Ethics 2

Question 1

• What is the process of opening an RICS regulated firm?

Answer 1

RICS Requirements:

• Inform RICS
• Appoint Responsible Principal
• Register with Regulatory Board
• Arrange PII, Client Money Handling Procedure and CHP + approved
• Register with RICS Valuer Registration Scheme if required
• Plan for succession
• Ensure completion of Annual Return inc. CPD

Statutory Compliance:

• Disclose business name
• Equality Act and Bribery Act compliance
• Appoint AML and H&S Officers
• Health and Safety Officer
• Inform HRMC for tax
• Ensure compliance with local laws

Question 2

• What is the process of closing an RICS regulated firm?

Answer 2

When closing a firm, for the RICS, you must:
o Inform RICS
o Inform clients as soon as possible
o Return money held for clients
o Inform insurers and acquire run-off PII for min 6 years
o Retain client’s files for 6 years

Question 3

• Can you tell me about RICS Disciplinary Procedure?

Answer 3

• Standards and Regulations Board
• Set out in ‘RICS Regulatory Tribunal Rules 2010’.

Head of Regulation can;

1.) Serve Fixed Penalty Notice
o Information provided to RICS breach

2.) Make a Regulatory Compliance Order

3.) Refer matter to member of Regulatory Tribunal

4.) Refer matter to Disciplinary Panel

Appeal:
o Includes members outside of RICS
o Reviews original and new information

Question 4

• What can you tell me about the background of the RICS?

Answer 4

• Started in 1868
• Has a royal charter, granted by Privy Council in 1881
• Regulations and byelaws set out the governance of the Institution
• President = Ann Gray FRICS
• 140,000 qualified and trainee members
• 4 Levels: FRICS, MRICS, AssocRICS and Trainee

Question 5

• What requirements do you need to become FRICS?

Answer 5

• Achieve four of the following:
• 5+ years as MRICS
• Leadership role
• Professional achievement
• Academic achievement
• Raising the profile of the RICS

Question 6

• What is the governance structure of the RICS?

Answer 6

• Privy Council – advisory board to Monarch and Ministers
• Governing Council - provides management and strategic direction
• Regulatory Board, Management Board, Audit Committee

Question 7

What is Money Laundering and the method?

Answer 7

• Money laundering is when proceeds of criminal activities are disguised or converted to make a legitimate asset

3 Stages of Money Laundering:
- Placement – Move money from source to legitimate system
- Layering – transactions to disguise
- Integration – clean money returned

Question 8

What does the RICS Countering Bribery, Corruption, Money Laundering and Terrorist Financing say?

Answer 8

• Required to have a written AML assessment
• Implement systems to prevent AML and meet requirements
• Provide staff training
• Comply with requirements regarding Politically Exposed People
• Ensure record keeping
• AML checks must be undertaken for proposed purchasers
• Seek additional risk investigation where required

Question 9

When is an AML check required?

Answer 9

• Required for sales
• Required for lettings (and renewals) over €10,000 per month

Question 10

What are the levels of AML checks?

Answer 10

• Simplified – limited information available (PLC)
• Standard – normal checks (Ltd)
• Enhanced – companies or people with any red flags

Question 11

What do you ask for in an AML check?

Answer 11

• Identify the ‘Beneficials’ (owners of the company over 25%)
• List of documents including acceptable ID – 2 forms required (driving licence, passport etc)
• For companies: name, company number and address.
• SmartSearch software

Question 12

Why would you undertake an enhanced check?

Answer 12

• Politically Exposed People
• High-risk countries
• Business associates
• Limitation of cash accepted (€10,000)
• Detailed record keeping
• AML Officer identified

Question 13

What is a SAR?

Answer 13

• SAR (Suspicious Activity Report) required if notice any risks
  o Defence – defend against sale (postpose transaction)
  o Information – walking away from the job

Question 14

What are the penalties for AML negligence?

Answer 14

• Max 14 years in prison and/or unlimited fine for assisting money laundering
• Max 5 years in prison and/or unlimited fine for tipping off or informing that under AML suspicion OR failing to report suspicion

Question 15

What are potential red flags in an AML process?

Answer 15

• Unwillingness to participate
• Changes to parties involved in transaction
• Unexpected urgency
• Potential loss making
• Payment in unusual currencies

Question 16

What is the AML protocol in a joint agency instruction?

