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Question 1 of 30
1. Question
For which of the following reasons is it essential that financial institutions establish and maintain robust anti-money laundering and countering financing of terrorism (AML/CFT), anti-fraud and investment suitability frameworks?
Correct
In order to manage and mitigate key risks arising from private banking businesses, it is essential that financial institutions establish and maintain robust anti-money laundering and countering financing of terrorism (AML/CFT), anti-fraud and investment suitability frameworks.
Incorrect
In order to manage and mitigate key risks arising from private banking businesses, it is essential that financial institutions establish and maintain robust anti-money laundering and countering financing of terrorism (AML/CFT), anti-fraud and investment suitability frameworks.
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Question 2 of 30
2. Question
Which of the following measures should financial institutions take in order to ensure effective implementation of robust AML/CFT, anti-fraud and investment suitability frameworks?
Correct
Financial institutions should instill an appropriate risk and control mindset in staff, across all levels and functions to facilitate effective implementation of robust anti-money laundering and countering financing of terrorism (AML/CFT), anti-fraud and investment suitability frameworks.
Incorrect
Financial institutions should instill an appropriate risk and control mindset in staff, across all levels and functions to facilitate effective implementation of robust anti-money laundering and countering financing of terrorism (AML/CFT), anti-fraud and investment suitability frameworks.
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Question 3 of 30
3. Question
In trying to foster a strong and enduring control culture and risk awareness throughout financial institutions, which of the following group of individuals are charged with setting the right tone at the top?
I. Front office roles should take the lead in setting the right tone at the top.
II. Senior management should take the lead in setting the right tone at the top.
III. Customer service roles should take the lead in setting the right tone at the top.
IV. The Board should take the lead in setting the right tone at the top.Correct
Board and senior management should take the lead and set the right tone at the top and foster a strong and enduring control culture and risk awareness throughout their financial institutions.
Incorrect
Board and senior management should take the lead and set the right tone at the top and foster a strong and enduring control culture and risk awareness throughout their financial institutions.
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Question 4 of 30
4. Question
Appropriate policies, procedures, and controls should be put in place by financial institutions in order to prevent fraud in vulnerable areas. Which of the following is an example of these vulnerable areas?
I. Inactive/dormant accounts
II. Third-party account transfers
III. Hold-mail
IV. Current accountsCorrect
Financial institutions should put in place appropriate policies, procedures, and controls in order to prevent fraud in vulnerable areas, such as third-party account transfers, hold-mail, and inactive/dormant accounts.
Incorrect
Financial institutions should put in place appropriate policies, procedures, and controls in order to prevent fraud in vulnerable areas, such as third-party account transfers, hold-mail, and inactive/dormant accounts.
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Question 5 of 30
5. Question
For Singapore to remain as a trusted and clean financial centre, which of the following are financial institutions likely to do?
I. Financial institutions must ensure that their controls commensurate with nature, and the complexity of their business.
II. Financial institutions must ensure that their controls commensurate with the size of their business.
III. Financial institutions must ensure that their controls are effective.
IV. Financial institutions must ensure that their controls are ineffective and don’t commensurate with the size, nature, and complexity of their business.Correct
Financial institutions must ensure that their controls are effective and commensurate with the size, nature, and complexity of their business in order for Singapore to remain a trusted and clean financial centre.
Incorrect
Financial institutions must ensure that their controls are effective and commensurate with the size, nature, and complexity of their business in order for Singapore to remain a trusted and clean financial centre.
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Question 6 of 30
6. Question
During the advisory and sales process, whose responsibility is it to highlight the downside risks of the investments to their customers?
I. It is the responsibility of the relationship managers to highlight the downside risks of the investments to their customers.
II. It is the responsibility of the senior management to highlight the downside risks of the investments to their customers.
III. It is the responsibility of the marketing department to highlight the downside risks of the investments to their customers.
IV. It is the responsibility of the sales department to highlight the downside risks of the investments to their customers.Correct
During the advisory and sales process, in addition to the product terms, benefits and pricing, it is the responsibility of the relationship managers to highlight the downside risks of the investments to their customers.
