CM CMP – Capital Markets – Securities, Derivatives, Collective Investment Schemes and Foreign Exchange

Correct: Under the Singapore Income Tax Act, if a person fails to furnish a return, the Comptroller of Income Tax has the power to estimate the person’s income and make an assessment based on the ‘best of judgment’. This is known as an estimated assessment. Upon receiving the Notice of Assessment (NOA), the taxpayer has a statutory right to lodge a written Notice of Objection within 30 days from the date of the NOA if they disagree with the estimated figures.

Incorrect: The approach suggesting a warrant is required is incorrect because the Income Tax Act grants the Comptroller statutory powers to make assessments without court intervention. The suggestion that the Comptroller must wait for a return is incorrect as it would allow taxpayers to indefinitely avoid tax by simply not filing. The approach suggesting that an estimated assessment is final and waives all rights to deductions is incorrect because the right to object and the right to claim legitimate reliefs remain protected under the law, provided the objection is filed within the 30-day window.

Takeaway: The Comptroller of Income Tax has the authority to issue estimated assessments when returns are not filed, but taxpayers maintain the right to object to these assessments within 30 days.

Correct: Under the One-Tier Corporate Tax System, which has been in effect in Singapore since 1 January 2003, the tax paid by a Singapore-resident company on its chargeable income is the final tax. Consequently, dividends paid by such companies are exempt from tax in the hands of all shareholders, whether they are individuals or corporate entities. There is no further tax liability for the recipient, and no tax credits are issued to shareholders.

Incorrect: The suggestion that dividends are grossed up and eligible for a tax credit refers to the obsolete imputation system, which was replaced by the One-Tier system. The idea of a flat withholding tax on domestic dividends is incorrect as Singapore does not impose withholding tax on dividends paid by resident companies. There is no regulatory provision or threshold based on paid-up capital that determines the tax-exempt status of dividends under the One-Tier system.

Takeaway: Under Singapore’s One-Tier Corporate Tax System, all dividends paid by resident companies are tax-exempt for the shareholders.

Correct: Under the Financial Advisers Act (FAA) and MAS Notice FAD-N03, financial advisers are legally obligated to disclose all remuneration they receive, including commissions, fees, and other benefits. This disclosure is mandatory and must be made to the client to ensure transparency, allowing the client to evaluate whether the recommendation might be influenced by the adviser’s financial gain, thereby addressing potential conflicts of interest.

Incorrect: The suggestion that disclosure is only required above a certain percentage is incorrect as the FAA does not set a minimum threshold for disclosure of remuneration. The idea that disclosure is only required upon a client’s request is false because the obligation is proactive and mandatory for the adviser. Stating that only a general conflict needs to be disclosed without specific details is incorrect because MAS guidelines require clear and specific disclosure regarding the nature and amount of remuneration to ensure the client is fully informed.

Takeaway: Under the FAA in Singapore, financial advisers must proactively and specifically disclose all commissions and remuneration to clients to mitigate conflicts of interest.

Correct: In Singapore, for a will to be valid, the testator must possess testamentary capacity, which includes understanding the nature of the act, the extent of their property, and the moral claims of potential beneficiaries. When there are red flags such as a dominant third party (potential undue influence) or memory lapses regarding significant assets (potential lack of capacity), the RM must take steps to ensure the client is acting voluntarily and has the requisite mental state. A private interview helps mitigate undue influence, and a medical assessment provides a robust defense against future challenges under the Mental Capacity Act or common law principles.

Incorrect: Accepting instructions from a third party without verifying the client’s independent intent increases the risk of a successful challenge based on undue influence. Proceeding despite clear red flags ignores the bank’s duty of care and the professional standards expected in legacy planning. Automatically disqualifying a client based solely on age or minor memory lapses is discriminatory and incorrect; capacity is a functional test, not a chronological one, and MAS does not mandate age-based disqualification.

Takeaway: To protect against legal challenges regarding testamentary capacity or undue influence, financial professionals must verify the client’s independent intent and mental state through private consultations and professional medical certification when necessary.

Correct: In Singapore, the Inland Revenue Authority of Singapore (IRAS) applies a progressive tax rate structure for residential properties. The owner-occupier tax rates are lower and are intended as a concession for individuals living in their own homes. These rates apply to only one property per owner. Residential properties that are rented out, vacant, or occupied by someone other than the owner (non-owner-occupied) are subject to a significantly higher progressive tax rate schedule.

