What are the disclosure requirements to the CPF members for FMAs?
Reports for fund management accounts should follow industry practice. FMCs should provide CPF members with the same disclosures and statements as they would for their cash investors of FMAs.
What can be the permissible investments for the fund’s underlying investments?
A fund’s underlying investments may only consist of the following permissible investments:
1. Cash;
2. Deposits with financial institutions with financial strength ratings of above C by Moody’s, or viability ratings of above BBB by Fitch;
3. Money market instruments;
4. Debt securities eligible under the CPFIG;
5. Units in CISs (subject to the CPF Board’s approval); and
6. Shares (including rights and warrants issued directly by the underlying company), and depositary receipts listed and traded on an exchange. For the avoidance of doubt, a fund may continue to hold listed shares which are subsequently suspended or delisted, and such shares are not subject to the deviation limit below.
How an issuer refers to the “responsible person“ as defined under the SFA?
An issuer refers to the “responsible person” as defined under the SFA, which is:
i. For a scheme which is constituted as a corporation, the corporation; or
ii. For a scheme which is not constituted as a corporation, the manager for the scheme.
Which are the offers where PHS is required?
Issuers should furnish investors with a PHS for offers of:
1. Debentures in the form of debentures or units of debentures issued pursuant to a securitisation transaction (“asset-backed securities”) and structured notes (including exchange-traded notes) where the offer is made in or accompanied by a prospectus; and
2. Unlisted CIS and exchange-traded funds where the offer is made in or accompanied by a prospectus.
The PHS should highlight key features and risks of the investment product to investors.
The PHS should also:
i. Clearly disclose required information in the format as set out in the PHS Guidelines;
ii. Not contain any information that is not included in the prospectus; and
iii. Not contain any information that is false or misleading.
What are the three steps in the process of money laundering?
There are generally three steps in the process of money laundering:
1. The Placement stage refers to the physical disposal of benefits for criminal conduct. These are placed with licensed deposit-taking companies like banks and finance companies.
2. The Layering stage refers to the separation of benefits of criminal conduct from their sources by creating layers of financial transactions designed to disguise the audit trail. Criminals may buy luxury or high value goods from genuine suppliers, resell them to
unknowing customers and then place the legitimate funds back in the bank as payments by cheque or wire transfers.
3. The Integration stage refers to the provision of apparent legitimacy to the benefits of criminal conduct. If the layering succeeds, the integration schemes place the laundered funds back into the financial system, making them appear as legitimate
business funds.
What are the different categories of embargoes?
Different categories of embargoes include:
i. Embargoes affecting all relations with a particular country e.g. North Korea;
ii. Embargoes affecting certain named individuals or entities e.g. Specially Designated Names (SDN List);
iii. Embargoes on certain sectors e.g. Armaments and Weaponry; and
iv. Economic sanctions which also vary from imposing import duties on products from certain countries and blocking of exports of certain goods to target countries, or full blockage of a country’s products.
How the term “fraud“ is defined?
Fraudulent acts are acts involving deception and dishonesty where a person obtains or seeks to obtain an advantage or benefit at the expense of another person. It can be committed by staff or outside parties when operational risk is not properly managed or is caused by a nonalert staff.
What is money laundering by acquisition?
Any person who knows or has reasonable grounds to believe that any property (in whole or in part, directly or indirectly) represents another person’s benefits from drug trafficking or criminal conduct, acquires that property for no or inadequate consideration shall be guilty of
an offence.
What are some basic guidelines for enhanced due diligence?
When the Risk Score is high, a CMS licence holder and its representatives must carry out EDD.
Some basic guidelines for enhanced due diligence include:
i. EDD on local and foreign politically exposed persons;
ii. Do not perform simple CDD if the bank suspects that money laundering or terrorist financing is involved;
iii. In instances where financial institutions rely on the intermediaries to perform CDD, the financial institutions would need to immediately obtain the CDD information from the
intermediaries. Failing which CMS licence holder should carry out its own due diligence.
Briefly describe the summary of “KYC“ Framework?
