Select a regulated financial services sector with which you are familiar, e.g. banking, capital markets, insurance. For your chosen sector, research and identify one regulation issued by the Monetary Authority of Singapore (MAS).
Discuss the objective of the regulation, which business activity is affected, and which compliance issue it is intended to address.
A new member of the compliance team at a regulated financial services firm stands up at an induction session and poses a question to the more senior members of the compliance group.
‘I have heard a term used that I do not really understand, namely a reference to “the three lines of defense model for risk management”. Could someone please explain what this term means and where the compliance function sits within this model’.
Wishing to impress the audience, you seek to answer the question. State the response you would make.
You have recently been part of an internal review team whose remit was to assess the firm’s compliance with the MAS’s requirements. The review noted several deficiencies. You have been tasked with dealing with the item:
‘The firm’s process for dealing with Suspicious Transaction Reports is not robust’.
You must imagine a failing that would fit this category and then:
Familiarise yourself with the key obligations placed on an organisation by the Notice on Prevention of Money Laundering and Countering the Financing of Terrorism (Notice 626).
Controls need to be implemented to prevent the risks associated with issues arising under MAS 626.
Draft a paragraph explaining the obligations that need to be met to satisfy the requirements regarding:
Your sales director approaches you with an idea about launching a new (to the firm) and complex product. Your CEO is not convinced that the firm should be entering into such high-risk and high-profile markets. Your CEO asks you to highlight options available to the firm to address the risks posed by this request. Identify the risk-management options available and briefly describe how they would apply.
Your firm has identified that Suspicious Transaction Reports are not being processed within time frames that are acceptable under company policy.
Identify the key timing requirements, how you will go about ensuring positive change and how you will ensure that the requirements are being met. Also, identify what information you will provide to senior management to demonstrate the impact of the changes.
You have been tasked with assisting the firm’s money laundering reporting officer. She advises that the Suspicious Transaction Reports she receives are often vague. She asks you to assist by creating a template for the staff to use to submit their suspicions to her. Create the template.
The MAS Guidelines on Standards of Conduct for Financial Advisers and Representatives refers to ‘Conflicts of Interest’ and ‘Remuneration’. State the high-level objectives of these sections and explain how a firm could avoid conflicts of interest in its remuneration policy
You have been asked by your compliance director to review the firm’s compliance training program. Enumerate the various stages that you will consider in reviewing, re-designing, and delivering training. Additionally, identify the key success factors and how you will measure them.
Your head of compliance is due to give a short talk at an upcoming seminar on the subject of ‘Ethical behaviour’. As part of her talk, she wants to make the point that ethical behaviour is something to be practised every minute of every day and not just when under scrutiny.
Produce a note on this subject containing 3–5 talking points that she can use in her talk.
A recent external audit of your firm criticised the firm’s internal communication processes. Notable for your department was the criticism that regulatory updates are sent only in hard copy to the various stakeholders with a note from the head of compliance requiring them to comply with the changes.
You have been tasked with reviewing and improving upon the process. Produce a note for the head of compliance that proposes a solution that will involve the stakeholders in the process, keep them informed, record their input and consider their interests and feedback. The note should identify how any conflicts will be managed and/or escalated.
1. Your firm experiences what your local money laundering reporting officer (MLRO) believes to be a higher than usual number of internal Suspicious Transaction Reports (STR). He has asked your supervisor, the head of compliance (HoC), to investigate this and the HoC has asked you to prepare a short note outlining:
2. The information you currently have available to address the concern is as follows:
An initial finding from your internal audit department’s review of complaints is that it appears that customers’ needs are not being fully considered when advice is given.
The only source of data used by the internal audit department was the complaints received, which they arranged into high-level categories, driven by the nature of the complaint.
You feel that this conclusion is misleading.
1. You have been asked to present the findings of your review of STRs as detailed in question 1 to the country compliance officers (CCOs).
2. Bearing in mind the staff attending the session understand the technicalities of STRs and reporting but are not statisticians or analysts, provide a short summary (suited to the level of understanding of your audience) which indicates: