PCR MCQ
Guide
2021/22
– Section A: Code of Conduct
– Section B: Money Laundering
– Section C: Financial Services
,Table of Contents
INTRODUCTION............................................................................................................................................ 5
AUTHORITSATION......................................................................................................................................... 5
WHEN IS AUTHORISATION REQUIRED?.......................................................................................................................5
RESERVED LEGAL ACTIVITIES.....................................................................................................................................5
ELIGIBILITY OF AUTHORISATION................................................................................................................................5
RULES ON BEING A ‘SOLICITOR’................................................................................................................................6
COLPS AND COFAS........................................................................................................................................ 6
COLPS................................................................................................................................................................. 7
COFAS.................................................................................................................................................................8
WHO IS ELIGIBLE TO BE A FIRM’S COLP OR COFA?........................................................................................................8
SUPERVISION OF THE BUSINESS OF THE FIRM AS A WHOLE...........................................................................8
SUPERVISION OF CLIENT MATTERS.............................................................................................................................9
NEGLIGENCE AND BREACH OF CONTRACT AGAINST SOLICITORS....................................................................9
SOLICITOR’S NEGLIGENCE AND THE CODE....................................................................................................................9
INSURANCE OBLIGATIONS OF FIRMS............................................................................................................. 9
DISCIPLINERARY ACTION AGAINST SOLICITORS............................................................................................ 10
PROVIDING A POOR SERVINCE................................................................................................................................10
PROVIDING INADEQUATE PROFESSIONAL SERVICES......................................................................................................10
PROFESSIONAL MISCONDUCT.................................................................................................................................10
CONDUCT UNBEFFITING A SOLICITOR.......................................................................................................................10
WHO CAN THE CLIENT COMPLAIN TO?.....................................................................................................................10
COMPLAINTS TO THE LEGAL OMBUDSMAN................................................................................................................11
COMPLAINTS TO SRA & SOLICITORS DISCIPLINARY TRIBUNAL.......................................................................................12
SUPERVISION AND MANAGEMENT RESPONSIBILITIES..................................................................................13
MORTGAGE FRAUD..................................................................................................................................... 14
ORGANISED CRIME: THIS CAN INVOLVE STEPS SUCH AS:..............................................................................................14
THE ROLE OF THE PROFESSIONAL ADVISER IN A MORTGAGE FRAUD................................................................................15
MORTGAGE FRAUD WARNING SIGNS.......................................................................................................................15
SECTION A: CODE OF CONDUCT................................................................................................................... 18
THE SRA PRINCIPLES (L1, P2-3).................................................................................................................... 18
THE PRINCIPLES...................................................................................................................................................18
CONFLICT BETWEEN THE PRINCIPLES........................................................................................................................18
DUTY TO THE COURT & PROFESSIONAL OBLIGATIONS..................................................................................................18
THE CODES (L1, P4-7).................................................................................................................................. 18
CODE OF CONDUCT FOR SOLICITORS (“CCS”)...........................................................................................................18
CODE OF CONDUCT FOR FIRMS (“CCF”)..................................................................................................................18
1
,CLIENT CARE AND SERVICE AND COMPETENCE (L1, P.7; CHAPTER 1)............................................................19
ACCEPTING INSTRUCTIONS.....................................................................................................................................19
CLIENT CARE....................................................................................................................................................... 19
COSTS STANDARDS IN CLIENT CARE LETTERS..............................................................................................................20
CLIENT MONEY AND ASSETS...................................................................................................................................20
COMPLAINTS, RE: CLIENT CARE LETTERS...................................................................................................................21
CONTENTS OF CLIENT CARE LETTER (L1, P12)...........................................................................................................21
TERMINATING A RETAINER.....................................................................................................................................21
EQUALITY AND DIVERSITY (CHAPTER 2)....................................................................................................... 22
