RES 2BE3 – Add-on Module for Asia Pacific Exchange (APEX)

Correct: Under the Code of Corporate Governance in Singapore and MAS guidelines, where the Chairman of the Board is not an independent director (such as when the Chairman is an executive of the Sponsor), independent directors should make up at least half of the Board. This is crucial for REIT Managers to mitigate potential conflicts of interest between the Sponsor and the unitholders, especially during sensitive incidents or related party transactions.

Incorrect: Maintaining only one-third independence is insufficient under the Code when the Chairman is not independent. While an Audit Committee must be independent, it does not replace the requirement for overall Board independence. There are no provisions in the Code or the Securities and Futures Act that allow a Sponsor’s guarantee to waive corporate governance independence requirements. While a Lead Independent Director is required when the Chairman is not independent, this is an additional requirement and does not negate the need for the board to be at least half independent.

Takeaway: In Singapore, REIT Managers must ensure that independent directors comprise at least half of the Board if the Chairman is not independent to safeguard unitholder interests against Sponsor conflicts.

Correct: Under Appendix 6 of the Code on Collective Investment Schemes (Property Funds Appendix) issued by the Monetary Authority of Singapore (MAS), a property fund (REIT) is required to have its assets valued at least once a year by an independent professional valuer. To ensure independence and objectivity, the guidelines specify that the same valuer should not be appointed to value the same property for more than two consecutive financial years.

Incorrect: Retaining the same firm while rotating the lead partner is insufficient as the regulation applies to the valuer/firm entity to prevent familiarity threats. There is no threshold based on the percentage of deposited property (such as 25%) that triggers the rotation requirement; it applies to all properties in the portfolio. The five-year rotation cycle mentioned is a misconception derived from audit firm rotation rules, which are distinct from the two-year rotation rule for property valuers under the CIS Code.

Takeaway: To maintain valuation integrity, Singapore REITs must rotate the independent professional valuer for each property at least every two consecutive financial years.

Correct: Under the Code on Collective Investment Schemes (Appendix 6: Property Funds) issued by the Monetary Authority of Singapore, when a property fund acquires an asset from an interested party, at least two independent valuations must be obtained. Furthermore, these valuations must be current, specifically meaning the valuation reports must be dated no more than six months before the date of the sale and purchase agreement.

Incorrect: The suggestion to use a valuer who has served for three consecutive years is incorrect because the Code requires valuer rotation, stating a valuer should not value the same property for more than two consecutive financial years. A single valuation is insufficient for interested party transactions, which specifically require two independent reports to mitigate conflicts of interest. While frequent updates might seem prudent, the specific regulatory threshold for the validity of a valuation report in this context is six months, not a mandatory quarterly update.

Takeaway: For interested party transactions involving Singapore REITs, two independent valuations dated within six months of the agreement are regulatory requirements.

Correct: Under the Securities and Futures Act (SFA), REIT management is a specific regulated activity. A firm that already holds a CMS license for other activities, such as fund management, must apply to the Monetary Authority of Singapore (MAS) to add ‘REIT management’ to its license. Furthermore, a REIT manager is subject to a specific minimum base capital requirement of S$1 million, which may be higher than the requirements for other types of fund management.

Incorrect: The suggestion that REIT management is automatically covered under a general fund management license is incorrect because the SFA treats REIT management as a distinct regulated activity requiring specific approval. Relinquishing an existing license is unnecessary and inefficient, as the MAS framework allows for the addition of regulated activities to an existing CMS license. Finally, the requirement for REIT managers typically includes having at least two resident executive directors, and the experience must be relevant to property fund management rather than just general property development.

Takeaway: A CMS licensee must specifically seek MAS approval to add REIT management to its license and must comply with the S$1 million minimum base capital requirement.

Correct: In accordance with the Singapore Code of Corporate Governance, the Board should implement a formal annual assessment of its effectiveness as a whole, and that of each of its board committees and individual directors. Best practice dictates that the Chairman should act on the results of the performance evaluation and, in consultation with the NC, propose new members or seek the resignation of directors where necessary. Providing private, constructive feedback to individual directors is the standard professional approach to enhance board performance while maintaining the necessary confidentiality and trust required for a high-functioning board.

