SCI CRI – Certificate in Reinsurance Exam Set Two

Correct: The Life Insurance Association (LIA) Singapore is a trade association that plays a vital role in self-regulation. One of its core functions is to establish industry standards, such as the Minimum Standard for Product Disclosure. Member companies are expected to adhere to these standards to ensure that consumers receive consistent, clear, and comparable information across the industry, which fosters trust and transparency in the Singapore life insurance market.

Incorrect: Simplifying disclosures beyond the LIA templates in a way that omits required information would violate industry standards and compromise consumer protection. Adopting foreign standards instead of LIA requirements is inappropriate because insurers operating in Singapore must comply with local industry standards and regulations. Waiting for formal MAS legislation is incorrect because LIA codes of practice are intended for proactive industry adoption as part of the self-regulatory framework to elevate professional standards without requiring constant legislative intervention.

Takeaway: The LIA Singapore sets essential industry standards and codes of practice that member insurers must implement to ensure professional conduct and standardized consumer disclosures across the life insurance sector.

Correct: In accordance with the Financial Advisers Act (FAA) and its associated regulations in Singapore, any person who is a financial adviser or a representative of a financial adviser must maintain a register of their interests in securities. The law specifically requires that entries regarding the acquisition of or change in interest must be made within 7 days of the event. Additionally, the register must be kept at the principal place of business of the financial adviser in Singapore to ensure it is readily available for inspection by the MAS.

Incorrect: The suggestion of a 14-day notification to MAS or a 30-day update window is incorrect as the statutory limit is strictly 7 days. Keeping the register at a designated branch office, an off-site facility, or a residential address does not satisfy the requirement that the register be maintained at the principal place of business. Furthermore, while the PDPA governs personal data, it does not override the FAA requirement for the location of the Register of Interests in Securities.

Takeaway: Under Singapore law, a Register of Interests in Securities must be updated within 7 days of a transaction and kept at the firm’s principal place of business.

Correct: In Singapore, the fundamental distinction is that participating (par) policies entitle the policyholder to a share of the profits of the insurer’s participating fund. This is typically delivered in the form of reversionary or terminal bonuses which are non-guaranteed until declared. Non-participating (non-par) policies, conversely, do not share in these profits; all benefits are fixed and guaranteed at the inception of the policy, and the policyholder does not receive any bonuses regardless of the insurer’s investment performance.

Incorrect: Smoothing is a characteristic of participating funds, not non-participating funds, used to level out the effects of short-term market fluctuations. Participating policies are traditional life insurance products and are distinct from Investment-Linked Policies (ILPs), which do not use a participating fund structure. The 90/10 rule (where at least 90% of the surplus is allocated to policyholders) applies specifically to the Participating Fund, not to non-participating policies.

Takeaway: The key difference is that participating policies offer a share in the life fund’s profits through non-guaranteed bonuses, while non-participating policies offer only fixed, guaranteed benefits.

Correct: Under the CDSA, specifically Section 39, any person who knows or has reasonable grounds to suspect that any property represents the proceeds of criminal conduct must file a Suspicious Transaction Report (STR) with the Suspicious Transaction Reporting Office (STRO). Furthermore, Section 48 of the CDSA prohibits tipping-off, which means the adviser must not inform the client or any other person that a report is being filed or that an investigation is underway, as this could prejudice the investigation.

Incorrect: Notifying the client about a potential report is a direct violation of the tipping-off provisions under Section 48 of the CDSA. Reporting requirements for suspicious transactions are based on the ‘suspicion’ of criminal conduct rather than just meeting a fixed numerical threshold. Delaying a report until after a free-look period or any other administrative milestone is incorrect, as the law requires reporting as soon as practicable once the suspicion is formed.

Takeaway: The CDSA requires immediate reporting of suspicious transactions to the STRO and strictly prohibits tipping off the client to ensure the integrity of potential criminal investigations.

Correct: MAS’s supervisory approach is integrated and risk-based, covering both prudential aspects (like capital adequacy under the Insurance Act) and market conduct (under the Financial Advisers Act). A robust compliance framework must ensure that the institution meets solvency requirements while also upholding high standards of conduct, as outlined in the Fair Dealing Guidelines and the Fit and Proper Criteria, which apply to both the institution and its representatives.