RULES................................................................................................................................................................22
DISCRIMINATION..................................................................................................................................................22
CONFLICT OF INTERESTS (L1, P.14-20; CHAPTER 3).......................................................................................23
THE GENERAL RULE..............................................................................................................................................23
THE SUBSTANTIALLY COMMON INTEREST EXCEPTION (‘SCI’).........................................................................................23
THE ‘CLIENTS COMPETING FOR THE SAME OBJECTIVE’ EXCEPTION (‘CCSO’)....................................................................24
AVOIDING CONFLICTS FROM HAPPENING (L1, P.19)...................................................................................................25
CONFIDENTIALITY AND DISCLOSURE (L1, P.21-23; CHAPTER 4).....................................................................25
DUTY OF CONFIDENTIALITY (CCS/CCF 6.3)..............................................................................................................25
DUTY OF DISCLOSURE (CCS/CCF 6.4).....................................................................................................................25
DUTY OF CONFIDENTIALITY AND DISCLOSURE CONFLICTS..............................................................................................26
ADVERSE INTERESTS AND CONFIDENTIAL INFORMATION (CCS/CCF 6.5)........................................................................27
MAINTAINING TRUST AND ACTING FAIRLY (L1, P25-28; CHAPTER 10)..........................................................28
UNDERTAKINGS...................................................................................................................................................28
COOPERATION AND ACCOUNTABILITY (L1 P.29-30; CHAPTER 9)...................................................................29
DISPUTE RESOLUTION AND PROCEEDINGS BEFORE COURTS, TRUUNALS AND INQUIRIES (L1, P.30-31;
CHAPTER 5)................................................................................................................................................. 30
HOW MIGHT YOU MISLEAD THE COURT?..................................................................................................................31
OTHER IMPORTANT STANDARDS..............................................................................................................................31
RIGHTS OF AUDIENCE...........................................................................................................................................31
ARE YOU OBLIGED TO ATTEND COURT WITH YOUR CLIENT?..........................................................................................31
COMPLIANCE WITH BUSINESS SYSTEMS (L1, P.31-32; CHAPTER 4)...............................................................32
REFERRALS, INTRODUCTIONS AND SEPARATE BUSINESSES (CHAPTER 6)......................................................32
INTRODUCTIONS..................................................................................................................................................33
COMMISSION/INTRODUCTION FEES RECEIVED FROM THIRD PARTIES:..............................................................................33
General commissions:...................................................................................................................................34
Commission paid in relation to financial products:......................................................................................34
FEE SHARING AND REFERRALS.................................................................................................................................34
Rules regarding fee sharing and referrals:...................................................................................................35
BRIBERY.............................................................................................................................................................35
PUBLICITY (CHAPTER 8)............................................................................................................................... 36
2
, SRA TRANSPARENCY RULES...................................................................................................................................36
SECTION B: MONEY LAUNDERING OFFENCES............................................................................................... 38
MONEY LAUNDERING INTRODUCTION (L2, P.1-4)........................................................................................38
INTERNAL CONTROLS: OFFICERS RESPONSIBLE FOR POCA/MLR COMPLIANCE.....................................................................38
MLR – REGULATION 21 SCREENING, TRAINING & INDEPENDENT AUDIT.........................................................................38
ELEMENTS OF MONEY LAUNDERING.........................................................................................................................39
HOW IS A SOLICITOR AT RISK FROM MONEY LAUNDERING?..........................................................................................39
PART 7 OF THE PROCEEDS OF CRIME ACT 2002 (L2, P.4-10)..........................................................................39
DIRECT INVOLVEMENT OFFENCES (S.327-329) & DEFENCES........................................................................................39
‘Direct involvement’ or principal offences under PoCA:...............................................................................39
Defences to s.327-329..................................................................................................................................40
Meaning of ‘authorised disclosure’ and ‘appropriate consent’:..................................................................40
NON-DIRECT INVOLVEMENT OFFENCES & DEFENCES....................................................................................................41
Failure to disclose to nominated officer in reg sector (s.330 PoCA).............................................................41
Meaning of ‘know or (reasonably) suspect’ under s.330 PoCA....................................................................41
Work which falls under the regulated sector? (Schedule 9 PoCA)...............................................................42
Failure of nominated officer to disclose to NCA (s.331)...............................................................................42
Defences to s.330/331..................................................................................................................................42