Incorrect: Disclosing individual performance scores and peer comments in the Annual Report is not a requirement of the Code of Corporate Governance or SGX Listing Rules and could damage board dynamics. Focusing only on the collective board ignores the specific requirement in the Code for individual director assessments. While the MAS oversees the fitness and propriety of key individuals, they do not require the submission of internal board evaluation results for formal validation of every director’s annual performance assessment.

Takeaway: The annual assessment for a Singapore REIT Manager must evaluate both the collective Board and individual directors, with the Chairman using the results to drive continuous improvement in board effectiveness and composition.

Correct: Under the tax transparency treatment provided by the Inland Revenue Authority of Singapore (IRAS), a Singapore REIT (S-REIT) is not taxed on its taxable income at the trustee level if it distributes at least 90% of that taxable income to its unitholders in the same year the income is earned. This mechanism ensures that the income is only taxed once at the unitholder’s level (subject to the unitholder’s tax profile), rather than being taxed at both the corporate and individual levels.

Incorrect: Distributing 100% of accounting profit including capital gains is not the requirement; tax transparency specifically concerns ‘taxable income’ and the threshold is 90%, not 100%. A 75% distribution of gross rental income is incorrect as the threshold is 90% of taxable income, and the use of funds for AEI does not lower this specific transparency threshold. While the MAS sets gearing ratio limits, these are regulatory requirements for the REIT’s capital structure and are independent of the 90% distribution requirement set by IRAS for tax transparency purposes.

Takeaway: To qualify for IRAS tax transparency and avoid corporate-level taxation, a Singapore REIT must distribute at least 90% of its taxable income to unitholders.

Correct: According to Appendix 6 of the Code on Collective Investment Schemes (Property Funds) issued by the Monetary Authority of Singapore (MAS), the total contract value of property development activities and investments in uncompleted property developments should generally not exceed 10% of the property fund’s deposited property. However, this limit may be increased to 25% if the additional allowance is used for the redevelopment of existing properties that the REIT has held for at least three years, and the REIT continues to hold the redeveloped property for at least three years upon completion.

Incorrect: Option b is incorrect because the 25% limit is a regulatory threshold available upon meeting specific holding period conditions, not a case-by-case waiver based on GFA percentage increases. Option c is incorrect because the limit is calculated based on ‘deposited property’ (total assets), not market capitalization. Option d is incorrect because while trustees have oversight roles, the specific condition to trigger the 25% limit is the three-year holding period requirement, not the appointment of additional third parties.

Takeaway: S-REITs can increase their development activity limit from 10% to 25% of deposited property only for redevelopment projects where the property is held for at least three years before and after the project.

Correct: According to the Property Funds Appendix (Appendix 6 of the Code on Collective Investment Schemes) issued by the Monetary Authority of Singapore (MAS), a property fund should not invest in vacant land unless it intends to use the land for development purposes. Additionally, the fund is generally prohibited from investing in mortgages, although an exception is made for investments in mortgage-backed securities. This ensures that the REIT remains focused on its core mandate of owning and managing income-generating real estate rather than acting as a land speculator or a credit provider.

Incorrect: The suggestion that land banking is allowed up to 10% is incorrect because the 10% (or 25% under specific conditions) limit applies to property development activities and investments in uncompleted properties, not to holding vacant land without development intent. The idea that vacant land is restricted to specific geographic zones like the Greater Southern Waterfront or requires SGX waivers for every transaction is not a requirement under the CIS Code. Furthermore, private mortgages are not considered qualifying real estate assets for a REIT, regardless of the holding period or registration with the Singapore Land Authority.

Takeaway: Singapore REITs are prohibited from speculative land banking and direct mortgage lending, ensuring the fund’s assets are primarily invested in income-producing real estate or development projects with clear intent.

