1. Ethics - (Ethics - SOE)

Question 1

What would you do if you considered your directors advice to be incorrect ?

Answer 1

Consider :
* Identify full facts of the matter and implications of the advice
* Is it legal ?
* Is it in line with RICS regulation?
* Discuss with colleagues
* If sitll considered it to be incorrect I would discuss the matter with my Director themselves.

• Refer to the Ethics decision tree for help

Question 2

How does your behaviour differ professionally and personally ?

Answer 2

My approach and behaviour does not change

Question 3

What are ethics?

Answer 3

Moral principles that govern an individuals behaviour

Question 4

Why are ethics important?

Answer 4

• Prevents any issues with inconsistent behaviour
• Promotes trust in me, my company and the industry
• Avoids potential legal and financial consequences.

Question 5

What does it mean to act ethically as a Chartered Surveyor?

Answer 5

Means your action are:
- legal
- are in line with RICS professional standards, most importantly the rules of conduct
- are in the best ineteret of your client.

Question 6

If faced with a situation that you felt was unethical, how would you proceed?

Answer 6

Using the Ethics decision tree, asking myself:
* Do I have sufficient facts?
* Is the matter legal?
* Is it in line with RICS Professional and Ethical Standards?
* Have I consulted with appropriate people?
* Do I have clear reasoning in reaching my decision?
* Would I be content for my actions to be made public?
* If answered no to any of the above, I would not proceed with the unethrical action/ situation and would consult senior staff with direction on how to proceed.

Question 7

How do ethics link with conduct rules?

Answer 7

Ethics are Moral pricniples that guide behaviours

The RICS Rules of Conduct include detailed descriptions of how RICS member should carry ourselves and behave to be ethical.

Question 8

What is the purpose of the International Ethics Standards published by IESC ?

Answer 8

International Ethics Standard Coalition.

• A global alliance of professional property and construction organisations.
• Purpose: uphold ethics globally and maintain public trust.
• Principles: Accountability, Confidentiality, Conflict of Interest, Financial Responsibility, Integrity, Lawfulness, Reflection, Standard of Service, Transparency, Trust.

Question 9

What did you learn from the RICS professionalism module?

Answer 9

The module covered the 5 Rules of Conduct in good details. One particular learning for me was around conflicts of interest, as I am not often required to carry out conflict of interest checks in my professional role.

Question 10

What is corruption

Answer 10

The misuse of public office or private power often in a buiness setting for private gain.

Question 11

What is whistleblowing?

Answer 11

Legally - “making a disclosure in the public interest”

When a worker from within an organisation reports wrongdoing externally. Potentially an activity that is illegal, immoral, unsafe or fraudulent.

Question 12

What is money laundering?

Answer 12

Illegally concealing the origin of money generated from illegal activities.

Question 13

What are the three types of due diligence?

Answer 13

• Simplified Due Diligence – Where you determine the business relationship is low risk of money laundering/terrorism
• Enhanced Due Diligence – for high risk customers and transactions with greater threat to financial sector
• New Customer Due Diligence – doing the checks to ensure your client is who they say they are.

Question 14

What are Money Laundering red flags?

Answer 14

Higher risk:
* Client is a PEP or associate
* Involves a high-risk jurisdiction
* Complex/unusual transactions
* Cash payments
* Complex structure charts

Question 15

If you ran your own firms who would you report suspicious activity to ?

Answer 15

• National crime agency (NCA)
• HMRC
• The Police

Question 16

Why is real estate in general attractive to potential money laundering ?

Answer 16

Real estate is attractive for money laundering because it enables large amounts of illicit money to be moved into the legal economy.

• Involves high-value transactions, allowing significant sums to be laundered at once.
• Allows for complex ownership structures, making it difficult to trace the true owner.
• Can be owned in shell companies
• Can generate legitimate rental income
• Seen as relaitvely safe investment

Question 17

Can you rely on someone else’s due diligence ?

Answer 17

No it is your responsibility to ensure the checks are suitable and sufficient

Question 18

What is tipping off ?

Answer 18

the process of alerting a suspect party of a potential investigation of them following a red flag being reported

Question 19

Give me some examples of how your firm might comply with the Money Laundering Regulations.

Answer 19

Report cash payments over £10K. Carry out risk assessments to make sure that we take the necessary procedures when working with clients from high risk countries or high risk sectors.

Question 20

What are the penalties related to Money Laundering?

Answer 20

Direct involvement: max.14 years prison time / unlimited fine
Indirect (tipping off, failing to report): max.5 years prison time / unlimited fine

Question 21

What is the key RICS regulation relating to money laundering?