TIPPING OFF (S.333A).........................................................................................................................................42
PENALTY FOR OFFENCES (S.334)............................................................................................................................43
PROTECTED DISCLOSURE....................................................................................................................................... 43
COMPLIANCE WITH THE MONEY LAUNDERING REGULATIONS (L2, P10-27)..................................................43
TO WHOM DO THE MLR RELATE (REGULATION 8).......................................................................................................43
RISK ASSESSMENT UNDER REGULATION 18...............................................................................................................44
WHAT STEPS DO THE MLR REQUIRE YOU TO TAKE AND WHEN? (REG 27).......................................................................45
WHAT CONSTITUTES A BUSINESS RELATIONSHIP? (REGULATION 4)................................................................................45
CDD REQUIRED IN RESPECT OF AN OCCASIONAL TRANSACTION.....................................................................................45
WARNING SIGNS FOR MONEY LAUNDERING AND TERRORIST FINANCING..........................................................................45
Jurisdictions with heightened risk of money laundering..............................................................................46
TIMING OF VERIFICATION......................................................................................................................................46
ONGOING MONITORING OBLIGATIONS.....................................................................................................................47
STANDARD CUSTOMER DUE DILIGENCE MEASURES (REG 28).......................................................................47
THE MEASURES................................................................................................................................................... 47
Beneficial owner...........................................................................................................................................47
‘NON-STANDARD’ CUSTOMER DUE DILIGENCE: ‘SIMPLIFIED’ OR ‘ENHANCED’ CDD......................................48
SIMPLIFIED DUE DILIGENCE (‘SDD’) (REGULATIONS 37 AND 38)..................................................................................49
SDD: Regulation 37(3) risk factors................................................................................................................49
SDD Process..................................................................................................................................................49
Discontinuation of SDD.................................................................................................................................50
ENHANCED DUE DILIGENCE (‘EDD’) (REGULATIONS 33 TO 35)....................................................................................50
EDD measures...............................................................................................................................................50
Assessment of risk........................................................................................................................................51
3
Guide
2021/22
– Section A: Code of Conduct
– Section B: Money Laundering
– Section C: Financial Services
,Table of Contents
INTRODUCTION............................................................................................................................................ 5
AUTHORITSATION......................................................................................................................................... 5
WHEN IS AUTHORISATION REQUIRED?.......................................................................................................................5
RESERVED LEGAL ACTIVITIES.....................................................................................................................................5
ELIGIBILITY OF AUTHORISATION................................................................................................................................5
RULES ON BEING A ‘SOLICITOR’................................................................................................................................6
COLPS AND COFAS........................................................................................................................................ 6
COLPS................................................................................................................................................................. 7
COFAS.................................................................................................................................................................8
WHO IS ELIGIBLE TO BE A FIRM’S COLP OR COFA?........................................................................................................8
SUPERVISION OF THE BUSINESS OF THE FIRM AS A WHOLE...........................................................................8
SUPERVISION OF CLIENT MATTERS.............................................................................................................................9
NEGLIGENCE AND BREACH OF CONTRACT AGAINST SOLICITORS....................................................................9
SOLICITOR’S NEGLIGENCE AND THE CODE....................................................................................................................9
INSURANCE OBLIGATIONS OF FIRMS............................................................................................................. 9
DISCIPLINERARY ACTION AGAINST SOLICITORS............................................................................................ 10
PROVIDING A POOR SERVINCE................................................................................................................................10
PROVIDING INADEQUATE PROFESSIONAL SERVICES......................................................................................................10
PROFESSIONAL MISCONDUCT.................................................................................................................................10
CONDUCT UNBEFFITING A SOLICITOR.......................................................................................................................10
WHO CAN THE CLIENT COMPLAIN TO?.....................................................................................................................10
COMPLAINTS TO THE LEGAL OMBUDSMAN................................................................................................................11