Correct: Under the SGX Listing Rules and the Property Funds Appendix of the Code on Collective Investment Schemes, for significant Related Party Transactions (RPTs), an IFA is required to evaluate the transaction. The core control is the IFA’s independent assessment and public statement that the transaction is on normal commercial terms and not prejudicial to minority unitholders, providing transparency and an objective benchmark for unitholders to make an informed decision.

Incorrect: Mandating a specific 10% discount is not a regulatory requirement for IFAs; their role is to assess ‘normal commercial terms’ rather than enforce arbitrary pricing. Obtaining waivers from MAS is not the IFA’s responsibility, and the 3% threshold is typically for announcements, whereas the IFA opinion is generally tied to the 5% threshold requiring unitholder approval. IFAs provide professional opinions based on available data; they do not provide performance guarantees or assume operational liability for the assets involved in the transaction.

Takeaway: The IFA serves as a critical safeguard in Singapore’s REIT framework by providing an objective assessment of whether a related party transaction is fair and reasonable from the perspective of minority unitholders.

Correct: Under Singapore law, a Real Estate Investment Trust (REIT) is structured as a collective investment scheme (CIS) under the Securities and Futures Act (SFA) and must comply with the Code on Collective Investment Schemes. This requires a dual-entity structure where a Manager manages the assets and a separate, independent Trustee holds the assets on behalf of unitholders. Conversely, a Business Trust (BT) is governed by the Business Trusts Act and utilizes a single-entity structure where a Trustee-Manager performs both the management and trustee functions.

Incorrect: The claim that both structures require a dual-entity structure is incorrect because Business Trusts are specifically designed to operate with a single trustee-manager entity. The assertion that both must distribute 90% of taxable income is also incorrect; while REITs must do so to enjoy tax transparency under IRAS rulings, Business Trusts distribute cash based on their cash flow and are not bound by the same 90% statutory distribution rule for tax transparency. Finally, the Business Trusts Act applies to Business Trusts, not REITs, which are primarily regulated under the SFA and the CIS Code.

Takeaway: The fundamental structural difference in Singapore is that a REIT requires a separate manager and trustee (dual-entity), while a Business Trust uses a single trustee-manager entity.

Correct: Under the CIS Code Appendix 6 and general fiduciary principles in Singapore, the REIT Manager has a duty to act in the best interests of unitholders. This includes exercising due care and diligence in managing the property fund. Safeguarding sensitive valuation and acquisition data is essential to maintain the integrity of the fund’s operations, prevent conflicts of interest, and ensure that the valuation process is conducted independently and professionally, as mandated by the governance standards for property funds.

Incorrect: The suggestion that valuers require permanent access is incorrect as access should be restricted to a need-to-know basis to maintain security and independence. The claim that the Trustee is responsible for the Manager’s internal data access controls is incorrect; while the Trustee provides oversight, the Manager is responsible for the day-to-day management and internal controls of the REIT. The idea that revocation is only necessary for substantial unitholders is a misconception, as the duty to protect sensitive data and manage conflicts of interest applies to all service providers regardless of their shareholding status.

Takeaway: REIT Managers must implement robust internal controls and data protection measures to uphold their fiduciary duty and ensure the integrity of the property fund’s valuation and management processes.

Correct: According to Appendix 6 (Property Funds) of the Code on Collective Investment Schemes issued by the Monetary Authority of Singapore (MAS), a property fund is permitted to invest in certain non-real estate related assets. However, Paragraph 7.1(c) specifically stipulates that not more than 10% of the deposited property of the property fund should be invested in unlisted debt securities and other non-real estate assets.

Incorrect: The suggestion that the limit is 25% is incorrect as that threshold typically applies to the aggregate limit for property development activities and investments in uncompleted properties under specific conditions. The claim that there is no specific limit as long as the 75% real estate rule is met is incorrect because the MAS CIS Code imposes sub-limits on non-core assets to prevent style drift. The 5% or 15% limits for bank-guaranteed securities are not standard regulatory thresholds defined for unlisted debt within the Property Funds Appendix.