Incorrect: The suggestion that both categories are taxed at the same flat rate is incorrect because Singapore uses a progressive system for residential property tax to ensure social equity. The claim that company-owned property qualifies for owner-occupier rates is false; only individual owners who physically reside in the property can qualify for the concession. Finally, while commercial and industrial properties are taxed at a flat rate of 10%, non-owner-occupied residential properties are subject to a progressive tax rate structure, not a flat 10% rate.

Takeaway: Owner-occupier property tax rates in Singapore are a specific concession for individual homeowners residing in their property, while all other residential properties face higher progressive tax scales.

Correct: Under the administrative concession granted by the Inland Revenue Authority of Singapore (IRAS) effective from 1 January 2004, all foreign-sourced income received in Singapore by resident individuals is exempt from tax. The only major exception to this concession is if the foreign-sourced income is received through a partnership in Singapore, in which case it remains taxable.

Incorrect: The requirement for a 15% headline tax rate and the ‘subject to tax’ condition refers to the Section 13(9) exemption, which typically applies to companies or specific income types like foreign dividends, not the general administrative concession for resident individuals. The Not Ordinarily Resident (NOR) scheme has been phased out and involved different criteria. There is no regulatory requirement that links the tax exemption of remitted foreign income to the non-utilization of CPF top-ups or other tax reliefs.

Takeaway: In Singapore, resident individuals are generally exempt from tax on foreign-sourced income received locally, provided the income is not earned through a Singapore partnership.

Correct: In Singapore, royalties are taxable as income under Section 10(1)(f) of the Income Tax Act. While there is a specific tax concession for authors, composers, and artists that allows them to be taxed on only 10% of their gross royalties (or net income after expenses, whichever is lower), this concession is strictly limited to literary, dramatic, musical, or artistic works. Commercial intellectual property, such as patents, trademarks, and software algorithms, does not qualify for this specific ‘creative work’ concession and is taxed at the individual’s prevailing marginal tax rate.

Incorrect: Classifying royalties as capital gains is incorrect because royalties are recurring revenue in nature and specifically listed as taxable income under the Income Tax Act. There is no universal 50% deemed expense deduction for all IP income in Singapore; deductions must generally be based on actual expenses incurred in producing the income unless a specific statutory concession applies. Withholding tax in Singapore is a mechanism used for payments made to non-resident persons; tax-resident individuals are required to report their royalty income in their annual tax returns and are taxed at graduated resident rates.

Takeaway: While Singapore provides tax concessions for specific creative royalties, commercial IP royalties like patents are generally taxed as ordinary income for resident individuals without the 90% exemption benefit.

Correct: In Singapore, the primary distinction is the timing of creation and the relationship to the probate process. An inter vivos trust (living trust) is created during the settlor’s lifetime. Because legal title to the assets is transferred to the trustee while the settlor is alive, these assets do not form part of the settlor’s estate upon death and thus do not require a Grant of Probate to be administered. A testamentary trust, however, is contained within a Will; it has no legal existence until the testator dies and the Will is validated through the probate process, which can cause delays in asset distribution.

Incorrect: The claim that testamentary trusts provide greater confidentiality is incorrect because once a Will is admitted to probate in Singapore, it becomes a matter of public record, whereas an inter vivos trust deed generally remains private. The assertion that inter vivos trusts must be registered with MAS for public record is false. The statement regarding automatic irrevocability is incorrect; inter vivos trusts can be revocable or irrevocable depending on the trust deed’s terms. Finally, while licensed trust companies are common, Singapore law does not mandate that an inter vivos trust must have a licensed trust company as the sole trustee; individuals can also serve as trustees for both types of trusts.

Takeaway: The fundamental difference is that inter vivos trusts operate outside the probate process for immediate asset management, while testamentary trusts are contingent upon the death of the testator and the completion of probate.

Correct: Under Singapore’s SRS regulations, participants who reach the statutory retirement age can opt for in-specie withdrawals. This allows them to transfer their SRS investments (such as shares or unit trusts) directly to their personal accounts without selling them. For tax purposes, 50% of the market value of these assets at the time of the withdrawal is considered taxable income, mirroring the tax treatment of cash withdrawals.