Incorrect: Delegating conduct oversight to self-regulatory bodies is insufficient as MAS maintains direct supervisory authority over conduct under the FAA. Allowing marketing departments to set disclosure standards without compliance oversight risks violating MAS’s requirements for clear and balanced product information. The Securities Industry Council (SIC) focuses on the Singapore Code on Take-overs and Mergers, which is not the primary regulatory focus for the day-to-day supervision of life insurance and financial advisory conduct.

Takeaway: MAS’s supervision of the financial sector in Singapore is a holistic, risk-based process that demands simultaneous compliance with prudential stability and high standards of market conduct and consumer protection.

Correct: The Suspicious Transaction Reporting Office (STRO) is the Financial Intelligence Unit (FIU) of Singapore, housed within the Commercial Affairs Department of the Singapore Police Force. Its primary mandate under the Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act (CDSA) is to receive, analyze, and disseminate financial intelligence (STRs) to relevant law enforcement and regulatory agencies to combat money laundering and terrorism financing.

Incorrect: The role of issuing administrative penalties and supervising the AML/CFT compliance of financial institutions belongs to the Monetary Authority of Singapore (MAS), not the STRO. Maintaining a public registry of individuals under investigation would violate ‘tipping off’ provisions and the confidentiality of investigations. The STRO is an intelligence unit, not a judicial body; the prosecution of offenses is handled by the Attorney-General’s Chambers (AGC) and the court system.

Takeaway: The STRO serves as Singapore’s central intelligence hub for suspicious transaction data, facilitating the flow of information from the financial sector to law enforcement.

Correct: In Singapore, participating endowment policies are designed to help policyholders meet long-term financial goals like education. They provide a guaranteed sum assured, which ensures a minimum amount is available at maturity. Additionally, policyholders can receive non-guaranteed bonuses (reversionary and terminal) based on the performance of the insurer’s participating fund. A critical feature of these funds is the ‘smoothing’ of returns, where the insurer retains some profits during years of strong performance to support bonus payouts during years of weaker performance, thereby providing more stable and predictable growth for the policyholder.

Incorrect: The suggestion that returns are pegged to Singapore Savings Bonds is incorrect as endowment returns depend on the specific performance of the insurer’s participating fund, not government bond yields. The claim that policies offer full liquidity without surrender charges after one year is false; endowment policies are structured for disciplined savings and typically incur significant surrender charges in the early years to discourage early withdrawal. Finally, guaranteeing the total maturity value including all projected bonuses is incorrect and would violate MAS and Life Insurance Association (LIA) Singapore disclosure requirements, as bonuses are by definition non-guaranteed and depend on future fund performance.

Takeaway: Participating endowment policies in Singapore combine a guaranteed maturity benefit with non-guaranteed bonuses that benefit from the smoothing of investment returns to support long-term savings goals.

Correct: Under the PDPA Access Obligation, an organization must, upon request by an individual, provide the individual with their personal data that is in the possession or under the control of the organization, and information about the ways in which that personal data has been or may have been used or disclosed by the organization within a year before the date of the request. The organization should respond as soon as reasonably possible, which is generally within 30 days.

Incorrect: The requirement to provide disclosure history is limited to the one year preceding the request, not the entire duration of the relationship. While MAS guidelines are relevant, the specific timelines for data access requests are governed by the PDPA, not a 14-day Fair Dealing rule. Internal records are not automatically exempt under business confidentiality; if they contain the individual’s personal data, they are generally subject to the Access Obligation unless a specific legal exception applies.

Takeaway: Under the PDPA Access Obligation, financial institutions must provide a client’s personal data and its usage/disclosure history for the preceding 12 months, typically within a 30-day window.

Correct: The Securities and Futures Act (SFA) shifts away from merit-based regulation toward a disclosure-based regime. A primary objective is to ensure that the market operates transparently by requiring issuers to provide all material information. By removing technical risk disclosures from marketing materials used by retail investors, the firm prevents investors from having the full and accurate information necessary to make an informed investment decision, which is the fundamental goal of the SFA’s disclosure requirements.