Incorrect
During the advisory and sales process, in addition to the product terms, benefits and pricing, it is the responsibility of the relationship managers to highlight the downside risks of the investments to their customers.
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Question 7 of 30
7. Question
Whose duty is it to instill good selling practices in relationship managers to allow for their proper discharge of the duty of care by them and to ensure that customers’ goals and constraints are met and adhered to respectively?
Correct
It is the duty of financial institutions to instill good selling practices in relationship managers to allow for their proper discharge of the duty of care by them and to ensure that customers’ goals and constraints are met and adhered to respectively.
Incorrect
It is the duty of financial institutions to instill good selling practices in relationship managers to allow for their proper discharge of the duty of care by them and to ensure that customers’ goals and constraints are met and adhered to respectively.
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Question 8 of 30
8. Question
During the advisory and sales process, which of the following information is the relationship manager likely to highlight to the customers about their investments?
I. The product terms and pricing.
II. The product benefits.
III. The downside risks of the investments.
IV. The profit of the product to the company.Correct
During the advisory and sales process, relationship managers would highlight the product terms, benefits, and pricing, and also the downside risks of the investments to their customers.
Incorrect
During the advisory and sales process, relationship managers would highlight the product terms, benefits, and pricing, and also the downside risks of the investments to their customers.
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Question 9 of 30
9. Question
A majority of financial institutions need the product documents reviewed and approved to ensure that the information contained in those documents is clear, adequate and not misleading. Which of the following departments are charged with doing this?
I. The marketing and sales department.
II. The legal and compliance department.
III. The customer service and support department.
IV. The product committee.Correct
A majority of financial institutions require their legal and compliance department or product committee to review and approve the product documents to ensure that the information contained in those documents is clear, adequate and not misleading.
Incorrect
A majority of financial institutions require their legal and compliance department or product committee to review and approve the product documents to ensure that the information contained in those documents is clear, adequate and not misleading.
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Question 10 of 30
10. Question
Financial institutions should devote sufficient attention and resources to put in place an appropriate product risk classification framework and ensure that assessments are properly performed. Which of the following is likely to be a result of inadequate product risk rating methodology and process?
I. Proper highlighting of downside risks of the investments to customers.
II. An understatement of risk for certain financial products.
III. Inappropriate product recommendations by relationship managers.
IV. Misselling of products by relationship managers.Correct
Inadequate product risk rating methodology and process could result in an understatement of risk for certain financial products, which could, in turn, lead to misselling or inappropriate product recommendations by relationship managers. Hence, financial institutions should devote sufficient attention and resources to put in place an appropriate product risk classification framework and ensure that assessments are properly performed.
Incorrect
Inadequate product risk rating methodology and process could result in an understatement of risk for certain financial products, which could, in turn, lead to misselling or inappropriate product recommendations by relationship managers. Hence, financial institutions should devote sufficient attention and resources to put in place an appropriate product risk classification framework and ensure that assessments are properly performed.
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Question 11 of 30
11. Question
Which of the following is essential for financial institutions to detect and report suspicious transactions in a timely and effective manner, and take appropriate steps to mitigate the associated ML/TF risks?
Correct
Robust transaction monitoring is essential for financial institutions to detect and report suspicious transactions in a timely and effective manner, and take appropriate steps to mitigate the associated money laundering and terrorism financing risks.
Incorrect
Robust transaction monitoring is essential for financial institutions to detect and report suspicious transactions in a timely and effective manner, and take appropriate steps to mitigate the associated money laundering and terrorism financing risks.
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Question 12 of 30
12. Question
Transaction monitoring is a key control in financial institutions’ anti-money laundering and countering the financing of terrorism policies and procedures. In an organization, whose responsibility is it to conduct transaction monitoring?
Correct
The conduct of transaction monitoring is an organization-wide responsibility and priority. Financial institutions’ board and senior management should set a strong tone from the top, and inculcate appropriate risk awareness, ownership of risks and their accompanying mitigation measures amongst all staff.
Incorrect
The conduct of transaction monitoring is an organization-wide responsibility and priority. Financial institutions’ board and senior management should set a strong tone from the top, and inculcate appropriate risk awareness, ownership of risks and their accompanying mitigation measures amongst all staff.