Incorrect: The suggestion that in-specie withdrawals are non-taxable is incorrect because all withdrawals from SRS after the retirement age are subject to the 50% tax rule regardless of form. The claim that the 50% concession only applies to cash is false, as the concession was extended to in-specie withdrawals to give participants more flexibility. Finally, the restriction of in-specie withdrawals to only government securities is incorrect; most SRS-eligible investments, including SGX-listed equities and REITs, can be withdrawn in-specie.

Takeaway: In-specie SRS withdrawals allow participants to retain their investment positions while still benefiting from the 50% tax concession on the asset’s market value at the time of transfer.

Correct: According to Section 7 of the Intestate Succession Act in Singapore, specifically Rule 5, if a person dies leaving no spouse, no issue (children), and no parents, the surviving siblings of the intestate shall take the whole of the estate in equal shares. Grandparents only come into the picture under Rule 6 if there are no surviving siblings or children of deceased siblings. Therefore, the siblings have a higher priority than the grandparents.

Incorrect: The suggestion that siblings and grandparents share the estate equally is incorrect because the Act follows a strict hierarchical order of priority rather than a communal distribution among different classes of relatives. The claim that grandparents have priority over siblings is false under Singapore law, as Rule 5 (siblings) precedes Rule 6 (grandparents). The idea that the Public Trustee freezes assets for ten years to wait for claims is a misunderstanding of the administration process; while the Public Trustee may be involved in small estates, they must still follow the statutory distribution rules immediately upon the grant of Letters of Administration.

Takeaway: Under the Singapore Intestate Succession Act, siblings have a higher priority of inheritance than grandparents when the deceased leaves no spouse, children, or parents.

Correct: Under the Income Tax Act in Singapore and IRAS guidelines, for a bad debt or impairment loss to be deductible for a sole proprietorship, it must be of a revenue nature (trade debt) and must have been previously included in the business’s gross income. Furthermore, the impairment must be ‘specific,’ meaning it is tied to identified individual debtors where there is objective evidence (such as failed recovery attempts or insolvency) that the amount is unlikely to be recovered. General provisions or impairments based on statistical percentages are not deductible.

Incorrect: Calculating impairment as a fixed percentage of total receivables constitutes a general impairment, which is not tax-deductible in Singapore. Deductions are only permitted for trade-related debts; capital debts, such as personal loans or loans for capital assets, do not qualify for deduction under Section 14(1)(d). The timing of the deduction is based on when the debt is specifically identified as impaired or bad during the course of business, not solely upon the cessation of operations.

Takeaway: In Singapore, only specific trade-related impairment losses supported by objective evidence of uncollectibility are tax-deductible for sole proprietorships.

Correct: In Singapore, when a will does not contain a residuary clause, any assets not specifically bequeathed (such as assets acquired after the will was made or forgotten assets) fall into ‘partial intestacy.’ Under the Intestate Succession Act (Cap. 146), these assets must be distributed according to the statutory rules of distribution (e.g., to spouse and children in specific proportions), which may not align with how the testator distributed the rest of their estate.

Incorrect: Distributing assets equally among existing beneficiaries is incorrect because executors do not have the legal authority to create new distribution rules; they must follow the law of intestacy for unallocated portions. The omission of a residuary clause does not invalidate the specific legacies already documented in the will; the will remains valid for what it does cover. Assets only become Bona Vacantia (ownerless goods) if the deceased has no surviving next-of-kin entitled to the estate under the Intestate Succession Act, not simply because a clause was missing.

Takeaway: A residuary clause is a critical ‘catch-all’ mechanism in Singapore estate planning to prevent partial intestacy and ensure all current and future assets are distributed according to the testator’s wishes.

Correct: In Singapore, under the Insolvency, Restructuring and Dissolution Act (IRDA) 2018 (which consolidated bankruptcy laws), the ‘relevant time’ for challenging a transaction at an undervalue is 3 years prior to the bankruptcy application. For the challenge to succeed, it must generally be proven that the settlor was insolvent at the time of the transfer or became insolvent because of it (though insolvency is presumed if the transaction was with an associate).

Incorrect: Option b is incorrect because Section 73B of the Conveyancing and Law of Property Act (CLPA) does not have a fixed time limit; it allows a transfer to be voided if it was made with the intent to defraud creditors, regardless of how many years have passed. Option c is incorrect because the IRDA applies to undervalue transactions regardless of whether the trustee is a professional entity or an individual. Option d is incorrect because being debt-free at the moment of execution does not prevent a clawback if the transfer itself causes insolvency or if the settlor enters bankruptcy within the statutory 3-year window.

