ACCA F4 - Corp and Business Law (ENG)

342 22: Fraudulent and criminal behaviour  Part H Governance and ethical issues relating to business

Study guide

Intellectual level

H Corporate fraudulent and criminal behaviour^

1 Fraudulent and criminal behaviour

(a) Recognise the nature and legal control over insider dealing 2

(b) Recognise the nature and legal control over market abuse 2

(c) Recognise the nature and legal control over money laundering 2

(d) Recognise the nature and legal control over bribery 2

(e) Discuss potential criminal activity in the operation, management and

liquidation of companies

2

(f) Recognise the nature and legal control over fraudulent and wrongful trading 2

Exam guide

Financial crime is highly examinable, in both types of question. Expect to be asked to identify whether or

not a crime has been committed, or explain the opportunities that exist for perpetrating such crimes.

1 Financial crime

Crime is conduct prohibited by the law. Financial crime can be international in nature, and there is a need

for international co-operation to prevent it.

Law tends to be organised on a national basis. However, as we shall see later, some crime, particularly

money laundering, is perpetrated across national borders. Indeed the international element of the crime

contributes to its success.

Particularly with regard to money laundering, international bodies are having to co-operate with one

another in order to control financial crimes which spreads across national boundaries.

1.1 Example: international financial crime

Money laundering is a crime in Country A but not in Country B. Money laundering can be effected legally

in Country B and the proceeds returned to Country A. Hence Country A cannot prosecute for the crime of

money laundering, which has not been committed within its national boundaries.

PER 1 requires you to demonstrate the application of professional ethics, values and judgement.

Prevention of financial crime is an important part of this.

2 Insider dealing

Insider dealing is the statutory offence of dealing in securities while in possession of inside information

as an insider, the securities being price affected by the information.

The Criminal Justice Act 1993 (CJA) contains the rules on insider dealing. It was regarded and treated as

a crime since a few people are enriched at the expense of the reputation of the stock market and the

interests of all involved in it.

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