Incorrect: The SFA does not involve merit-based regulation where the MAS assesses the commercial viability or profitability of a product; that responsibility lies with the investor. The SFA also does not provide any statutory guarantees against capital losses, as investment risk remains with the participant. Finally, while the SGX plays a role in market operations, the SFA’s objectives regarding product offers focus on disclosure standards rather than centralizing individual investment decisions within the exchange.

Takeaway: The SFA’s regulatory framework for investment offers is built on a disclosure-based regime designed to ensure investors receive all material information for informed decision-making.

Correct: According to the MAS Guidelines on Recommendations on Investment Products and the Financial Advisers Act (FAA), if a client declines to provide any information requested by a financial adviser during the Fact-Find process, the adviser must inform the client that this may affect the adviser’s ability to make a suitable recommendation. Furthermore, the adviser must document the client’s refusal to provide the information to ensure there is a clear record that the advice was given based on incomplete data.

Incorrect: Estimating debt levels based on partial records like bank statements is speculative and does not satisfy the requirement to have a reasonable basis for a recommendation. Waiving requirements by incorrectly labeling a client as an Accredited Investor is a serious regulatory breach, as AI status must be verified against specific criteria under the Securities and Futures Act (SFA). Applying arbitrary risk multipliers to compensate for missing data is not a recognized or compliant substitute for a proper Fact-Find and fails to meet the MAS standards for suitability.

Takeaway: When a client refuses to provide KYC information, the adviser must warn the client about the impact on the recommendation’s suitability and maintain a formal record of the refusal.

Correct: Under Section 57 of the Singapore Insurance Act 1966, a life insurance policy is void unless the person taking out the insurance has an insurable interest in the life of the person insured at the time the policy is made. While the Act presumes insurable interest for oneself, a spouse, or a child/ward under 18, it does not recognize a ‘close friend’ without a pecuniary (financial) interest. Therefore, the representative must advise that the contract would be legally void and suggest the friend (who has interest in their own life) take out the policy themselves.

Incorrect: Option b is incorrect because, under Singapore law, the mere consent of the life insured does not satisfy the legal requirement for the proposer to have an insurable interest. Option c is incorrect because the requirement for insurable interest applies to all life insurance policies, including both traditional and investment-linked policies. Option d is incorrect because the requirement for insurable interest is a statutory mandate under the Insurance Act and cannot be waived by the representative or the insurer based on personal relationships.

Takeaway: In Singapore, a life insurance policy is void from inception if the proposer lacks a statutory or pecuniary insurable interest in the life insured at the time the policy is effected.

Correct: In Singapore, while the Contracts (Rights of Third Parties) Act (CRTPA) allows a third party to enforce a contract term if the contract expressly provides for it or purports to confer a benefit, most insurers include a standard clause that expressly excludes the CRTPA. This is done to maintain contractual certainty and ensure that the rights of beneficiaries are governed specifically by the nomination framework under the Insurance Act (Sections 49L and 49M) rather than the broader CRTPA.

Incorrect: The option suggesting an automatic right regardless of exclusion is incorrect because the CRTPA specifically allows parties to a contract to exclude its application through express terms. The option involving MAS approval is incorrect because third-party enforcement rights are a matter of contract law and statutory interpretation of the CRTPA, not regulatory approval. The option suggesting the CRTPA supersedes the Insurance Act is incorrect because the nomination framework in the Insurance Act is the primary specialized legislation for insurance beneficiaries in Singapore and is not overridden by the CRTPA.

Takeaway: Most life insurance policies in Singapore expressly exclude the Contracts (Rights of Third Parties) Act to ensure beneficiary rights are managed strictly through the Insurance Act’s nomination framework.

Correct: Under the Insurance Act and associated MAS Guidelines on Business Conduct, insurance intermediaries are required to manage conflicts of interest effectively. Accepting high-value gifts or entertainment can impair the objectivity of the intermediary, potentially leading them to prioritize the insurer’s interests over the policyholder’s needs, which violates the core principle of acting in the client’s best interest.