A KYC framework can be summarised as follows:
• Know Your Customers / customer selection
• Maintain KYC documentation
• Monitor Transactions
• Report suspicious transaction to Management as well as to Compliance
• Work with Compliance and Management to determine if transaction needs to be reported to the police/ central bank
• Avoid tipping off
What does the word “FRAUD“ stand for?
• F – Follow Policies & Procedures. If you dont know what these are, ask compliance where to find them.
• R – Report any suspicious transaction or inconsistencies to Compliance and Management through a whistle blowing process.
• A – Act if you suspect and investigate.
• U – Unite with Management, Compliance & Enforcement Agencies to bring perpetrators to justice.
• D – Disciplinary action to be taken and criminal charges Imposed.
A person who knows or has reasonable grounds to suspect that:
a. An authorised officer is acting or is proposing to act, in connection with an investigation which is being or is about to be conducted under or for the purposes of the CDSA; and
b. Discloses to any other person information or any matter which is likely to prejudice any investigation which might be conducted following the disclosure, shall be guilty of an offence.
What is the penalty for money laundering offences?
A person who commits any money laundering offences stated above shall be liable to:
a) If an individual, a fine up to SGD 500,000, or imprisonment up to 7
years, or both; or
b) If non-individual, a fine of SGD 1 million.
What are the responsibilities of FMCs?
FMCs have to:
i. Provide the selected FTC with the analytical data necessary to enable proper disclosure of the performance of the funds they manage;
ii. Ensure that the CPF members have at least one source from which they can access the FMCs’ funds’ performance and risk monitoring information, computed on the same basis as with all the other funds included under the CPFIS;
iii. Make available at least the following basic analytical data to the selected FTC in a timely manner, so that the performance and risk monitoring report can be made available to the CPF members at least once every quarter:
(a) Total asset size of fund as at the end of the relevant reporting period;
(b) Net asset value (NAV) per unit in Singapore dollars for each month of the relevant reporting period;
What are the disclosure requirements for prospectus?
The prospectus of funds included under the CPFIS must disclose the following:
1. A list of countries that the fund intends to invest in (unless the fund’s focus is on the global market). FMCs may make a provision in the prospectus allowing them to invest up to 5% of the deposited property of the fund in markets not stated in the prospectus;
2. A list of categories of assets that the fund intends to invest in (such as equities, cash, bonds etc.);
3. The FMC’s self-imposed investment limits or operating ranges (by market, asset class, issuer etc.);
4. The benchmark which the fund’s performance should be measured against (e.g. Morgan Stanley Capital International World Index, Salomon Brothers World Government Bond Index etc.);
5. The FMC’s intention to invest in derivatives and/or engage in securities lending; and
6. Procedures to resolve conflicts of interests.
What is meant by supplementary documents and replacement documents?
“Supplementary documents” refer to supplementary prospectus or supplementary profile statements. “Replacement documents” refer to replacement prospectus or replacement profile statements. Typically, the offeror may choose to lodge either a
supplementary or replacement document after the prospectus or profile statement is registered by MAS, as an amendment or supplement to the original documents.
What should be included at the beginning of the replacement document?
The replacement document must include at its beginning:
(a) A statement that it is a replacement prospectus or profile statement; and
(b) An identification of the prospectus or profile statement it replaces.
What are the elements of a publication?
A statement will be considered a publication for a CIS if the statement is part of the normal advertising for the offeror’s products or services and whether it is likely to encourage investment decisions to be made on the statement rather than on the basis of information contained in the prospectus or profile statement.
Some advertisements or publications relating to CIS can be disseminated without being subject to the advertising requirements in the SFR-CIS. These include regulatory
disclosures and reports, notice or report of a proposed meeting, a news report or genuine comment made by a person not associated with the offeror.
The waivers given to news reports or genuine comments would be invalidated if a consideration or any other benefit is given for the publication of such advertisements or statements. Such advertisements or publications would then be subject to the
advertising requirements in the SFR-CIS.
What is the minimum track record of CPFIS admission requirements for the FMCs?
The FMC should have:
(i) A minimum 1-year track record as a CMS licence holder under the SFA, in the fund management industry in Singapore, while the group as a whole should have a minimum of 3-year track record in fund management; or
(ii) In the case of a foreign FMC of a recognised CIS, a minimum of 3-year track record in fund management.