Takeaway: Under the MAS CIS Code, a Singapore REIT’s investment in unlisted debt securities and other non-real estate assets is strictly capped at 10% of its deposited property.

Correct: In accordance with the Code of Corporate Governance in Singapore and MAS requirements for REIT Managers, if the Chairman of the Board is not an independent director (such as when the Chairman is an executive of the Sponsor), independent directors should make up at least half of the Board. This higher threshold is necessary to ensure that the Board can exercise independent judgment and effectively manage potential conflicts of interest between the REIT Manager, the REIT, and the Sponsor.

Incorrect: The approach of maintaining only one-third independent directors is insufficient when the Chairman is not independent, as Singapore governance standards require a majority or at least half in such cases. Allowing directors to have significant business relationships with the Sponsor would compromise their status as ‘independent’ under the Securities and Futures (Licensing and Conduct of Business) Regulations. Technical expertise, while valuable, cannot be used as a substitute for meeting the mandatory regulatory requirements regarding the proportion of independent directors on the Board.

Takeaway: For Singapore REIT Managers, if the Chairman is not independent, independent directors must constitute at least half of the Board to ensure effective governance and conflict mitigation.

Correct: Under SGX Listing Rule 906, an issuer must obtain shareholder approval for any Interested Person Transaction (IPT) of a value equal to or more than 5% of the group’s latest audited net tangible assets (NTA). Furthermore, Rule 919 stipulates that the interested person and any associate of the interested person must abstain from voting on the resolution to ensure the decision is made by disinterested shareholders.

Incorrect: Option b is incorrect because while Audit Committee review is a standard part of the IPT process, the 5% NTA threshold specifically triggers the requirement for an immediate announcement and a shareholder vote, not just annual report disclosure. Option c is incorrect because the threshold for mandatory shareholder approval is 5% of NTA, not 10%, and while an Independent Financial Adviser (IFA) opinion is required, it does not remove the need for a shareholder vote. Option d is incorrect because commercial considerations like yield-accretion do not provide a basis for a waiver from the mandatory shareholder approval requirements set out in the SGX Listing Rules for significant IPTs.

Takeaway: In Singapore, S-REITs must obtain disinterested shareholder approval for any Interested Person Transaction that equals or exceeds 5% of the REIT’s net tangible assets.

Correct: According to the MAS Guidelines on Fit and Proper Criteria, any person performing a relevant function for a REIT Manager must satisfy the criteria of honesty, integrity, and reputation; competence and capability; and financial soundness. This is an ongoing obligation, meaning the REIT Manager must ensure its representatives and directors remain fit and proper throughout their tenure, not just at the point of hire.

Incorrect: The suggestion that the assessment is a one-time event is incorrect because fit and proper requirements are a continuous obligation under Singapore regulatory standards. The claim that competence is exclusively based on academic qualifications is false, as MAS also considers professional experience and past conduct. Finally, financial soundness is only one of the three pillars; a clean credit history does not automatically satisfy the requirements for integrity or competence.

Takeaway: Professionals in Singapore REIT management must continuously meet MAS standards for integrity, competence, and financial soundness to remain fit and proper.

Correct: Under the MAS Code on Collective Investment Schemes (Appendix 6), if the aggregate leverage limit is exceeded as a result of circumstances beyond the control of the manager, such as a depreciation in the asset value of the property fund, the manager should notify the MAS within three business days of the breach. While the manager is not required to sell assets immediately to rectify the breach, they must not incur additional borrowings or enter into further deferred payment arrangements while the limit is exceeded.

Incorrect: Immediate divestment is not required by the MAS for involuntary breaches, as forced sales could be detrimental to unitholders’ interests. Notification to the MAS is mandatory regardless of whether the breach was within the manager’s control or not. Reclassifying debt as quasi-equity to manipulate leverage ratios is a violation of accounting standards and regulatory reporting requirements under the Securities and Futures Act.

