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FIC Act FIC Act Compliance (CDD, AML/CFT, Reporting)
An FSP's client agreement contains a strict confidentiality clause. The FSP forms a suspicion that the client is laundering money, but its lawyer advises that reporting would breach the contract. Which statement reflects the FIC Act?
RE5 practice question with a worked answer. This is one of hundreds of FSCA RE5 questions in the RegulatoryExams question bank.
- a) The reporting duty applies, but the FSP must first give the client notice of the report.
- b) The reporting duty overrides any duty of confidentiality, apart from legal privilege.Correct
- c) The contract prevails, so the FSP may report only with the written consent of the client.
- d) The contract prevails unless a court first orders the FSP to make the report.
Why this is the answer
No duty of secrecy or confidentiality, whether imposed by statute, the common law or agreement, affects the duty to report under the FIC Act; the only exception is legal professional privilege between an attorney and client. Seeking the client's consent or giving notice would amount to tipping off.
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