Incorrect: Capital adequacy ratios (CAR) are financial requirements used to ensure an insurer has enough capital to cover its risks and are not a justification for conduct-related issues like gift-giving. The distinction between captive insurers and direct insurers relates to the scope of their insurance license and who they are permitted to insure, not to conduct rules regarding gifts. The source of the incentive (whether a reinsurer or a life insurer) does not waive the requirement for intermediaries to avoid conflicts of interest that could bias their advice.

Takeaway: The primary regulatory concern regarding gifts and entertainment for Singapore insurance intermediaries is the prevention of conflicts of interest that could compromise objective client advice.

Correct: Under Section 27 of the Financial Advisers Act (FAA), a financial adviser must have a reasonable basis for any recommendation made to a client. This requires the adviser to have considered the client’s investment objectives, financial situation, and particular needs. Even if gifts or entertainment are received, the representative must demonstrate that the recommendation is objectively suitable for the client. In this scenario, recommending a potentially higher-risk ILP sub-fund to retirees seeking capital preservation requires a rigorous suitability assessment to ensure the recommendation is based on the client’s needs rather than the influence of the gala dinner.

Incorrect: Recording the gift in a log (option b) is a procedural requirement for conflict management but does not satisfy the substantive requirement to have a ‘reasonable basis’ for a specific recommendation. Disclosure and client acknowledgement (option c) are necessary for transparency but do not exempt the representative from the statutory duty to provide suitable advice under the FAA. Relying on an approved product list (option d) is a firm-level control, but the FAA requires the representative to have a reasonable basis for the specific recommendation given to a specific client based on their unique profile.

Takeaway: The FAA’s reasonable basis requirement mandates that every recommendation must be objectively justified by the client’s unique financial profile, independent of any external incentives or conflicts of interest.

Correct: In Singapore, the distinction between acceleration and additional (or ‘stand-alone’) riders is fundamental. An acceleration rider ‘accelerates’ the payment of the death benefit. If Mr. Chen claims $150,000 under an acceleration CI rider, his remaining death benefit would drop to $150,000. Conversely, an additional rider pays the $150,000 CI benefit separately, leaving the original $300,000 death benefit intact. This choice significantly impacts the long-term protection strategy and premium costs.

Incorrect: The suggestion that acceleration riders provide higher payouts or only pay after death benefits are exhausted is a misunderstanding of the term ‘acceleration’. There is no MAS regulation (such as Notice 307) that mandates acceleration riders specifically for ILPs over other plan types. Furthermore, while Waiver of Premium is a common rider, it is not an inherent feature that distinguishes acceleration riders from additional riders; they are separate contractual provisions.

Takeaway: The primary difference between CI riders is whether the claim amount is deducted from the main policy’s sum assured (acceleration) or paid as an independent benefit (additional).

Correct: In accordance with MAS Notice FAA-N16 (Recommendations on Investment Products), a financial adviser is required to disclose the remuneration they will receive for a recommended product. This disclosure must be in writing, specific to the product being recommended, and provided at the time the recommendation is made. This ensures transparency and allows the client to assess any potential conflicts of interest before committing to the investment.

Incorrect: Providing a general statement or waiting for a client request is insufficient because MAS regulations mandate proactive and specific disclosure to mitigate conflicts of interest. There is no minimum threshold (such as 5%) that exempts a representative from disclosure; all remuneration related to the recommendation must be disclosed. Post-sale disclosure is also non-compliant because the information must be available to the client during the decision-making process at the point of recommendation.

Takeaway: In Singapore, financial advisers must provide written, specific disclosure of remuneration and incentives at the point of recommendation to ensure client transparency and manage conflicts of interest.

Correct: SGX (Singapore Exchange) acts as the securities exchange where Exchange Traded Funds (ETFs) are listed and traded. ETFs are a form of Collective Investment Scheme (CIS). In the context of ILPs, an insurer may allow policyholders to allocate their premiums into sub-funds that invest directly into these SGX-listed ETFs, thereby utilizing the exchange’s infrastructure for the underlying assets of the insurance policy.

Incorrect: The Monetary Authority of Singapore (MAS), not SGX, is the statutory regulator responsible for the authorization and recognition of Collective Investment Schemes (CIS) under the Securities and Futures Act (SFA). SGX does not guarantee investment performance or capital, as market risk is a fundamental characteristic of these instruments. Furthermore, ILP sub-funds are typically managed internally by life insurance companies and are not listed on the SGX; only specific underlying assets like ETFs or Real Estate Investment Trusts (REITs) are traded on the exchange.