Takeaway: In Singapore, asset protection via irrevocable trusts is subject to a 3-year clawback period for undervalue transactions under the IRDA if the settlor was or became insolvent.

Correct: In Singapore, the Supplementary Retirement Scheme (SRS) provides different annual contribution limits based on residency status: S$15,300 for Singapore Citizens and Permanent Residents, and S$35,700 for foreigners. The higher limit for foreigners is intended to offset the fact that they do not receive employer CPF contributions. However, regardless of the SRS contribution amount, the total personal income tax relief an individual can claim is strictly capped at S$80,000 per Year of Assessment.

Incorrect: The statement regarding uniform limits is incorrect because the SRS framework specifically differentiates between locals/PRs and foreigners. The suggestion that foreigners are exempt from the S$80,000 tax relief cap is false, as this cap applies to all individual tax residents in Singapore without exception. The idea that locals can exceed the SRS limit based on their CPF contribution levels is incorrect; the SRS contribution limit is a fixed statutory cap and is independent of the CPF Annual Limit calculations.

Takeaway: SRS contribution limits vary by residency status to account for CPF differences, but all participants are bound by the S$80,000 total personal income tax relief cap.

Correct: In Singapore, the Annual Value (AV) of a property is defined under the Property Tax Act as the estimated gross annual rent that the property could reasonably be expected to fetch if it were rented out, excluding the rent for furniture, furnishings, and maintenance fees. IRAS determines this value by analyzing the market rentals of similar or comparable properties in the same area. This methodology applies regardless of whether the property is actually rented out, owner-occupied, or left vacant.

Incorrect: The methodology involving a fixed percentage of market resale value is incorrect because AV is primarily a rental-based assessment, not a capital-based one. Using historical cost adjusted for inflation is incorrect as AV must reflect current market rental conditions. Linking the AV to the owner’s annual taxable income is incorrect because AV is an objective assessment of the property’s potential rental value and is independent of the owner’s personal financial circumstances.

Takeaway: The Annual Value (AV) in Singapore is an objective estimate of a property’s potential annual rental income based on market comparables, used as the basis for property tax assessment.

Correct: Under Section 19A(10A) of the Singapore Income Tax Act, taxpayers, including self-employed individuals and small businesses, can elect to claim a 100% write-off (accelerated capital allowance) for low-value assets. A low-value asset is defined as one costing no more than $5,000. The total amount of such claims is capped at $30,000 for any single Year of Assessment (YA).

Incorrect: The statement regarding a mandatory three-year period is incorrect because Section 19A allows for various accelerated options, including a one-year write-off for specific items. The claim for low-value assets is not restricted to incorporated companies; it is available to all businesses, including sole proprietorships and partnerships. Capital allowances are not automatically granted; the taxpayer must proactively claim them in their tax return and meet the qualifying criteria.

Takeaway: In Singapore, small businesses can optimize cash flow by claiming a 100% tax write-off for assets costing up to $5,000, subject to an annual cap of $30,000.

Correct: In Singapore, for a trust to be validly constituted, the settlor must divest legal title and control to the trustee. If the settlor retains excessive control such that the trustee does not exercise independent judgment, the trust risks being classified as a ‘sham’ or ‘illusory trust’ under common law principles applicable in Singapore. The Trustees Act and fiduciary principles require the trustee to act independently in the best interests of the beneficiaries. Advising the settlor on the necessity of trustee independence ensures the trust’s legal integrity and protects the assets from potential creditors or legal challenges.

Incorrect: Appointing a protector with unrestricted power to override all decisions (option_b) can undermine the trustee’s fiduciary role and increase the risk of the trust being viewed as an alter ego of the settlor. Using side letters to bypass the trust deed (option_c) is legally risky and may be considered evidence of a sham trust. Attempting to exempt a trustee from all fiduciary duties (option_d) is generally unenforceable under Singapore law, as core fiduciary duties and certain statutory obligations under the Trustees Act cannot be fully excluded by the trust instrument.

Takeaway: To ensure the validity of a Singapore trust, the trustee must maintain independent fiduciary discretion and the settlor must genuinely relinquish legal control over the trust assets.

