CMFAS M5 Exam Free Trial

Practice Notes are meant to guide specified institutions or persons on administrative procedures relating to, such as licensing, reporting and compliance matters. They do not have any legal effect, unless a procedure stated in the practice note is also required by an Act or regulation.

Regulation should set standard, baseline requirements of broad application and provide for the exercise of supervisory judgement to set higher standards or permit exemptions when merited by the particular circumstances of a financial institution.

The responsibilities of the AML/CFT compliance officer should include:
(a) carrying out, or overseeing the carrying out of, ongoing monitoring of
business relations and sample review of accounts for compliance with the Notice and these Guidelines;
(b) promoting compliance with the Notice and these Guidelines, as well as MAS Regulations issued under Section 27A of the MAS Act, and
taking overall charge of all AML/CFT matters within the organisation;
(c) informing employees, officers and representatives promptly of regulatory changes;
(d) ensuring a speedy and appropriate reaction to any matter in which ML/TF is suspected

A financial adviser should develop indicators that would alert it to customers and transactions (actual or proposed) that are possibly associated with proliferation financing-related activities, including indicators such as whether:
(a) the customer is vague and resistant to providing additional information when asked;
(b) the customer’s activity does not match its business profile or the enduser information does not match the end-user’s business profile;
(c) the transaction involves designated persons;
(d) the transaction involves higher risk countries or jurisdictions which are known to be involved in proliferation of weapons of mass destruction or proliferation financing activities;

Without prejudice to the generality of the first paragraph of this subsection, the circumstances in which an insurer should notify the
MAS under the paragraph include, but are not limited to:
(a) when the single-premium endowment products in the thenexisting business portfolio of the insurer have durations of five years, and the insurer wishes to introduce longer or shorter policy terms for any such products;
(b) when the insurer wishes to increase the number of dread diseases covered under their whole life products;
(c) when the insurer wishes to provide prospective or existing policy owners of a product in the insurer’s then-existing business portfolio with the option of paying premiums at any frequency, which is then unavailable to such policy owners; and
(d) when total permanent disability cover is an existing feature of any products other than whole life products in the insurer’s thenexisting business portfolio.

the process of ML comprises three stages, namely:
(a) Placement – The physical or financial disposal of the benefits derived from criminal conduct.
(b) Layering – The separation of these benefits from their original source by creating layers of financial transactions designed to disguise the ultimate source and transfer of these benefits.
(c) Integration – The provision of apparent legitimacy to the benefits derived from criminal conduct.

In conducting an enterprise-wide risk assessment, the broad ML/TF risk factors that the financial adviser should consider include:
(a) in relation to its customers:
(i) the target customer markets and segments;
(ii) the profile and number of customers identified as higher risk; and
(iii) the volumes and sizes of its customers’ transactions and funds transfers, considering the usual activities and the risk profiles of its customers;

Where verification of identity is performed without face-to-face contact (e.g. electronically), a financial adviser should apply additional checks to manage the risk of impersonation.The additional checks may consist of robust anti-fraud checks that the financial adviser routinely undertakes as part of its existing procedures, which may include:
(a) telephone contact with the customer at a residential or business number that can be verified independently;
(b) confirmation of the customer’s address through an exchange of correspondence or other appropriate method;
(d) confirmation of the customer’s salary details by requiring the presentation of recent bank statements, where applicable;
(e) provision of certified identification documents by lawyers or notaries public.

A serious breach of the financial adviser’s internal policy or code of conduct which would render the representative liable to demotion, suspension, or termination of the representative’s employment or arrangement with the financial adviser.

For the purpose of complying with the requirements, a financial adviser is expected to conduct internal investigations and keep proper records of the following:
(a) a summary of the facts of the case;
(b) interviews with relevant parties, such as the representative, his supervisor and the client;
(c) documentary evidence of the alleged misconduct;
(d) the investigator’s assessment and recommendation; and
(e) disciplinary action taken against the representative, if any.

Notice No: FAA-N06 is based on the following principles, which shall serve as a guide for all financial advisers in the conduct of their operations and business activities:
(a) A financial adviser shall exercise due diligence when dealing with customers, natural persons appointed to act on the customer’s behalf, connected parties of the customer and beneficial owners of the customer.
(b) A financial adviser shall conduct its business in conformity with high ethical standards, and guard against establishing any business relations or undertaking any transaction, that is or may be connected with or may facilitate money laundering or terrorism financing.
(c) A financial adviser shall, to the fullest extent possible, assist and cooperate with the relevant law enforcement authorities in Singapore to prevent money laundering and terrorism financing.

“Introducing activity” means:
(a) introducing any client to an introducee in relation to the provision of any type or types of financial advisory service by the introducee; or
(b) the activity as referred and either or both of the following:
(i) recording the particulars of any client and forwarding such particulars to an introducee with the client’s consent;
(ii) providing factual information to any client on investment products.

The principal shall ensure that any individual proposed to be a provisional representative is able to satisfy the following minimum entry requirements:
(a) he is at least 21 years old;
(b) he is in the process of relocating or has already relocated to Singapore;
(c) he possesses at least three years of working experience relevant to the type of financial advisory service that he will provide as a provisional representative; and
(d) he possesses at least a Bachelor’s degree or equivalent, or a professional qualification.

The CMFAS Examination requirements apply to individuals who wish to provide any of the following types of financial advisory service:
(a) advising others, either directly or through publications or writings.
(b) marketing of any collective investment scheme; or
(c) arranging of any contract of insurance in respect of life policies, other than a contract of reinsurance

Under Section 83(5) of the FAA, an “officer”, in relation to a body corporate, means a director, member of the committee of management, chief executive, manager, secretary, or other similar officer of the body, and includes a person purporting to act in any such capacity.

Notice No: FAA-N16 shall apply to the following classes of persons:
(a) licensed financial advisers;
(b) exempt financial advisers;
(c) representatives of financial advisers;
(d) persons who are exempt under Regulation 29 of the Financial Advisers Regulations [“FAR”];

For the purpose of the Customer Knowledge Assessment, a financial adviser shall take into consideration information on a client’s educational qualifications, investment experience and work experience. Where a client does not provide information on his educational qualifications, investment experience or work experience, the financial adviser shall deem the client not to possess knowledge or experience in the unlisted Specified Investment Product concerned.

Regulation 4A(4) of the FAR provides that for the purpose of Section 23F(1)(c) of the FAA, a principal shall undertake all of the following responsibilities in relation to its provisional representatives:
(a) To put in place measures to properly supervise the activities and conduct of the representative
(b) To put in place measures, including proper training, to ensure that the representative understands and complies with all Singapore laws
(c) To ensure that the representative is accompanied at all times by an authorised person
(d) To ensure that the representative sends concurrently to any of the authorised persons all electronic mail that he sends to any client or member of the public in the course of providing any financial advisory service.

Furthermore, Section 34(2) of the FAA states that no licensed financial adviser shall, with intent to deceive, in relation to a claim under a contract of insurance:
(a) fill up, in whole or in part, a form, being a form that is given or sent to an insurer, in such a way that the form is false or misleading in a material particular;
(b) omit to disclose to the insurer any matter that is material to the claim;
(c) induce the insured to fill up, in whole or in part, a form, being a form that is given or sent to the insurer, in such a way that the form is false or misleading in a material particular; or
(d) advise or induce the insured to omit to disclose to the insurer any matter that is material to the claim.

Furthermore, when there is any change in any interest in securities, the relevant person is required to enter the particulars of the change in the register within seven days from the date of the change and retain the entry for five years.