What are the two stages of review for the applicant as a FMC under the CPFIS?
1. First Stage of Review
The CPF Board will review the application with MAS, to assess the suitability of the applicant against the prevailing FMC criteria for admission under the CPFIS.
2. Second Stage of Review
The CPF Board will appoint an investment consultant to conduct due diligence on the applicant based on the applicant’s track record and quality of investment management, taking into consideration factors such as the stability in the applicant’s fund
management team, the applicant’s corporate culture and its ability to retain good fund managers in the company.
What should be included in the application for recognized CISs?
The application should include:
i. A list of investments of the recognised CIS as at the date of the application indicating which investments deviate from the CPFIG;
ii. Proposed compliance procedures and confirmation that at least 95% of the value of the fund will be invested in accordance with the CPFIG; and
iii. A confirmation from the FMC that it does not retain cash rebates for its own account in its management of the fund.
What is the general criteria for the funds to be included under the CPFIS?
All funds to be included under the CPFIS must meet the following criteria:
1. Be in the top 25 percentile of funds in their global peer group
2. Have a Total Expense Ratio (TER)13 not exceeding the median of existing CPFIS funds in its risk category;
3. Have sales charges not exceeding 3%; and
4. Preferably have a track record of 3 years.
What are the special conditions imposed on the property funds by the CPFIS?
Property funds that invest directly in real estate or infrastructure, and are listed need not comply with the CPFIG. However, a CPF member may only invest up to 35% of his investible savings in such property funds. In addition, property funds included under the CPFIS-OA must be:
• Offered by a company that is incorporated in Singapore;
• Denominated in Singapore dollars; and
• Listed on the SGX MainBoard.
How Fund-of-Funds (FOF) / Multi-manager products are evaluated for inclusion into the CPFIS?
FOF or multi-manager products are evaluated for inclusion into the CPFIS on a case by-case basis, depending on the specific structure of each product submitted. This is because FOF and multi-manager products may vary their investments in the underlying funds or with the underlying managers over time.
What are the three broad groups for narrowly focused investments?
i. Single-country Focused Securities – tend to maintain a substantial portion of their investments in securities of companies in a single country;
ii. Regional Focused Securities – tend to maintain a major portion of their investments in particular regions (e.g. Europe, Asia), with relatively broad diversification maintained across various countries within this region (e.g. North America, Europe, Asia, Emerging Markets); and
iii. Sector Focused Securities – have a global industry sector focus, or otherwise do not fit into the groups associated with the first two sub-headings (e.g. technology, healthcare, biotechnology, others).
What are the two categories of focus risk?
The two categories of focus risk are as follows:
1. Broadly Diversified – Lower focus risk; investments tend to be spread across more geographical regions, countries, industries and individual securities; and
2. Narrowly Focused – Higher focus risk; investments tend to be focused in particular geographical regions, countries, industries or individual corporations.
How the FMCs inform the CPF Board related to the merging/termination of funds?
FMCs must:
i. Inform the CPF Board in writing of the effective date of the merger or termination of their funds, enclosing a copy of their letter to unit-holders, after they have consulted their trustee;
ii. Inform the CPF unit-holders of transactional charges that they may incur, including agent bank charges for switching of funds under the CPFIS-OA, if any; and
iii. Perform reconciliation with agent banks for actions affecting funds under the CPFIS-OA, and with the CPF Board for actions affecting funds under the CPFIS-SA.
What should be disclosed by the prospectus of funds under the CPFIS?
The prospectus of funds included under the CPFIS must disclose the following:
1. A list of countries that the fund intends to invest in (unless the fund’s focus is on the global market). FMCs may make a provision in the prospectus allowing them to invest up to 5% of the deposited property of the fund in markets not stated in the prospectus;
2. A list of categories of assets that the fund intends to invest in (such as equities, cash, bonds etc.);
3. The FMC’s self-imposed investment limits or operating ranges (by market, asset class, issuer etc.);
4. The benchmark which the fund’s performance should be measured against (e.g. Morgan Stanley Capital International World Index, Salomon Brothers World Government Bond Index etc.);
5. The FMC’s intention to invest in derivatives and/or engage in securities lending; and
6. Procedures to resolve conflicts of interests.