Answer 16

• Both undertake due diligence
• Reliance on other party

Question 17

What does the Proceeds of Crime Act 2002 include?

Answer 17

• Provides enforcement authorities the right to recover criminal money
• Also provides criminal offences in order to combat AML – inc the concealment of criminal money

Question 18

Who oversees the disciplinary of RICS members?

Answer 18

RICS Standards and Regulations Board

• Responsibility to protect the public

Question 19

Where is the RICS disciplinary process set out?

Answer 19

RICS Regulatory Tribunal Rules 2020

Question 20

What are the different levels of disciplinary action?

Answer 20

3 Levels of Action:

• Action by Head of Regulations
• Disciplinary Panel
• Appeal Panel

Question 21

What is contained within the process of disciplinary procedure?

Answer 21

• RICS Head of Regulation formalise the investigation
• Then decide on one of the following:

1. Serve a Fixed Penalty Notice
2. Regulatory Compliance Order
3. Refer to Regulatory Tribunal
4. Refer to Disciplinary Panel

Question 22

What is a Regulatory Compliance Order?

Answer 22

• For minor breaches (e.g. CPD non compliance)
• Withdraw member from actions for a period of time

Question 23

What is a Disciplinary Panel?

Answer 23

• For serious breaches
• Includes non-RICS members
• Penalties include - fines, exclusion

Question 24

What is the Appeal Panel?

Answer 24

• Includes members outside the RICS
• Reviews new and original information

Question 25

What is PACTT?

Answer 25

- Used when assessing penalties o Proportionality – is penalty proportionate/fair o Accountability – accountable to public o Consistency – treat all members equally o Targeting – serious breaches o Transparency – all parties

Question 26

What are the thresholds for the level of PII cover required?

Answer 26

PII Thresholds: Turnover below £100,000 = PII £250,000 Turnover below £200,000 = PII £500,000 Turnover above £200,000 = £1M - Maximum excess is £10,000 for firms with turnover below £10M - Not max excess for those over £10M

Question 27

How many hours of CPD are required each year and what is the split?

Answer 27

- 20 hours - 10 minimum = Formal - Undertake by 31st January each year

Question 28

Would you accept a bottle of wine from the bank's customer after the instruction?

Answer 28

No, think about how the bank would perceive this. Even if it is after the instruction.

Question 29

Should you negotiate on a fee?

Answer 29

No, inform client that this fee has been considered and reflects the works and experience. - Competition is encouraged - Fee cutting is not ethical - Market based fees

Question 30

Where can you find the RICS Decision Tree?

Answer 30

RICS Website Wwebpage related to Rules of Conduct

Question 31

Who can members contact with ethical dilemmas?

Answer 31

RICS Regulation Confidential Hotline

Question 32

What do the RICS publish regarding Social Media?

Answer 32

Use of Social Media Guidance Note - Members damaging the reputation of the RICS and profession online - Discrimination - Hate

Question 33

What guidance is there on dealing with confidentiality?

Answer 33

- Mentioned within the RICS Bye Laws - Estate Agency Guidance Notes

Question 34

What are RICS Bye Laws?

Answer 34

- 10 bye laws - Set out requirements of RICS members

Question 35

What kind of money can client's money include?

Answer 35

- Rent - Deposits - Service Charges

Question 36

What guidance is there for Clients Money Handling?

Answer 36

- RICS Client Money Handling Professional Statement

Question 37

What are the 6 main areas for good practice within the RICS Client Money Handling Professional Statement?

Answer 37

- Holding client money - Providing information to clients - Receipts of client money - Payments from client accounts - Accounting records and controls - Compliance

Question 38

How would sanctions have an affect on AML?

Answer 38

- Identifying purchasers through AML checks - Potentially restricted from purchasing property - Contact OFSI for assistance

Question 39

Where would you consult for advice on AML?

Answer 39

- RICS Countering Bribery, Corruption, Terrorist Financing and Money Laundering

Question 40

Is being offered a form of hospitality allowed?

Answer 40

IT DEPENDS - Can it be perceived as a bribe? - What is the value of the item? - Is it allowed by the company policy, RICS and local laws? - Is it proportional? - What is the timing? - What is the relationship?

Question 41

What is a piece of case law for negligence?

Answer 41

- Yianni v Edwin Evans (1981) - residential valuer liable for mortgage