Correct: The NOR scheme was lapsed after YA 2020. However, individuals who were granted the NOR status for a five-year period (with the last batch being granted in YA 2020) can continue to enjoy the NOR tax concessions for the duration of their five-year period, provided they meet the qualifying criteria for each specific concession every year. For the time apportionment of Singapore employment income, the individual must have spent at least 90 days outside Singapore for business and have a total Singapore employment income of at least $160,000.

Incorrect: Option B is incorrect because the NOR scheme has been lapsed, and no new status or extensions can be granted after YA 2020. Option C is incorrect because transition rules were specifically implemented to allow those already granted the status to complete their five-year term. Option D is incorrect because the Global Investor Programme (GIP) is a residency scheme and does not automatically provide the specific tax concessions (like time apportionment) that were unique to the NOR scheme.

Takeaway: Taxpayers granted NOR status by YA 2020 can continue to access transition benefits for their five-year period provided they meet the annual qualifying thresholds for business travel and income.

Correct: Under the Residential Property Act (RPA), a ‘foreign person’ (non-Singapore citizen) must obtain approval from the Land Dealings Approval Unit (LDAU) of the Singapore Land Authority (SLA) to purchase restricted residential property, which includes landed houses on the mainland. Sentosa Cove is the only area where such approval is generally granted more easily to foreigners for their own occupation. Furthermore, under IRAS regulations, foreign buyers are subject to the highest tier of Additional Buyer’s Stamp Duty (ABSD) on the purchase price or market value of any residential property.

Incorrect: The assertion that foreigners are completely prohibited from owning landed property is incorrect because they can apply for LDAU approval. The idea that using a Singapore-incorporated company bypasses the RPA is false, as the Act specifically regulates ‘foreign entities’ and ‘foreign persons’ to prevent circumvention. The claim that holding an Employment Pass for five years grants the same rights as citizenship regarding landed property is incorrect; even Permanent Residents must seek LDAU approval for restricted properties, though their criteria for approval may differ from non-PR foreigners.

Takeaway: Foreigners must obtain LDAU approval to purchase restricted residential property under the Residential Property Act and are subject to the prevailing Additional Buyer’s Stamp Duty (ABSD) rates.

Correct: In Singapore, under the Income Tax Act, if a person disputes an assessment made by the Comptroller of Income Tax, the statutory requirement is to furnish a written Notice of Objection within 30 days from the date of the Notice of Assessment. This notice must state the specific grounds on which the objection is made. This is the formal legal procedure to initiate a review of the assessment by the Inland Revenue Authority of Singapore (IRAS).

Incorrect: Withholding payment is generally not permitted as tax must typically be paid notwithstanding any objection, and a private ruling is a prospective tool rather than a retrospective remedy for a disputed assessment. Submitting an amended return does not substitute for the legal requirement of a formal Notice of Objection within the 30-day window. An appeal to the Income Tax Board of Review can only be made after the Comptroller has issued a Notice of Refusal to Amend following the initial objection process; it is not the immediate next step.

Takeaway: The formal Notice of Objection filed within 30 days is the mandatory first legal step for a taxpayer to challenge an assessment issued by the Comptroller of Income Tax in Singapore.

Correct: According to the MAS Guidelines on Outsourcing, a financial institution (FI) in Singapore remains fully responsible and accountable for any outsourced function. The FI’s board and senior management must ensure that the outsourcing arrangement does not diminish its ability to fulfill its obligations to customers or comply with regulatory requirements. The FI must exercise the same care and oversight as if the function were managed internally.

Incorrect: The suggestion that an indemnity clause absolves the FI of regulatory liability is incorrect because regulatory accountability cannot be contracted away. The idea that responsibility is transferred upon notification to MAS is false; notification is a transparency requirement, not a transfer of liability. Limiting responsibility to initial due diligence is insufficient, as MAS requires ongoing monitoring and effective control over the service provider throughout the duration of the contract.

Takeaway: Under Singapore’s regulatory framework, financial institutions retain ultimate accountability for all outsourced functions and must maintain rigorous oversight of their service providers.

Correct: Under the FIDReC framework in Singapore, a consumer must first approach the financial institution (FI) to resolve the dispute through the FI’s internal dispute resolution (IDR) process. If the consumer is dissatisfied with the final outcome or if the FI fails to provide a final response within a reasonable timeframe (typically 4 weeks), the consumer can then file a claim with FIDReC within six months of receiving the final IDR letter.