Takeaway: While MAS regulates the authorization of investment schemes, SGX provides the essential marketplace for trading listed CIS like ETFs which often serve as underlying components of investment-linked products.

Correct: Under the Financial Advisers Regulations (FAR) in Singapore, a financial adviser that receives client money must pay the money into a client’s bank account (trust account) not later than the next business day following the receipt of the money. This ensures the prompt segregation of client funds from the firm’s own assets, protecting the client in the event of the firm’s insolvency.

Incorrect: The suggestion that funds can be held in an operational account for three days is incorrect as it violates the segregation requirement and the ‘next business day’ rule. Retaining interest earned on client money without a specific written agreement is generally not permitted, and verbal notification is insufficient. The statutory period for maintaining records under the Financial Advisers Act and its regulations is typically five years, not three years.

Takeaway: Licensed financial advisers must deposit client money into a designated trust account by the next business day to ensure strict segregation and protection of client assets.

Correct: According to the Second Schedule of the Financial Advisers Act (FAA), financial advisory services include advising others (whether through reports or direct communication) concerning investment products, provided it is not advice on corporate finance. It also specifically includes the ‘arranging of any contract of insurance in respect of life policies’, while explicitly excluding contracts of reinsurance.

Incorrect: Advising on corporate finance and reinsurance are specifically excluded from the definitions of financial advisory services in the Second Schedule. Managing a discretionary portfolio of capital markets products is classified as ‘fund management’ under the Securities and Futures Act (SFA), rather than a financial advisory service under the FAA. While general insurance is regulated, the specific definition in the Second Schedule of the FAA focuses on life policies for the purpose of arranging insurance contracts.

Takeaway: The FAA Second Schedule defines financial advisory services to include advising on investment products and arranging life insurance, while excluding corporate finance advice and reinsurance contracts.

Correct: In Singapore, participating (Par) policies involve a Life Fund where the insurer practices ‘smoothing.’ This mechanism involves holding back some of the profits during years of strong investment performance to buffer and maintain bonus distributions during years of weak performance. This provides policyholders with more stable, less volatile returns compared to direct market investments.

Incorrect: Distributing the entire surplus immediately would lead to high volatility in bonus rates and fail to provide the stability expected of Par policies. The selection of specific sub-funds is a characteristic of Investment-Linked Policies (ILPs), not participating Whole Life policies where the insurer manages the pool. Reversionary bonuses, once declared and vested, become part of the guaranteed benefits of the policy and cannot be revoked, unlike terminal bonuses which are only determined at the point of payout.

Takeaway: Smoothing is the fundamental mechanism in Singapore participating policies used to provide stable non-guaranteed benefits by averaging out investment performance over the long term.

Correct: Under the Financial Advisers Act (FAA) and the Representative Notification Framework (RNF) administered by MAS, principal firms have a legal obligation to notify MAS within 14 days when a representative ceases to act on their behalf. This requirement is crucial for MAS to maintain an up-to-date public register, allowing consumers to verify the status of individuals they are dealing with.

Incorrect: The requirement to notify MAS within 14 days applies to all cessations of service, regardless of whether misconduct was involved, making the suggestion that only fit and proper breaches trigger notification incorrect. The responsibility for notification lies with the principal firm (the employer or principal), not the individual representative. Furthermore, reporting must be done on an ad-hoc basis within the 14-day window rather than being delayed until an annual compliance submission.

Takeaway: In Singapore, principal firms must notify MAS within 14 days of a representative’s cessation of service to maintain the accuracy of the public register under the RNF.

Correct: Under the Financial Advisers Act (FAA) and MAS guidelines, representatives are strictly prohibited from making false or misleading statements. Presenting a target return (which is inherently speculative) as a ‘fixed expectation’ is misleading because it creates a false sense of security and fails to provide a fair and balanced view of the investment’s risks and the non-guaranteed nature of its returns.

