beneficial owners of the client (and to verify the identity of the persons responsible for managing it if not able to do so in the Persons of Significant Control register on Companies House)
  • For a company, its name, company number and address of the registered office
  • The name of the directors
  • Obtain info on the purpose and intended nature of the business relationship and proposed funding arrangement as appropriate
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8
Q

What is included in Enhanced Due Diligence (EDD)?

A

A more detailed examination on the background and purpose of the transaction and increased monitoring.

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9
Q

Why is Enhanced Due Diligence required (EDD)?

A

This is required for any transaction or business relationship involving a person established in a ‘high-risk third country’ or a ‘politically exposed person (PEP) or a family of a PEP member/business associate. EDD procedures require additional evidence and monitoring.

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10
Q

What is a PEP (Politically Exposed Person)?

A

Someone who has been entrusted with a prominent public function.

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11
Q

Why does a PEP present a higher risk?

A

They generally present a higher risk for potential involvement in bribery and corruption by virtue of their position and the influence they may hold.

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12
Q

What is limit for acceptance of cash?

A

10,000 euros

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13
Q

What should firms continue to monitor

A

The ongoing relationship between the client and them

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14
Q

Who must be appointed to take responsibility for all compliance?

A

A senior member of staff or board member

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15
Q

Who must report any suspicions with a Suspicious Activity Report (SAR) to the National Crime agency?

A

A nominated person, known as the Money Laundering Reporting Officer

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16
Q

How long must firms maintain records for?

A

5 years

17
Q

Who must a firm report to if they find any discrepancies between the information from the firm holds on their customers compared with the information held in the Companies House Register?

A

Companies House

18
Q

What are the penalties of failing to comply with the regulations?

A

14 years in prison/unlimited fine for assisting with money laundering
5 years in prison/unlimited fine for tipping off a person by informing them that they are under suspicion for money laundering or for failing to report the suspicion.

19
Q

What CDD evidence is required for a PLC

A

London stock exchange listing

20
Q

What CDD evidence is required for a Publicly accountable body?

A

Government ownership / control

21
Q

What CDD evidence is required for a Private Limited Company?

A

Certificate of Incorporation
Full name
Registered number
Registered office
Business address
Name of all directors and name of all shareholders with 25% or more holding
Identification of a higher-risk client
N.B Report any discrepancies to Companies House

22
Q

What CDD evidence is required for a Private Individual?

A

Copy of valid passport or driving license with photo
Copy of a bank statement, credit card bill, council tax statement or utility bill to show evidence of address, not more than 3 months old

23
Q

What Directive has the UK implemented?

A

The 6th EU Anti-Money Laundering Directive

24
Q

If asked about the acceptance of any cash, gift or hospitality in your interview, what should you consider?

A
  • Bribery Act 2010
  • The RICS Professional Standard (Countering Bribery Corruption, Money Laundering and terrorist financing (2019)
  • Your organisation’s procedures
  • Professional objectivity, openness and transparency
  • Proportionality
  • Tax Implications
  • Sanctions
  • Employment contract details
25
Q

If asked about Anti Money Laundering, what would you consider?

A
  • Money Laundering, Terroist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (as amended)
    -The RICS Professional Standard
  • Government guidance for estate agents (Estate agency business guidance for money laundering supervision).
  • Due diligence procedures
  • Professional objectivity, openness and transparency
  • Red Flags
  • HM’s Treasury’s Office of Financial Sanctions Implementation, which regularly provides updated guidance regarding financial sanctions against countries, companies and individuals
26
Q

What would you consider as a Red Flag?

A

The inability or unwillingness to provide identity documents
Changes to parties involved in transactions
Unusual transaction features, such as 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

27
Q

What does the RICS Guidance in ‘Anti-Money laundering sanctions update, 2022’ include? and why was it issued?