COMPLAINTS TO SRA & SOLICITORS DISCIPLINARY TRIBUNAL.......................................................................................12
SUPERVISION AND MANAGEMENT RESPONSIBILITIES..................................................................................13
MORTGAGE FRAUD..................................................................................................................................... 14
ORGANISED CRIME: THIS CAN INVOLVE STEPS SUCH AS:..............................................................................................14
THE ROLE OF THE PROFESSIONAL ADVISER IN A MORTGAGE FRAUD................................................................................15
MORTGAGE FRAUD WARNING SIGNS.......................................................................................................................15
SECTION A: CODE OF CONDUCT................................................................................................................... 18
THE SRA PRINCIPLES (L1, P2-3).................................................................................................................... 18
THE PRINCIPLES...................................................................................................................................................18
CONFLICT BETWEEN THE PRINCIPLES........................................................................................................................18
DUTY TO THE COURT & PROFESSIONAL OBLIGATIONS..................................................................................................18
THE CODES (L1, P4-7).................................................................................................................................. 18
CODE OF CONDUCT FOR SOLICITORS (“CCS”)...........................................................................................................18
CODE OF CONDUCT FOR FIRMS (“CCF”)..................................................................................................................18
1
,CLIENT CARE AND SERVICE AND COMPETENCE (L1, P.7; CHAPTER 1)............................................................19
ACCEPTING INSTRUCTIONS.....................................................................................................................................19
CLIENT CARE....................................................................................................................................................... 19
COSTS STANDARDS IN CLIENT CARE LETTERS..............................................................................................................20
CLIENT MONEY AND ASSETS...................................................................................................................................20
COMPLAINTS, RE: CLIENT CARE LETTERS...................................................................................................................21
CONTENTS OF CLIENT CARE LETTER (L1, P12)...........................................................................................................21
TERMINATING A RETAINER.....................................................................................................................................21
EQUALITY AND DIVERSITY (CHAPTER 2)....................................................................................................... 22
RULES................................................................................................................................................................22
DISCRIMINATION..................................................................................................................................................22
CONFLICT OF INTERESTS (L1, P.14-20; CHAPTER 3).......................................................................................23
THE GENERAL RULE..............................................................................................................................................23
THE SUBSTANTIALLY COMMON INTEREST EXCEPTION (‘SCI’).........................................................................................23
THE ‘CLIENTS COMPETING FOR THE SAME OBJECTIVE’ EXCEPTION (‘CCSO’)....................................................................24
AVOIDING CONFLICTS FROM HAPPENING (L1, P.19)...................................................................................................25
CONFIDENTIALITY AND DISCLOSURE (L1, P.21-23; CHAPTER 4).....................................................................25
DUTY OF CONFIDENTIALITY (CCS/CCF 6.3)..............................................................................................................25
DUTY OF DISCLOSURE (CCS/CCF 6.4).....................................................................................................................25
DUTY OF CONFIDENTIALITY AND DISCLOSURE CONFLICTS..............................................................................................26
ADVERSE INTERESTS AND CONFIDENTIAL INFORMATION (CCS/CCF 6.5)........................................................................27
MAINTAINING TRUST AND ACTING FAIRLY (L1, P25-28; CHAPTER 10)..........................................................28
UNDERTAKINGS...................................................................................................................................................28
COOPERATION AND ACCOUNTABILITY (L1 P.29-30; CHAPTER 9)...................................................................29
DISPUTE RESOLUTION AND PROCEEDINGS BEFORE COURTS, TRUUNALS AND INQUIRIES (L1, P.30-31;
CHAPTER 5)................................................................................................................................................. 30
HOW MIGHT YOU MISLEAD THE COURT?..................................................................................................................31
OTHER IMPORTANT STANDARDS..............................................................................................................................31
RIGHTS OF AUDIENCE...........................................................................................................................................31
ARE YOU OBLIGED TO ATTEND COURT WITH YOUR CLIENT?..........................................................................................31
COMPLIANCE WITH BUSINESS SYSTEMS (L1, P.31-32; CHAPTER 4)...............................................................32
REFERRALS, INTRODUCTIONS AND SEPARATE BUSINESSES (CHAPTER 6)......................................................32
INTRODUCTIONS..................................................................................................................................................33
COMMISSION/INTRODUCTION FEES RECEIVED FROM THIRD PARTIES:..............................................................................33
