KNDI Licensing flashcards
KNDI Licensing · Build recall with a focused review session.
32 cards. Read the term and the definition here. The deck at the top of this page is optional.
- Regulated activity
- An activity specified in law (such as dealing, arranging, managing investments, custody, or advising) that requires a licence before a firm may carry it on.
- Variation of permission
- The regulatory process a licensed firm uses to add, amend, or remove activities on its licence before undertaking them, requiring an application and approval.
- Qualifying holding
- A shareholding in a licensed firm at or above a defined threshold (commonly 10%) that triggers notification and approval requirements on acquisition or increase.
- Approved persons
- Individuals holding senior or key functions who must be individually assessed for fitness and propriety and approved by the regulator before taking up the role.
- Passporting
- A regime allowing a firm licensed in one jurisdiction to provide services in another without a separate local licence, where the host recognises the home licence.
- Three lines of defence
- A governance model where business units own risk, risk and compliance functions oversee it, and internal audit provides independent assurance to the board.
- Independent non-executive director
- A board member with no material commercial, employment, or family link to the firm, assessed against tenure, remuneration, and relationship criteria.
- Audit committee
- A board committee with majority independent membership that oversees financial reporting, internal controls, and the independence and performance of internal and external audit.
- Conflicts of interest register
- A maintained log identifying actual or potential conflicts, the controls applied to manage them, and the disclosure made to affected clients.
- Accountable individual
- A named senior person responsible for a defined business line or risk, documented in a statement of responsibilities and answerable to the regulator.
- Capital adequacy ratio
- Eligible regulatory capital divided by risk-weighted assets, expressed as a percentage and compared against minimum and buffer requirements.
- Risk-weighted assets
- Exposure amounts adjusted by risk weights derived from credit, market, and operational risk methodologies, forming the denominator of capital ratios.
- Liquidity coverage ratio
- High-quality liquid assets divided by net cash outflows over a 30-day stress period; must meet or exceed 100% under the standard.
- Net stable funding ratio
- Available stable funding divided by required stable funding over a one-year horizon, designed to limit reliance on short-term wholesale funding.
- Large exposures limit
- A cap on exposure to a single counterparty or connected group, expressed as a percentage of eligible capital, to limit concentration risk.
- Leverage ratio
- Tier 1 capital divided by a total exposure measure that is not risk-weighted, acting as a backstop to risk-based capital requirements.
- Client categorisation
- Classification of clients as retail, professional, or eligible counterparty, which determines the level of disclosure, suitability, and execution protection owed.
- Suitability assessment
- Evaluation of a retail client's knowledge, experience, financial situation, and objectives to determine whether a recommended product or service is appropriate.
- Best execution
- The obligation to take all sufficient steps to obtain the best possible result for clients, considering price, cost, speed, size, and settlement factors.
- Inducements
- Fees or commissions paid to or by a firm that must enhance service quality, be disclosed to clients, and not impair the duty to act in their best interest.
- Market manipulation
- Conduct such as spoofing, layering, or false reporting that gives misleading signals about supply, demand, or price of a financial instrument.
- Client money segregation
- Holding client cash in designated accounts separate from firm funds, with daily reconciliation and funding of any shortfall from firm resources.
- Title transfer collateral
- An arrangement where a client transfers full ownership of assets to the firm as collateral, permitting reuse only where documented and disclosed.
- Client money reconciliation
- A daily comparison of the aggregate client cash liability with balances held in client accounts, with discrepancies identified and corrected promptly.
- Internal client money audit
- An independent periodic review of client money controls, reconciliations, and segregation, with findings reported to the board and remediated.
- Risk-based approach
- An AML framework in which the depth of due diligence and monitoring is proportionate to assessed customer, product, and jurisdictional risk.
- Beneficial ownership
- Identification of the natural persons who ultimately own or control a customer, typically at a threshold such as 25%, verified during due diligence.
- Politically exposed person
- An individual entrusted with prominent public functions, or an associate or family member, requiring enhanced due diligence and senior approval.
- Suspicious activity report
- An internal escalation and external filing to the financial intelligence unit describing suspected money laundering or terrorist financing, without tipping off the client.
- Sanctions screening
- Checking customers, beneficial owners, and transactions against applicable sanctions lists at onboarding and on an ongoing basis, with escalation and freezing.
- Regulatory return
- A periodic submission to the regulator containing prescribed financial, capital, liquidity, or exposure data within a fixed deadline and format.
- Record retention period
- The statutory minimum time client, transaction, and compliance records must be kept (commonly five to seven years) and remain retrievable and intact.