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Question 13 of 30
13. Question
Which of the following is the next line of action of a financial institution who notices transactions that exhibit reasonable grounds for suspicion of money laundering and countering the financing of terrorism?
Correct
Where transactions exhibit reasonable grounds for suspicion of money laundering and countering the financing of terrorism, financial institutions are required to file suspicious transaction reports (STRs) with the Suspicious Transaction Reporting Office (STRO) in a timely manner after these transactions come to their attention.
Incorrect
Where transactions exhibit reasonable grounds for suspicion of money laundering and countering the financing of terrorism, financial institutions are required to file suspicious transaction reports (STRs) with the Suspicious Transaction Reporting Office (STRO) in a timely manner after these transactions come to their attention.
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Question 14 of 30
14. Question
Transaction monitoring is a key control in financial institutions’ anti-money laundering and countering the financing of terrorism (AML/CFT) policies and procedures. Which of the following is one of the stages of the transaction monitoring process chain?
I. Quality-based calibration.
II. Resolution and enhancement.
III. Robust implementation of the transaction monitoring process.
IV. Knowing and understanding the customer.Correct
Financial institutions should monitor and ensure the effective performance of transaction monitoring at each stage of the transaction monitoring process chain. The following stages make up the transaction monitoring process:
– Knowing and understanding the customer.
– Risk-based calibration.
– Robust implementation of the transaction monitoring process.
– Resolution and enhancement.Incorrect
Financial institutions should monitor and ensure the effective performance of transaction monitoring at each stage of the transaction monitoring process chain. The following stages make up the transaction monitoring process:
– Knowing and understanding the customer.
– Risk-based calibration.
– Robust implementation of the transaction monitoring process.
– Resolution and enhancement. -
Question 15 of 30
15. Question
An effective transaction monitoring system enables financial institutions to detect and assess whether customers’ transactions pose suspicion when considered against their respective backgrounds and profiles. Which of the following is an element that makes up an effective transaction monitoring system?
I. Poorly designed operation of the financial institution.
II. A well-calibrated framework.
III. Meaningful integration.
IV. Robust risk awareness in the staff of financial institutions.Correct
An effective transaction monitoring system is comprised of the following elements:
– A well-calibrated framework.
– Robust risk awareness in the staff of financial institutions.
– Meaningful integration.Incorrect
An effective transaction monitoring system is comprised of the following elements:
– A well-calibrated framework.
– Robust risk awareness in the staff of financial institutions.
– Meaningful integration. -
Question 16 of 30
16. Question
Financial institutions comprise of three lines of defense. Which of the following is not one of these lines of defense?
I. Independent freelance crowdsourcing.
II. Financial institutions’ frontline staff.
III. Financial institutions’ compliance and support functions.
IV. Financial institutions’ internship support.Correct
Financial institutions should designate clear responsibilities for the effective conduct of transaction monitoring across their three lines of defense. These lines of defense are:
– Financial institutions’ frontline staff.
– Financial institutions’ compliance and support functions.
– Independent audit functions.Incorrect
Financial institutions should designate clear responsibilities for the effective conduct of transaction monitoring across their three lines of defense. These lines of defense are:
– Financial institutions’ frontline staff.
– Financial institutions’ compliance and support functions.
– Independent audit functions. -
Question 17 of 30
17. Question
Which of the following statements is the responsibility of the line of financial institutions’ frontline staff?
I. Actively oversee the management of the financial institution.
II. Alert their organizations to any unusual or suspicious customer activities in the first instance.
III. Establish a good understanding of their customers’ activities and behaviors.
IV. Test and safeguard the robustness of financial institutions’ transaction monitoring performance.Correct
Financial institutions’ front line staff should establish a good understanding of their customers’ activities and behaviors, so as to alert their organizations to any unusual or suspicious activities in the first instance. Financial institutions’ frontline staff should be well equipped to perform this.
Incorrect
Financial institutions’ front line staff should establish a good understanding of their customers’ activities and behaviors, so as to alert their organizations to any unusual or suspicious activities in the first instance. Financial institutions’ frontline staff should be well equipped to perform this.