Incorrect: The second option is incorrect because while an adjudication award is binding on the financial institution if the consumer accepts it, the consumer is not bound and can choose to reject the award and pursue other legal remedies. The third option is incorrect because FIDReC’s jurisdiction for claims is generally up to S$100,000 per claim, not exceeding it. The fourth option is incorrect because FIDReC proceedings, including mediation and adjudication, are private and confidential, unlike public court proceedings.

Takeaway: FIDReC provides an independent and affordable alternative to the courts for retail investors, provided they have first exhausted the financial institution’s internal dispute resolution process for claims up to S$100,000.

Correct: Under the Financial Advisers Act (FAA) and the Representative Notification Framework (RNF), an individual is prohibited from conducting any regulated financial advisory service unless they are an appointed, provisional, or temporary representative. Crucially, the individual’s name must be entered in the Register of Representatives maintained by the Monetary Authority of Singapore (MAS) before they can commence these activities. Acting as a representative without being on the register is a breach of the FAA.

Incorrect: The suggestion that a 14-day window exists for retrospective notification is incorrect; while firms must update MAS of changes within specific timeframes, the initial appointment must be reflected on the Register before activity starts. Exempt financial advisers, such as banks or certain listed entities, are still required to ensure their representatives are notified to MAS under the RNF before they provide advisory services. There is no 30-day grace period for regulated activity prior to the official entry in the MAS Register, regardless of supervision.

Takeaway: In Singapore, an individual must be officially listed on the MAS Register of Representatives before they can perform any regulated financial advisory activities under the FAA.

Correct: In Singapore, for an S-REIT to enjoy tax transparency treatment from the Inland Revenue Authority of Singapore (IRAS), it must distribute at least 90 percent of its taxable income. Tax transparency means the REIT is not taxed at the corporate level on the portion of income distributed; instead, the tax is effectively ‘passed through’ to the unitholders, though for most individual investors in Singapore, these distributions are tax-exempt.

Incorrect: The suggestion that the 90 percent rule is a statutory requirement under the Securities and Futures Act regardless of profit is incorrect, as it is primarily a condition for tax transparency. The claim that the distribution rule allows a gearing limit of 60 percent is false, as the Monetary Authority of Singapore (MAS) sets the aggregate leverage limit at 45 percent (or 50 percent if the REIT meets specific interest coverage ratios). The idea that SGX mandates the distribution to maintain a specific credit rating is also incorrect, as credit ratings are independent assessments and not a direct regulatory consequence of the 90 percent distribution rule.

Takeaway: The 90 percent distribution requirement is a regulatory condition for S-REITs to achieve tax transparency, ensuring the trust itself is not taxed on distributed income.

Correct: The Representative Notification Framework (RNF) moved away from individual licensing to a system where the principal (the financial institution) is responsible for the due diligence and ‘fit and proper’ assessment of its representatives. The principal notifies MAS of the appointment, and the representative is then listed on the public register. This register is a key transparency tool that allows the public to verify a representative’s identity, the types of regulated activities they can perform, and whether they have any past disciplinary actions or prohibitions.

Incorrect: The suggestion that individuals must personally apply for a physical license is incorrect because the RNF is a notification-based system, not an individual licensing system. The claim that the register is restricted or confidential is false, as its primary purpose is to serve as a public resource for consumer protection. Finally, the RNF applies to representatives under both the Securities and Futures Act (SFA) and the Financial Advisers Act (FAA), not just the SFA.

Takeaway: The RNF shifts the responsibility of representative conduct to the principal firm while providing a public MAS register for consumer verification and regulatory transparency.

Correct: According to the MAS Guidelines on Fair Dealing, Outcome 1 requires that customers have confidence they are dealing with a financial institution where fair dealing is central to the corporate culture. This starts with the Board and Senior Management, who are responsible for setting the ‘tone from the top.’ They must ensure that the institution’s strategy, leadership, and decision-making processes are aligned with fair dealing. This includes ensuring that human resource policies, such as recruitment, training, and remuneration/incentive structures, do not create conflicts of interest that compromise fair dealing.

Incorrect: Establishing a separate department for fair dealing is insufficient because the guidelines require fair dealing to be embedded across all business units and functions, not siloed. Reviewing outcomes only during legislative changes is a reactive approach that fails to provide the continuous leadership and monitoring expected by MAS. Relying solely on automated system alerts focuses on technical suitability (Outcome 2) but does not address the broader cultural and strategic alignment required from leadership to satisfy Outcome 1.