A

It was issued in light of the Ukraine Conflict.
It includes:
- how businesses should consider the risk as part of the AML procedure, noting the sanctions list which includes UK citizens and people who live in the UK
- Risk factors and red flags
- the use of software as part of due diligence where it is likely firms are to engage with higher-risk clients or assets
- checking existing clients regularly where they present a higher risk
- what do to if you think you have found a match on the sanctions list, including contacting the Office of Financial Sanctions Implementation for assitance.

28
Q

What is the Proceeds of Crime Act 2002?

A

It provides power to enforcement authorities in the UK to recover in criminal and civil proceedings money and other assets which are deemed to be the proceeds of crime. It also sets out a set of criminal offences intended to combat money laundering.

29
Q

What are the three Proceeds of Crime Act 2002 offences?

A
  1. Concealing criminal property - if a person conceals, disguises, converts or transfers criminal property
  2. Arrangements - if a person enters into or becomes concerned in an arrangement which they know or suspect facilitates the acquisition, retention, use or control of criminal property by or on behalf of another person
  3. Acquisition use and possession -if a person acquires, uses or has possession of a criminal property
30
Q

What is a high risk country?

A

Examples such as: Turkey, Syria, Iran, Kenya and Haiti

31
Q

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

A

It includes measures for a beneficial ownership register of overseas entities owning property in the UK
It strengthens investigation powers regarding unexplained wealth orders (UWOs)
It allows the easier prosecution of those involved in sanction-busting inability or unwillingness of parties to provide identity documents.

32
Q

What is the Professional Standard called which deals with Bribery, Corruption, Money Laundering and Terrorist Financing?

A

The RICS Professional Standard: Countering Bribery, Corruption, Money Laundering and Terrorist Financing (2019)

33
Q

What are the three parts in the RICS Professional Standard: Countering Bribery, Corruption, Money Laundering and Terrorist Financing (2019)

A
  1. Mandatory requirements
  2. Guidance
  3. Supplementary guidance
34
Q

What does Part 1 of the The RICS Professional Standard: Countering Bribery, Corruption, Money Laundering and Terrorist Financing (2019) require firms to do in terms of Bribery and Corruption?

A

Firms must:
- Not offer or accept anything that could constitute a bribe
- Have procedures in place to comply with the law
- Report suspicion to the relevant authority
- Act with due diligence to perform periodic written evaluations of the risks the firms face
- Retain records to show the firm has met the requirements of the Professional Statement.

35
Q

What does Part 1 of the The RICS Professional Standard: Countering Bribery, Corruption, Money Laundering and Terrorist Financing (2019) require firms to do in Money Laundering and Terrorist Financing?

A

Firms must:
- Not facilitate or be complicit in ML or TF
- Have systems in place to comply with the laws
- Report suspicion
- Evaluate and review the risks presented to the firm
- Use third party reliance for checks only where there is a level of confidence for the quality of information provided by the third party
- Take appropriate measures to understand the client and the purpose of the instruction
- Verify the client by understand basic ID checks
- Retain records to show how the firm has met the requirements of the professional statement.

36
Q

What does Part 2 of the The RICS Professional Standard: Countering Bribery, Corruption, Money Laundering and Terrorist Financing (2019) provide firms guidance on?

A

Have practical guidance on:
- Have a written policy in place for, and senior management to take control of, the procedures
- Publish a code of behaviour for staff and provide staff training
- Encourage transparency
- Set up a gifts register
- Keep up to date with legislation

37
Q

What does Part 3 of the The RICS Professional Standard: Countering Bribery, Corruption, Money Laundering and Terrorist Financing (2019) provide supplementary guidance on?

A

It provides guidance on a range of issues including:
- Establishing a risk-based approach, with the 3 W’s, Who you act for, What you are doing, and Why you are being asked to do something.
- Dealing with politically exposed persons (PEPs). They are at higher risk as they hold positions of influence and enhanced due diligence is required.
- The need to identify the beneficial ownership of a company, partnership or trust, such as by requesting a recent certificate of incorporation or annual return for a company.

38
Q
A

APC Revision (13 decks)

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