Answer 21

JUST BEEN REPLACED WITH:

RICS Professional Standard Countering Bribery, corruption, money laundering and terrorist financing (2025)

Question 22

What is key legislation relating to money laundering and what are the key provision of it?

Answer 22

1. Money Laundering Terrorist Financing and Transfer of Funds Regulations (2017). – The Home Office

Must have:
* Risk assessment policy, internal control systems
* Staff training
* DD policies
* Record keeping and ongoing monitoring

2. Sanctions and Anti-Money Laundering Act 2018 - Framework for post-Brexit sanctions & AML powers.
   = gives UK government powers to set sanctions and AML rules to prevent crime and protect national interests.
3. Proceeds of Crime Act 2002

Question 23

What are the three main areas of offence under the Proceeds of Crime Act 2002

Answer 23

1. Concealing criminal property - deliberately disguising the origin of illicit funds through layering or offshore transfers - actively hiding
2. Arrangements - facilitating a transaction or structuring a deal that enables another party to benefit from proceeds of crime - facilitating
3. Acquisition use and possession - knowingly buying or holding assets purchased with criminal funds - simply holding

Question 24

When are enhanced Customer Due Diligence checks required?

Answer 24

Higher risk:
* Client is a PEP or associate
* Involves a high-risk jurisdiction
* Complex/unusual transactions
* Higher money laundering/terrorist financing risk identified

Question 25

For a public limited company what evidence would you require for Customer Due Diligence?

Answer 25

London stock exchange listing

Question 26

For a publicly accountable body what evidence would you require for Customer Due Diligence?

Answer 26

Government ownership

Question 27

For a private limited company what evidence would you require for Customer Due Diligence?

Answer 27

* Certificate of incorporation * Full name * Registered number and office * Names/IDs of all directors and shareholders above 25% ownership

Question 28

For individual what evidence would you require for Customer Due Diligence?

Answer 28

* Copy of valid passport and driving license * Copy of bank statement, Credit card bill, council tax statement or utility bill to show evidence of address (last 3 months) * Understand source of wealth.

Question 29

What is a PEP ?

Answer 29

Politically exposed person – describing someone in a prominent public function

Question 30

What is the cash limit under AML regulation?

Answer 30

Firms cannot accept cash payments of €10,000 or more

Question 31

Who is the nominated person under AML regulation?

Answer 31

A Money Laundering Reporting Officer (MLRO) must be appointed to handle AML reporting

Question 32

When must a Suspicious Activity Report (SAR) be made?

Answer 32

A SAR must be submitted to the National Crime Agency (NCA) if money laundering or terrorist financing is suspected.

Question 33

How long must AML records be kept?

Answer 33

Firms must retain AML records for a minimum of 5 years and report any discrepancies to Companies House.

Question 34

What is Octopus’s Anti-Money Laundering Policy

Answer 34

1) Company wide training 2) KYC / AML i.e for new borrowers Includes - worldsafe (database/ KYC tool - check for sanctions, if PEP, adverse media) - creditsafe checks (credit + financial checks/ confirm structure) - adverse media checks - ID - 2x proof of address - asking to confirm source of funds 3) HTAR - High Risk Transaction Approval Request - compliance team to carry out own checks if Enhanced DD is required i.e PEP, Higher risk jurisdiction DD only last 3 months before redoing them / info held for 5 years

Question 35

What is Octopus’ HTAR Policy?

Answer 35

HTAR Trigger: A High-Risk Transaction Approval Request (HTAR) is required if at lease one of the risk factors are met: * Client is a PEP or associate * Involves a high-risk jurisdiction * Complex ownership structure * Complex/unusual transactions * Adverse media * Source of funds/wealth concerns Approved by compliance team.

Question 36

How long are KYC searches valid for?

Answer 36

3 months

Question 37

What is a bribe?

Answer 37

Giving, offering, promising, or receiving of an unfair advantage in exchange for an action.

Question 38

What is a facilitation payment ?

Answer 38

A facilitation payment is a type of bribe. A common example is where a government official is given money or goods to perform (or speed up the performance of) an existing duty. Facilitation payments were illegal before the Bribery Act came into force and they are illegal under the Bribery Act, regardless of their size or frequency.

Question 39

What’s the difference between a gift and a bribe ?

Answer 39

A gift is a reasonable and proportionate gesture; a bribe is giving, promising, offering or reviving an unfair advantage in exchange for an action.

Question 40

What is the key legislation around Bribery and corruption?

Answer 40

Bribery Act 2010 Home Office - Money Laundering Terrorist Financing Regulations 2017

Question 41

What are the six principles of the Bribery Act (2010)?