Takeaway: For involuntary leverage breaches in Singapore REITs, the manager must notify MAS within three business days and cease further borrowing, but is not forced into immediate asset liquidation.

Correct: Under the Code on Collective Investment Schemes (CIS Code) issued by the Monetary Authority of Singapore (MAS), specifically the Property Funds Appendix, the Manager has a fiduciary duty to ensure the Trustee is kept fully informed of all material information relating to the property fund. A structural defect in a core asset is considered material because it impacts the value, risk profile, and physical integrity of the trust property. The Trustee requires this information promptly to perform its oversight role and ensure the Manager is acting in the best interests of unitholders, independent of whether the repair costs fit within a pre-approved budget.

Incorrect: The duty to inform the Trustee is not strictly limited by numerical NAV thresholds or the existence of insurance claims. While specific thresholds exist for public disclosures or interested person transactions, the Manager-Trustee relationship requires transparency regarding any significant issue affecting the assets. Delaying notification until a quarterly report or until costs are finalized is a failure of the Manager’s duty to keep the Trustee informed of developments that could affect the trust’s risk or valuation.

Takeaway: The REIT Manager must proactively and promptly disclose all material information to the Trustee to facilitate effective fiduciary oversight of the trust’s assets and operations.

Correct: In Singapore, a REIT is established through a Trust Deed, which is the fundamental constitutive document. It defines the rights, duties, and obligations of the Manager and the Trustee, and sets out the investment parameters. According to the Code on Collective Investment Schemes (CIS Code) issued by the MAS, specifically the Property Funds Appendix, the Trust Deed is legally binding on all parties, including unitholders. Significant changes to the deed, such as those affecting the investment strategy or fee structures, generally require a special resolution (75% of votes) from unitholders to ensure their interests are protected.

Incorrect: The suggestion that internal compliance manuals can override the Trust Deed is incorrect because the deed is the superior legal instrument governing the trust’s existence. The claim that the Trust Deed is superseded by the SFA is inaccurate; while the SFA provides the regulatory framework, the Trust Deed remains the specific governing document for the individual REIT. Finally, the assertion that unitholders rely on the Companies Act is incorrect because a REIT is a trust structure, not a company, and the Trust Deed specifically creates the legal relationship and rights for unitholders.

Takeaway: The Trust Deed is the cornerstone legal document for a Singapore REIT, establishing the fiduciary framework and requiring unitholder approval for material amendments under the CIS Code.

Correct: According to Appendix 6 (Property Funds) of the Code on Collective Investment Schemes issued by the Monetary Authority of Singapore (MAS), the aggregate leverage of a property fund should not exceed 45% of the fund’s deposited property. However, the aggregate leverage may exceed 45% (up to a maximum of 50%) only if the property fund has a minimum adjusted interest coverage ratio (ICR) of 2.5 times.

Incorrect: The 35% limit is an outdated threshold and does not reflect current MAS requirements. A 60% limit is not permitted under the current framework for S-REITs. While credit ratings were historically used to determine leverage limits (previously allowing up to 60% with a rating), the current regulatory framework has shifted to using the Interest Coverage Ratio (ICR) as the primary determinant for allowing leverage up to 50%.

Takeaway: S-REITs are subject to a 45% leverage limit, which can be increased to 50% only if they maintain a minimum adjusted interest coverage ratio of 2.5 times.

Correct: In the context of Singapore’s general insurance principles, pure risk is the only type of risk that is generally insurable. Pure risk refers to situations where there is only the possibility of loss or no loss (such as a fire or an accident). Speculative risk, which involves the possibility of loss, no loss, or gain (such as gambling or stock market investments), is not insurable because insurance is intended to provide indemnity for losses, not to protect against the failure to achieve a profit.

Incorrect: The suggestion that speculative risks are insurable if gain is secondary is incorrect because the inherent possibility of gain makes the risk speculative and thus uninsurable in general insurance. The definition stating pure risks guarantee profit if no event occurs is a fundamental misunderstanding, as pure risk involves no possibility of gain. The claim that higher premiums allow for the coverage of speculative risks is false, as the principle of indemnity and the nature of insurance contracts in Singapore exclude speculative ventures.