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Question 18 of 30
18. Question
Which of the following statements best describes the role and responsibility of the line of financial institutions’ compliance and support functions?
Correct
Financial institutions’ compliance and support functions, should perform systems-based transaction monitoring. They should be adequately equipped, managed, and resourced in order to promptly identify, assess and report unusual or suspicious transactions.
Incorrect
Financial institutions’ compliance and support functions, should perform systems-based transaction monitoring. They should be adequately equipped, managed, and resourced in order to promptly identify, assess and report unusual or suspicious transactions.
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Question 19 of 30
19. Question
Which of the following statements best describes the role and responsibility of the line of financial institutions’ independent audit functions?
Correct
Independent audit functions play an important role in testing and safeguarding the robustness of financial institutions’ transaction monitoring performance.
Incorrect
Independent audit functions play an important role in testing and safeguarding the robustness of financial institutions’ transaction monitoring performance.
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Question 20 of 30
20. Question
Which of the following is the fundamental building block to ensuring investment suitability?
I. Investment choice
II. Customer profiling
III. Customer service
IV. Relationship managementCorrect
Customer profiling is the fundamental building block to ensuring investment suitability. Customer profiling is a way to create a picture of your customers to help you make decisions concerning your service. It is only when relationship managers understand their customers’ objectives, needs, and constraints that they can provide appropriate investment advice to them. Financial institutions would have to exercise special care to accurately and correctly profile their customers.
Incorrect
Customer profiling is the fundamental building block to ensuring investment suitability. Customer profiling is a way to create a picture of your customers to help you make decisions concerning your service. It is only when relationship managers understand their customers’ objectives, needs, and constraints that they can provide appropriate investment advice to them. Financial institutions would have to exercise special care to accurately and correctly profile their customers.
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Question 21 of 30
21. Question
Customer profiling typically involves customers completing a risk assessment questionnaire, which allows the financial institutions to understand and assess certain things about the customer. Which of the following are financial institutions trying to understand about the customer through customer profiling?
I. The customer’s volatility tolerance.
II. The customers’ investment objectives.
III. The customer’s favorite sport.
IV. The customer’s financial needs or constraints.Correct
Customer profiling allows financial institutions to understand and assess the customers’ investment objectives, investment time horizon, loss tolerance, volatility tolerance, financial needs or constraints, and prior investment knowledge and experience.
Incorrect
Customer profiling allows financial institutions to understand and assess the customers’ investment objectives, investment time horizon, loss tolerance, volatility tolerance, financial needs or constraints, and prior investment knowledge and experience.
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Question 22 of 30
22. Question
How frequently do financial institutions review the risk profiles with their customers to ensure that the risk profiles are up-to-date and remain relevant?
Correct
Financial institutions review the risk profiles with their customers every one to two years to ensure that the risk profiles are up-to-date and remain relevant. If any material changes to their personal circumstances, customers are reminded to inform their financial institutions of such changes so that the necessary updates to the profiles can be done.
Incorrect
Financial institutions review the risk profiles with their customers every one to two years to ensure that the risk profiles are up-to-date and remain relevant. If any material changes to their personal circumstances, customers are reminded to inform their financial institutions of such changes so that the necessary updates to the profiles can be done.
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Question 23 of 30
23. Question
What statement best describes the term “private banking”?
Correct
Private banking is banking, investment and other financial services provided by banks and financial services firms. Private banking consists of personalized financial services and products offered to the high-net-worth individual (HNWI) clients of a retail bank or other financial institution.
Incorrect
Private banking is banking, investment and other financial services provided by banks and financial services firms. Private banking consists of personalized financial services and products offered to the high-net-worth individual (HNWI) clients of a retail bank or other financial institution.
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Question 24 of 30
24. Question
Where the legitimacy of the customer’s or beneficial owner’s source of wealth cannot be reasonably ascertained, which of these are financial institutions expected to do?
Correct
Where the legitimacy of the customer’s or beneficial owner’s source of wealth cannot be reasonably ascertained, financial institutions are expected not to proceed with establishing business relations with the customer.
Incorrect
Where the legitimacy of the customer’s or beneficial owner’s source of wealth cannot be reasonably ascertained, financial institutions are expected not to proceed with establishing business relations with the customer.