Answer 41

They are designed to help organisations establish "adequate procedures" to prevent bribery. 1. Proportionality: Procedures proportionate, clear, and practical. 2. Commitment: Senior management show zero tolerance. 3. Risk Assessment: Identify, record, and prioritise risks. 4. Communication: Ongoing training, messaging, whistleblowing. 5. Due Diligence: Check staff, partners, and third parties. 6. Monitoring & Review: Regularly assess and update policies. Pizza crust really could do with mayo Companies are responsible for employees; gifts must be reasonable and proportional and must be recorded in gift register.

Question 42

What are the four offences under the Bribery Act (2010)?

Answer 42

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

Question 43

What are the penalties under the Bribery Act (2010)?

Answer 43

Policed by the Serious Fraud Office. Criminal offence; 10 years prison time or unlimited fine.

Question 44

What are your Company’s Gifts & Benefits Policy?

Answer 44

1) Written permission from line manager prior to receiving gift over the value of £200 2) For gifts over £30 must complete gift form and provide to compliance - logged on a register and kept for 5 years. 3) Gifts sent to us at christmas (hampers) etc go to company raffle

Question 45

When did the bribery act 2010 come into force ?

Answer 45

01-Jul-11

Question 46

If you were given a gift, what would you do?

Answer 46

1) consider timing and proportionately 2) approval from manager - over £200 3) Log anything over £30 - in line with FCA

Question 47

What three things do you consider when deciding if to accept a gift?

Answer 47

1. Timing 2. Proportionately 3. Reasonableness

Question 48

What information did you include in your Shoreditch stabilisation HoTs to ensure transparency?

Answer 48

I included: * Monthly and annual interest rates * All fees with basis of calculation * Arrangement fee: 0.5% of gross loan * Admin fee: £1,000 * No over-term fee (can be up to 2.5%) * Borrower’s responsibility for broker fees * Details of any guarantees required

Question 49

How do you confirm the client understands the fee structure?

Answer 49

I typically explain fees verbally in meetings with the borrower and when issuing HoTs and seek written acknowledgement via email from the client to confirm understanding.

Question 50

Why is transparency important when setting out fees?

Answer 50

Transparency builds trust, avoids disputes, and ensures compliance with RICS Rules of Conduct.

Question 51

What rules of conduct did your Gifts and Entertainment example demonstrate?

Answer 51

Rule 1 – Integrity, by ensuring hospitality was proportionate, transparent, and recorded to avoid undue influence. Attended a breakfast hosted by an employer’s agent (BPM – Great Haddon) instructed by my firm; ensured the hospitality was proportionate, within policy limits, and recorded in the gifts register to avoid undue influence.

Question 52

What rules of conduct did your Stabilisation loan, Shoreditch example demonstrate?

Answer 52

Rule 3 – Quality & Diligent Service Issued indicative HoTs for a mixed-use property loan (office + apartment), clearly setting out monthly/annual interest rates, arrangement and admin fees, broker fees, and guarantees, and confirmed the client’s understanding.

Question 53

What rules of conduct did your Development loan, Hackney example demonstrate?

Answer 53

Rule 2 – Competence While underwriting a 30-unit residential loan in Stoke Newington, land searches were unavailable due to a cyber-attack; I advised the borrower to seek legal advice and, with our lawyers, obtained a no-search indemnity policy.

Question 54

What rules of conduct did you Bridging loan, Little Venice example demonstrate?

Answer 54

Rule 1 – Integrity During due diligence on a borrower refinancing a hotel, I discovered a criminal conviction; despite the strong commercial case, I advised against issuing HoTs in line with firm policy and ethical standard.

Question 55

On your Bridging loan, little Venice example, how did you respond to a criminal conviction being identified?

Answer 55

I advised against issuing indicative HoTs, in line with firm policy, to protect integrity and reputation, and given the serious nature of the offence (false imprisonment of young girls), I considered this an unacceptable borrower to be involved with.

Question 56

What did you learn In your CPD on Conduct Rules, Ethics and Professional practice?

Answer 56

As part of my CPD on RICS Conduct Rules, Ethics and Professional Practice, I developed a clearer understanding of how to apply the RICS ethical principles — particularly integrity, honesty, and responsibility — in practice. Shortly afterwards, I was preparing an investment committee paper for a loan approval, which included a key risk metric: the Loan to Purchase Price (LTPP) ratio. I incorrectly input the purchase price figure the borrower had provided. This meant that the LTPP I had reported was lower than it should have been, unintentionally understating the lender's risk exposure. Although the investment decision was primarily based on Loan to Value (LTV), I recognised the importance of full transparency. I promptly flagged the error to my line manager, corrected the figure, and issued a revised investment paper to the committee. This ensured they had the full and accurate picture before proceeding.