Incorrect: The prohibition against misleading statements is not contingent on the client suffering an actual financial loss; the act of misrepresentation itself constitutes a breach. Internal models do not grant a representative the right to present variable targets as certainties. Furthermore, providing a written risk disclosure does not excuse or rectify misleading verbal statements made during the advisory process.

Takeaway: Financial advisers in Singapore must ensure all communications are fair, balanced, and do not present non-guaranteed investment returns as certainties.

Correct: The Financial Advisers Act (FAA) in Singapore adopts an activity-based regulatory framework. It regulates any person providing financial advisory services, which includes advising others on investment products such as life policies and units in collective investment schemes. While certain entities like banks, merchant banks, and insurance companies are ‘exempt financial advisers’ (meaning they do not need a specific financial adviser’s license), they and their representatives must still comply with the FAA’s conduct of business requirements and representative notification regimes to ensure a level playing field and consistent consumer protection.

Incorrect: The approach suggesting the FAA only applies to independent firms is incorrect because banks and insurance companies are considered ‘exempt financial advisers’ under the FAA and must still adhere to its conduct standards. The approach suggesting research reports are self-regulated is incorrect because ‘issuing or expounding on research reports’ is specifically listed as a financial advisory service under the Second Schedule of the FAA. The approach suggesting life insurance is excluded is incorrect because the FAA explicitly includes life policies (including ILPs) within its definition of investment products.

Takeaway: The Financial Advisers Act (FAA) regulates financial advisory activities across both licensed and exempt financial advisers to ensure uniform standards of conduct for advice on investment products in Singapore.

Correct: Term life insurance is characterized by providing pure protection for a fixed period with no savings or investment element. In the Singapore context, it is highly suitable for individuals with significant but temporary financial obligations, such as a mortgage or the dependency period of young children, because it allows the policyholder to obtain a large amount of coverage at a significantly lower premium than whole life or endowment policies.

Incorrect: The suggestion that term insurance accumulates cash value is incorrect as it is a non-participating product designed for pure protection. There is no regulatory requirement by the Monetary Authority of Singapore (MAS) to convert term policies based on income levels. Furthermore, while critical illness riders are often recommended, they are not a mandatory legal requirement for all mortgage-related insurance, and term policies certainly do allow for various riders to be attached.

Takeaway: Term life insurance is a cost-effective solution for high, temporary protection needs as it focuses on pure insurance coverage without a savings or investment component.

Correct: The Life Insurance Association (LIA) Singapore is a trade association that plays a key role in self-regulation. One of its primary functions is to establish industry standards and codes of practice, such as the LIA Minimum Disclosure Standards and the guidelines for Benefit Illustrations. These standards ensure that all member companies provide clear, comparable, and standardized information to consumers, which is vital for maintaining trust and transparency in the Singapore life insurance market.

Incorrect: The Monetary Authority of Singapore (MAS), not the LIA, is the statutory regulator with the power to enforce the Financial Advisers Act and impose penalties. The Financial Industry Disputes Resolution Centre (FIDReC) is the independent body responsible for resolving consumer disputes, not the LIA. Additionally, the LIA does not set or mandate specific premium prices or mortality charges, as these are determined by individual insurers based on their own actuarial assessments and commercial strategies.

Takeaway: The LIA Singapore promotes industry excellence and consumer protection by setting self-regulatory standards and codes of practice that ensure transparency and consistency across life insurance products.

Correct: The most effective control is a robust internal compliance program. Under the Financial Advisers Act (FAA), licensed financial advisers must comply with MAS Notices, which are legally binding. Regular audits and training ensure that the firm and its representatives stay updated on regulatory requirements, thereby mitigating the risk of criminal sanctions, fines, or the revocation of licenses. While Guidelines are not legally binding in the same way as Notices, MAS considers compliance with Guidelines when assessing whether a person remains fit and proper to conduct regulated activities.

Incorrect: Treating MAS Guidelines as purely advisory is incorrect because MAS uses these to assess the ‘fit and proper’ status of licensees; failure to follow them can lead to administrative actions. Delegating full responsibility to individuals is ineffective as the licensed corporation remains responsible for the conduct of its representatives under MAS supervision. Focusing only on high-net-worth clients is a flawed risk management strategy because MAS regulations apply to all regulated activities regardless of client wealth, and systemic failures in any segment can lead to severe penalties.

