Ethics

Question 1

What is money laundering?

Answer 1

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

Question 2

What is the legislation relating to Anti Money Laundering?

Answer 2

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

Question 3

What are the 9 key provisions of regs?

Question 4

What are Estate agents legal obligations?

Answer 4

• Regs say lettings agents to register with HMRC if they let individual properties for more than the equivalent of £10,000/ month
• Government guidance ‘Estate agency business guidance for money laundering supervision’ updated in June 2021.
• Individuals and business need to be approved and remain registered by HMRC in order to trade
• CDD (Customer Due Diligence) checks on vendors, purchasers, landlords and tenants will have to be undertaken on new sales and any letting or reletting
• EDD (Enhanced Due Diligence Checks) checks will need to be undertaken if red flags occur. (involving high risk countries or non face to face business relationships)
• Firms must have polices to identify and scrutinise transactions which are: complex or unusually large, contain unusual patterns of transactions or are without apparent economic or legal purpose
• Firms must have group wide procedures to share information and train anyone capable of identifying or preventing money laundering or terrorist financing risks.
• Allsop AML policy is located on the AML intranet site. The policy is broken down into the policy, money laundering and real estate, roles and responsibilities, quality control, training and record keeping etc.

Question 5

What is a conflict of interest?

Answer 5

A conflict of interest arises when a member of firms independence and impartiality is threatened due to the existence of a conflict between two clients:

• Any financial interest
• A personal interest
• Commercial relationships
• Acting on both sides of a transaction

Question 6

Conflict avoidance v conflict management

Answer 6

• Conflict avoidance is when you do not accept the instruction.
• Conflict management is when the instruction is accepted, and steps are agreed and put in place to manage the conflict, such as an information/ ethical barrier, with the written agreement of all parties.

Question 7

What does the RICS Global Professional Standard on Conflicts of Interest 2017 state?

Answer 7

• States that ‘a member must not advise or represent a client where doing so would involve a conflict of interest or a significant risk of a conflict of interest, other than where all those who are, or may be affected have provided their formal consent.’

Question 8

What are the other key areas of the professional standard?

Answer 8

• All conflicts must be managed in accordance of professional standard
• Every firm must have systems and controls in place for managing this – Allsop has its own ‘Conflicts of Interest Policy Statement’ which is available to all employees which highlights how to identify a conflict, different types of conflict, information and barriers, training awareness and an informed consent template letter.
• Firms must keep record to show their compliance with the standard

Question 9

What are the three types of conflicts of interest?

Answer 9

• Party Conflict – relating to work on the same instruction for two different parties
• Own Interest Conflict – relating to a personal interest
• Confidential information conflict – relating work to two parties that is confidential

Question 10

What is informed consent?

Answer 10

• Has to be given in writing by client and that the person acting is transparent and party understands all details.
• Surveyors should seek informed consent if they are satisfied all parties would benefit.

Question 11

What is the three step process on managing a conflict?

Answer 11

STEP ONE – upon receipt of full facts, consider if your impartiality is irresolvable and you should avoid or whether it can be managed properly.

STEP TWO

If you accept the instruction you need to do three things
- Disclose the nature of the conflict to both parties, the circumstances and how the firm will deal with it such as setting up information barriers etc.
- Be clear and ensure both parties can make their own decision (inform them to seek independent advice).
- Request written confirmation from both clients of their informed consent.

STEP THREE – CONFLCIT MANAGEMENT
- Once written consent is received from both parties you can set up an info barrier agreed by both clients.

Question 12

What must an information barrier include in order to be sufficient?

Answer 12

• Robust
• Reasonable steps to operate a barrier
• Surveyors acting on two sides must be separated preferably by two different buildings or floors
• All information on instruction should be securely stored
• Keep a clear audit trail of conflict check

Question 13

What does the RICS Professional Statement: Conflicts of Interest – UK commercial property market investment agency, 2017 relate to?

Answer 13

RICS Professional Statement: Conflicts of Interest – UK commercial property market investment agency, 2017

Question 14

What is Dual agency?

Answer 14

Where an agent has a contractual agency relationship with both the seller and the buyer. (This practice MUST not be undertaken)

Question 15

What is multiple introductions and what is the key basis of this?

Answer 15

This is where an agent has competing contractual relationships simultaneously with several buyers for investment opportunities.

• An agent can make multiple intro’s
• But when a client appoints an agent to act on their behalf in acquiring, TOE must be agreed in writing and the agent must make clear whether the agent is acting on an exclusive or non-inclusive basis.
• Incremental Advice: where an agent is advised by another party to provide advice, to include valuation, building surveying or planning, related to a purchase or disposal that incremental to an existing instruction. e.g. when an agent is acting for the seller but is approach by the buyer or lender for a valuation. Information barriers and informed consent put in place again.
• Personal Interest/ Own Interest Conflict: Arises when acting for a family member or someone close to you or you share a financial interest with (term – ‘connected person’). You must not let a personal interest interfere with or influence your judgement (transparency required). Section 21 of Estate Agents Act 1979 declaration required for estate agency work.

Question 16

What must be included in the Terms of Engagement?

Question 17

If you were asked for advice on at a BBQ on selling a piece of land what would you do?

Answer 17

You would firstly state that you couldn’t provide advice in this situation as you don’t have signed signed terms of engagement.
Without terms you don’t have insurance.
If they acted on your advice without cover this could be detrimental.