Chartered Banker Institute Qualifications Regulation, Compliance and Financial Crime Syllabus

Regulation, Compliance and Financial Crime syllabus — full chapter and topic list

Expand any chapter to see its topics and sub-topics. This is the whole examinable outline for Regulation, Compliance and Financial Crime in Chartered Banker Institute Qualifications, not a summary of it.

1. 1

   The UK Regulatory Architecture

   4 topics

   • The twin peaks model
     • Prudential Regulation Authority objectives
     • Financial Conduct Authority objectives
     • Financial Policy Committee and macroprudential policy
   • Statutory basis and FSMA 2000
     • Regulated activities and authorisation
     • Threshold conditions
   • The FCA Handbook and PRA Rulebook structure
   • International standards bodies and Basel Committee
2. 2

   Conduct Regulation and Accountability

   5 topics

   • Principles for Businesses
   • The Senior Managers and Certification Regime
     • Senior Management Functions and statements of responsibility
     • Certification functions and fitness and propriety
     • Conduct Rules for staff
   • The Consumer Duty and good outcomes
   • Complaints handling and the Financial Ombudsman Service
   • Whistleblowing arrangements
3. 3

   Prudential Regulation and Capital

   5 topics

   • Basel framework evolution
     • Basel II, III and the finalisation reforms
     • Pillar 1, 2 and 3 structure
   • Capital adequacy and capital tiers
     • CET1, Tier 1 and Tier 2 capital
     • Risk-weighted assets and capital ratios
   • Liquidity standards
     • Liquidity Coverage Ratio
     • Net Stable Funding Ratio
   • Stress testing and ICAAP/ILAAP
   • Recovery, resolution and bail-in
4. 4

   Anti-Money Laundering and Counter-Terrorist Financing

   5 topics

   • The money laundering process
     • Placement, layering and integration
   • UK legal framework
     • Proceeds of Crime Act 2002
     • Money Laundering Regulations 2017
     • Terrorism Act provisions
   • Customer Due Diligence and risk-based approach
     • Simplified, standard and enhanced due diligence
     • Politically Exposed Persons and beneficial ownership
   • Suspicious Activity Reports and the MLRO role
   • Sanctions screening and OFSI obligations
5. 5

   Fraud, Bribery and Data Protection

   4 topics

   • Types of banking fraud
     • Authorised Push Payment fraud and scams
     • Identity theft and account takeover
   • Fraud prevention and the Contingent Reimbursement Model
   • Bribery Act 2010 and the failure to prevent offence
   • Data protection and privacy
     • UK GDPR and Data Protection Act 2018
     • Customer confidentiality and the Tournier principles

Regulation, Compliance and Financial Crime flashcards for Chartered Banker Institute Qualifications

20 of 50 cards from the Regulation, Compliance and Financial Crime deck — real questions with worked answers.

1. What is the 'twin peaks' model of UK financial regulation, and which two regulators form the peaks?

   A regulatory structure (in force since 1 April 2013) that separates prudential and conduct supervision into two bodies: the Prudential Regulation Authority (PRA), part of the Bank of England, which oversees the safety and soundness of major firms; and the Financial Conduct Authority (FCA), which regulates conduct for all firms and prudentially supervises smaller firms.

2. Which Act provides the statutory basis for UK financial regulation, and what are the regulators' general objectives under it?

   The Financial Services and Markets Act 2000 (FSMA 2000). The FCA's strategic objective is ensuring markets function well, with three operational objectives: consumer protection, market integrity, and promoting effective competition. The PRA's general objective is promoting the safety and soundness of PRA-authorised firms.

3. Under FSMA 2000, what is the 'general prohibition' and what offence does breaching it create?

   Section 19 prohibits any person from carrying on a regulated activity in the UK unless they are authorised or exempt. Breaching it is a criminal offence and may render agreements unenforceable.

4. How is the FCA Handbook structured into its main blocks?

   It is divided into blocks: High Level Standards (e.g. PRIN, SYSC), Prudential Standards, Business Standards (e.g. COBS, BCOBS), Regulatory Processes, Redress (e.g. DISP), and Specialist sourcebooks, plus the Handbook Glossary.

5. How does the PRA Rulebook differ in structure from the FCA Handbook?

   The PRA Rulebook contains only legally binding rules (no guidance), organised by firm type/sector (e.g. CRR firms, Solvency II firms, Non-authorised persons). Guidance and expectations are issued separately via Supervisory Statements and Statements of Policy.