Takeaway: Proactive internal compliance and training are essential for adhering to MAS regulatory requirements and maintaining a firm’s license under the Financial Advisers Act.

Correct: Under the PDPA’s Consent Obligation, an organization may collect, use, or disclose personal data about an individual only with the individual’s consent. Furthermore, the Withdrawal of Consent Obligation mandates that an individual may, at any time on giving reasonable notice, withdraw any consent given or deemed to have been given under the Act.

Incorrect: Sharing data with an overseas parent company still requires compliance with the Transfer Limitation Obligation, ensuring the destination provides a standard of protection comparable to the PDPA. The Retention Limitation Obligation actually requires organizations to cease to retain documents containing personal data as soon as it is reasonable to assume that the purpose for which that personal data was collected is no longer being served and retention is no longer necessary for legal or business purposes. The Protection Obligation applies to all personal data in the possession or under the control of an organization, regardless of whether it is in electronic or physical form.

Takeaway: Financial institutions must comply with the PDPA by obtaining valid consent for data usage and respecting the client’s right to withdraw that consent, while ensuring data is not retained longer than necessary.

Correct: According to the Singapore Insurance Act, specifically regarding life policies, a policy is void unless the person effecting the insurance has an insurable interest in the life of the insured at the time the insurance is effected. The Act deems that a person has an insurable interest in their own life, the life of a spouse, and the life of a child or ward under the age of 18.

Incorrect: The suggestion that insurable interest must exist at the time of claim is incorrect for life insurance; it only needs to exist at the inception of the policy. The idea that consent can waive the statutory requirement for insurable interest is false, as the Act mandates the relationship or dependency for the contract to be valid. Finally, the requirement for insurable interest applies to all life insurance policies, including Investment-Linked Policies, as they are governed by the same fundamental insurance principles under the Act.

Takeaway: Under the Singapore Insurance Act, insurable interest must exist at the time of policy inception for a life insurance contract to be legally valid and not void.

Correct: Under Section 39 of the CDSA, any person who, in the course of his trade, profession, business or employment, knows or has reasonable grounds to suspect that any property may be connected to criminal conduct must disclose the matter to the Suspicious Transaction Reporting Office (STRO) as soon as is reasonably practicable. Furthermore, Section 48 of the CDSA makes it a criminal offense to ‘tip off’ the person who is the subject of the investigation or report.

Incorrect: Waiting for a quarterly audit is incorrect because the CDSA requires reporting as soon as is reasonably practicable to prevent the movement of illicit funds. Informing the client that a report might be filed constitutes ‘tipping-off’, which is a serious offense under the CDSA. The duty to report suspicious transactions is based on the existence of ‘reasonable grounds to suspect’ and is not limited by a specific monetary threshold like S$20,000, which primarily applies to Cash Transaction Reports (CTR) for precious stones and metals dealers or cross-border movements.

Takeaway: The CDSA mandates the prompt reporting of suspicious transactions to the STRO and strictly prohibits tipping off the client to ensure the integrity of potential criminal investigations.

Correct: The Suspicious Transaction Reporting Office (STRO) is the Financial Intelligence Unit (FIU) of Singapore, situated within the Commercial Affairs Department (CAD). Its primary role under the CDSA is to receive, analyze, and disseminate financial intelligence. When a financial institution files an STR, the STRO processes this information to identify patterns of money laundering or terrorism financing and shares relevant leads with law enforcement agencies.

Incorrect: The STRO is an intelligence-gathering and analysis unit, not a prosecutorial body; prosecution is handled by the Attorney-General’s Chambers (AGC). Filing an STR does not provide automatic legal immunity or ‘clearance’ to proceed with a transaction; firms must still ensure they do not commit the offense of ‘tipping off’ and must manage their own AML/CFT risks. Administrative sanctions and fines for KYC or compliance failures are typically the responsibility of the Monetary Authority of Singapore (MAS) as the industry regulator, rather than the STRO.

Takeaway: The STRO functions as Singapore’s central intelligence hub for receiving and analyzing suspicious transaction data to support the detection of financial crimes and terrorism financing.