Takeaway: The Board and Senior Management are ultimately accountable for embedding fair dealing into the financial institution’s culture, strategy, and operational frameworks.

Correct: Under the Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act (CDSA), any person who knows or has reasonable grounds to suspect that any property may be connected to criminal conduct must file a Suspicious Transaction Report (STR) with the STRO. Furthermore, Section 48 of the CDSA prohibits ‘tipping off,’ meaning the reporting entity must not inform the client or any third party that a report has been lodged or that an investigation is being considered, as this could prejudice the investigation.

Incorrect: Notifying the client that a report is being filed is a violation of the ‘tipping off’ provisions under the CDSA and is a criminal offense. Delaying the report for an annual review is incorrect because the law requires reporting as soon as practicable once suspicion is formed. Reporting exclusively to the MAS is incorrect because the STRO, which is part of the Commercial Affairs Department (CAD) of the Singapore Police Force, is the specific central agency designated to receive and analyze STRs in Singapore.

Takeaway: In Singapore, suspicious transactions must be reported promptly to the STRO, and the reporting party must strictly avoid tipping off the suspect to comply with the CDSA.

Correct: In the Singapore context, a rights issue is a capital-raising tool where the company offers new shares to existing shareholders, usually at a discount. This results in an inflow of cash but increases the share base, which can dilute earnings per share (EPS). A bonus issue, however, is not a capital-raising exercise; it is the ‘capitalization of reserves’ where the company converts its retained earnings or share premium into share capital. While the number of shares increases and the share price is adjusted downwards (ex-bonus) to reflect this, the total value of the shareholder’s holding and the company’s total equity remain unchanged.

Incorrect: The other approaches are incorrect because: bonus issues do not increase the net asset value or total wealth as the share price adjusts proportionally; rights issues are not purely administrative and do affect market price through the theoretical ex-rights price (TERP); bonus issues do not involve external cash subscriptions; and rights issues typically lead to a lower ex-rights price rather than an immediate increase. Furthermore, there is no MAS guideline stating that bonus issues signal an inability to pay cash dividends.

Takeaway: Rights issues raise new capital and may dilute EPS, while bonus issues capitalize reserves to increase share count and liquidity without changing the company’s total valuation.

Correct: MAS utilizes a risk-based supervisory approach. This means that while all financial institutions must meet baseline regulatory standards, MAS allocates more intensive supervision to ‘systemically important’ institutions or those with higher risk profiles. This approach ensures that the impact of a potential failure on Singapore’s financial ecosystem is minimized and that market integrity is maintained under the Securities and Futures Act (SFA).

Incorrect: The suggestion that MAS guarantees investment portfolios is incorrect, as MAS does not protect investors from market losses or guarantee returns. The claim that MAS only focuses on prudential solvency for banks is false; MAS is an integrated regulator that also oversees the conduct of business and market integrity for capital market intermediaries. Finally, MAS generally does not require pre-approval for every individual marketing document, but rather sets standards for fair dealing and disclosure that institutions must follow, often through a post-market monitoring or thematic review process.

Takeaway: MAS employs a risk-based supervisory framework to maintain financial stability and market integrity by focusing resources on institutions with the highest systemic impact.

Correct: Under the PDPA’s Protection and Transfer Limitation Obligations, when a financial adviser (acting as the organization) engages a third-party service provider (acting as a data intermediary) to process personal data, the adviser remains responsible for ensuring the data is handled securely. This is achieved by ensuring the intermediary is contractually obligated to provide a standard of protection comparable to the PDPA requirements.

Incorrect: The Consent Obligation is a core pillar of the PDPA; while discretionary mandates allow for investment decisions, they do not automatically waive the requirement for clear consent regarding data disclosure to third parties. The Retention Limitation Obligation does not mandate immediate destruction within 30 days; in fact, financial advisers must often retain records for at least five years to comply with Monetary Authority of Singapore (MAS) regulatory requirements under the Financial Advisers Act. The requirement to appoint a Data Protection Officer (DPO) is mandatory for all organizations in Singapore, regardless of the size of the workforce or the volume of data processed.

Takeaway: Financial advisers must ensure that any third-party intermediaries processing client data are contractually held to Singapore’s PDPA standards to maintain the Protection and Accountability Obligations.