General commissions:...................................................................................................................................34
Commission paid in relation to financial products:......................................................................................34
FEE SHARING AND REFERRALS.................................................................................................................................34
Rules regarding fee sharing and referrals:...................................................................................................35
BRIBERY.............................................................................................................................................................35
PUBLICITY (CHAPTER 8)............................................................................................................................... 36
2
, SRA TRANSPARENCY RULES...................................................................................................................................36
SECTION B: MONEY LAUNDERING OFFENCES............................................................................................... 38
MONEY LAUNDERING INTRODUCTION (L2, P.1-4)........................................................................................38
INTERNAL CONTROLS: OFFICERS RESPONSIBLE FOR POCA/MLR COMPLIANCE.....................................................................38
MLR – REGULATION 21 SCREENING, TRAINING & INDEPENDENT AUDIT.........................................................................38
ELEMENTS OF MONEY LAUNDERING.........................................................................................................................39
HOW IS A SOLICITOR AT RISK FROM MONEY LAUNDERING?..........................................................................................39
PART 7 OF THE PROCEEDS OF CRIME ACT 2002 (L2, P.4-10)..........................................................................39
DIRECT INVOLVEMENT OFFENCES (S.327-329) & DEFENCES........................................................................................39
‘Direct involvement’ or principal offences under PoCA:...............................................................................39
Defences to s.327-329..................................................................................................................................40
Meaning of ‘authorised disclosure’ and ‘appropriate consent’:..................................................................40
NON-DIRECT INVOLVEMENT OFFENCES & DEFENCES....................................................................................................41
Failure to disclose to nominated officer in reg sector (s.330 PoCA).............................................................41
Meaning of ‘know or (reasonably) suspect’ under s.330 PoCA....................................................................41
Work which falls under the regulated sector? (Schedule 9 PoCA)...............................................................42
Failure of nominated officer to disclose to NCA (s.331)...............................................................................42
Defences to s.330/331..................................................................................................................................42
TIPPING OFF (S.333A).........................................................................................................................................42
PENALTY FOR OFFENCES (S.334)............................................................................................................................43
PROTECTED DISCLOSURE....................................................................................................................................... 43
COMPLIANCE WITH THE MONEY LAUNDERING REGULATIONS (L2, P10-27)..................................................43
TO WHOM DO THE MLR RELATE (REGULATION 8).......................................................................................................43
RISK ASSESSMENT UNDER REGULATION 18...............................................................................................................44
WHAT STEPS DO THE MLR REQUIRE YOU TO TAKE AND WHEN? (REG 27).......................................................................45
WHAT CONSTITUTES A BUSINESS RELATIONSHIP? (REGULATION 4)................................................................................45
CDD REQUIRED IN RESPECT OF AN OCCASIONAL TRANSACTION.....................................................................................45
WARNING SIGNS FOR MONEY LAUNDERING AND TERRORIST FINANCING..........................................................................45
Jurisdictions with heightened risk of money laundering..............................................................................46
TIMING OF VERIFICATION......................................................................................................................................46
ONGOING MONITORING OBLIGATIONS.....................................................................................................................47
STANDARD CUSTOMER DUE DILIGENCE MEASURES (REG 28).......................................................................47
THE MEASURES................................................................................................................................................... 47
Beneficial owner...........................................................................................................................................47
‘NON-STANDARD’ CUSTOMER DUE DILIGENCE: ‘SIMPLIFIED’ OR ‘ENHANCED’ CDD......................................48
SIMPLIFIED DUE DILIGENCE (‘SDD’) (REGULATIONS 37 AND 38)..................................................................................49
SDD: Regulation 37(3) risk factors................................................................................................................49
SDD Process..................................................................................................................................................49
Discontinuation of SDD.................................................................................................................................50
ENHANCED DUE DILIGENCE (‘EDD’) (REGULATIONS 33 TO 35)....................................................................................50
EDD measures...............................................................................................................................................50
Assessment of risk........................................................................................................................................51
3