6. What is the Basel Committee on Banking Supervision (BCBS) and what is the legal status of its standards?

   An international standard-setting body for banks, hosted by the Bank for International Settlements (BIS) in Basel, Switzerland. Its standards are not legally binding in themselves; they must be implemented into the law/rules of each member jurisdiction.

7. Name three international standards bodies relevant to banking regulation and their focus.

   BCBS (banking prudential standards); Financial Stability Board (FSB) (global financial stability and systemically important institutions); Financial Action Task Force (FATF) (anti-money laundering and counter-terrorist financing standards).

8. List the FCA's Principles for Businesses (PRIN) 1 to 6.

   1 Integrity; 2 Skill, care and diligence; 3 Management and control; 4 Financial prudence; 5 Market conduct; 6 Customers' interests (treating customers fairly).

9. List the FCA's Principles for Businesses (PRIN) 7 to 11.

   7 Communications with clients (clear, fair, not misleading); 8 Conflicts of interest; 9 Customers: relationships of trust (suitability of advice); 10 Clients' assets (protection); 11 Relations with regulators (open and cooperative, disclose appropriately).

10. What is Principle 12 ('the Consumer Duty principle') and which Principles does it disapply for retail business?

    Principle 12 requires a firm to 'act to deliver good outcomes for retail customers.' For retail market business it sets a higher standard than and disapplies Principles 6 (customers' interests) and 7 (communications).

11. What are the three pillars of the Senior Managers and Certification Regime (SM&CR)?

    (1) The Senior Managers Regime (most senior decision-makers, pre-approved by the regulator, each with a Statement of Responsibilities); (2) The Certification Regime (staff who can cause significant harm, certified annually as fit and proper by the firm); (3) Conduct Rules (basic standards for almost all staff).

12. Under the SM&CR, what is the 'Duty of Responsibility' for a Senior Manager?

    A Senior Manager can be held individually accountable if a regulatory breach occurs in their area of responsibility and they did not take the steps a reasonable Senior Manager would have taken to prevent it.

13. What is a 'Statement of Responsibilities' and a 'Management Responsibilities Map' under SM&CR?

    A Statement of Responsibilities is a document for each Senior Manager setting out the areas of the business for which they are responsible. A Management Responsibilities Map is a single firm-level document describing the firm's management and governance arrangements and how responsibilities are allocated.

14. What are the SM&CR Individual Conduct Rules (Tier 1)?

    Rule 1 Act with integrity; Rule 2 Act with due skill, care and diligence; Rule 3 Be open and cooperative with regulators; Rule 4 Pay due regard to customers' interests and treat them fairly; Rule 5 Observe proper standards of market conduct; Rule 6 Act to deliver good outcomes for retail customers (Consumer Duty conduct rule).

15. What are the four outcomes that firms must deliver under the FCA Consumer Duty?

    (1) Products and services (fit for purpose, designed for the target market); (2) Price and value (fair value); (3) Consumer understanding (communications equip consumers to make informed decisions); (4) Consumer support (meets needs throughout the relationship).

16. Under the Consumer Duty, what are the three 'cross-cutting rules'?

    Firms must: (1) act in good faith towards retail customers; (2) avoid causing foreseeable harm; and (3) enable and support customers to pursue their financial objectives.

17. What is the standard timeline for handling a complaint under the FCA's DISP rules?

    Firms must send a final response or explain why they cannot within 8 weeks of receiving the complaint. The complainant must then be told they may refer the complaint to the Financial Ombudsman Service (FOS), generally within 6 months of the final response.

18. What is the Financial Ombudsman Service (FOS) and on what basis does it decide cases?

    A free, independent statutory dispute-resolution body (set up under FSMA 2000) for unresolved complaints between consumers/eligible smaller businesses and financial firms. It decides cases on the basis of what is 'fair and reasonable in all the circumstances,' and its decisions are binding on the firm if the consumer accepts.

19. What is the maximum award the Financial Ombudsman Service can require a firm to pay (for acts/omissions on or after 1 April 2019)?

    £430,000 (for complaints referred from 1 April 2024) for acts/omissions on or after 1 April 2019, with lower limits for older events and rising annually with inflation. Awards above the binding limit can be recommended but not enforced.

20. Under SYSC whistleblowing rules, what must in-scope firms appoint and what protection is given to whistleblowers?

    Firms must appoint a 'whistleblowers' champion' (a Senior Manager responsible for the integrity and effectiveness of arrangements) and maintain internal channels. Whistleblowers are protected from detriment/dismissal under the Public Interest Disclosure Act 1998 (PIDA), and individuals may report directly to the FCA/PRA.

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