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Question 25 of 30
25. Question
Many financial institutions review their product risk rating methodology to ensure that it remains relevant. How often do most financial institutions review their product risk rating methodology?
Correct
Many financial institutions review their product risk rating methodology to ensure that it remains relevant. Most financial institutions do this annually.
Incorrect
Many financial institutions review their product risk rating methodology to ensure that it remains relevant. Most financial institutions do this annually.
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Question 26 of 30
26. Question
In order to facilitate the tracing of funds passing through different financial institutions, which of the following should all outgoing payment instructions contain?
Correct
A majority of the financial institutions have automated the screening of individuals and entities in both incoming as well as outgoing payment instructions against relevant sanction lists. To facilitate the tracing of funds passing through different financial institutions, all outgoing payment instructions should contain complete originator information.
Incorrect
A majority of the financial institutions have automated the screening of individuals and entities in both incoming as well as outgoing payment instructions against relevant sanction lists. To facilitate the tracing of funds passing through different financial institutions, all outgoing payment instructions should contain complete originator information.
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Question 27 of 30
27. Question
Financial institutions in the private banking industry typically use financial intermediaries as a source of customer acquisition. Which of the following should financial institutions do prior to establishing a business relationship with a financial intermediary?
Correct
Financial institutions should conduct due diligence on the financial intermediary prior to establishing a business relationship with a financial intermediary. Financial institutions have established policies and procedures to guide their dealings with financial intermediaries and to reduce the legal and reputational risks that could arise from such collaborations.
Incorrect
Financial institutions should conduct due diligence on the financial intermediary prior to establishing a business relationship with a financial intermediary. Financial institutions have established policies and procedures to guide their dealings with financial intermediaries and to reduce the legal and reputational risks that could arise from such collaborations.
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Question 28 of 30
28. Question
Given the role of the financial intermediaries as a customer source, what could be the consequence of inadequate due diligence on financial intermediaries?
I. Financial institutions could be exposed to liquidity risks.
II. Financial institutions could be exposed to volatility risks.
III. Financial institutions could be exposed to legal risks.
IV. Financial institutions could be exposed to reputational risks.Correct
Financial institutions could be exposed to legal and reputational risks as a result of inadequate due diligence on financial intermediaries, given the role of the financial intermediaries as a customer source. As part of the due diligence process, financial institutions are expected to satisfy themselves that these intermediaries are licensed and supervised for compliance with AML/CFT requirements and have adequate measures to comply with those requirements.
Incorrect
Financial institutions could be exposed to legal and reputational risks as a result of inadequate due diligence on financial intermediaries, given the role of the financial intermediaries as a customer source. As part of the due diligence process, financial institutions are expected to satisfy themselves that these intermediaries are licensed and supervised for compliance with AML/CFT requirements and have adequate measures to comply with those requirements.
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Question 29 of 30
29. Question
As part of the due diligence process, financial institutions should conduct background searches, including name and adverse news screening on all known parties connected to the intermediary. Which of these is/are likely to be known parties connected to the intermediary?
I. The unauthorized representatives of the financial intermediary.
II. The community members of the staff of the financial intermediary.
III. The directors of the financial intermediary.
IV. The authorized signatories of the financial intermediary.Correct
Parties connected to the intermediary include but are not limited to its owners, directors, authorized representatives, and signatories. Financial institutions should conduct background searches on these parties.
Incorrect
Parties connected to the intermediary include but are not limited to its owners, directors, authorized representatives, and signatories. Financial institutions should conduct background searches on these parties.
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Question 30 of 30
30. Question
Financial institutions have in place processes to ensure that suspicious transaction reports (STRs) are filed expeditiously. Within how many days of a case being flagged as suspicious, would suspicious transaction reports (STRs) be filed?
Correct
Financial institutions have in place processes to ensure that within 15 working days of a case being flagged as suspicious, suspicious transaction reports (STRs) are filed expeditiously.
Incorrect
Financial institutions have in place processes to ensure that within 15 working days of a case being flagged as suspicious, suspicious transaction reports (STRs) are filed expeditiously.