Takeaway: General insurance is restricted to pure risks where the only possible outcomes are loss or stay-even, excluding speculative risks that offer a chance of profit.

Correct: In Singapore’s insurance market, surveyors (or loss adjusters) are technical experts appointed to provide an impartial and objective assessment of a loss. Their primary role is to investigate the circumstances, determine the cause of the damage (proximate cause), and quantify the extent of the loss. This technical report is essential for the insurer to decide if the claim falls within the scope of the policy coverage and to determine the appropriate settlement amount.

Incorrect: The suggestion that a surveyor acts as a legal intermediary to maximize a claim is incorrect because surveyors must remain impartial and do not have the authority to override policy terms. The idea that a surveyor provides a binding legal ruling is false; legal interpretations are the province of the courts or legal counsel, not technical surveyors. The claim that a surveyor’s role is to guarantee premium stability is incorrect as their focus is on the specific incident assessment, not the underwriting or pricing of future risks.

Takeaway: The surveyor serves as an independent technical expert whose primary duty is to provide an objective assessment of the cause and extent of loss to facilitate the claims process.

Correct: The principle of indemnity is a fundamental concept in general insurance which dictates that the insured should be restored to the same financial position they were in just before the loss. This prevents the insured from gaining a financial advantage or profiting from an unfortunate event, which aligns with the ethical standards and market conduct guidelines expected in the Singapore insurance industry.

Incorrect: Providing the bank with upgraded technology would constitute a betterment, which violates the basic principle of indemnity unless a specific Reinstatement or New for Old cover was purchased. Paying the full sum insured regardless of actual value describes a Valued Policy, which is an exception rather than the standard application of indemnity. Paying the original purchase price ignores depreciation and the actual market value at the time of loss, which would likely result in the bank being in a better financial position than before the loss.

Takeaway: The principle of indemnity ensures that an insurance contract serves as a mechanism for loss recovery rather than a source of financial gain for the policyholder.

Correct: Under Section 53 of the Insurance Act in Singapore, it is an offense for any person to offer or pay any rebate of the premium payable on a policy, or any commission or other valuable consideration, as an inducement to any person to take out a policy of insurance. This prohibition is intended to prevent unethical sales practices and ensure that insurance products are sold based on their merits and the needs of the client rather than through financial incentives that could lead to inappropriate product placement.

Incorrect: Labeling a rebate as a marketing grant does not change its nature as a prohibited inducement under the Insurance Act. Disclosure in a Product Summary or a client declaration does not override the statutory prohibition against rebating. There is no regulatory provision that allows rebating based on commission thresholds; the prohibition is absolute regarding inducements not specified in the policy terms.

Takeaway: Rebating and offering inducements to purchase insurance are strictly prohibited under Singapore law to maintain market integrity and protect consumer interests from unethical sales tactics.

Correct: Under Singapore’s Work Injury Compensation Act (WICA), it is mandatory for employers to maintain insurance for all employees engaged in manual labor, regardless of their salary level. A centralized system that uses job classification (manual vs. non-manual) as the primary trigger ensures that even high-earning manual workers are covered, thereby mitigating the risk of statutory breaches and Ministry of Manpower (MOM) penalties.

Incorrect: Relying on salary thresholds alone is insufficient because the salary cap only applies to non-manual workers; manual workers must be covered regardless of pay. Limiting coverage to high-risk environments ignores the legal requirement that all manual labor is covered under WICA regardless of the specific site risk. Subjective assessments by department heads create a high risk of misclassification, which can lead to uninsured liabilities and legal prosecution under the Act.

Takeaway: In Singapore, the requirement for Work Injury Compensation insurance for manual workers is based strictly on the nature of the work performed, not the salary level of the employee or the specific risk level of the environment.

Correct: In the Singapore insurance market, the insured has a fundamental duty to act as if they were uninsured. This involves mitigating the loss by taking reasonable steps to prevent further damage (like turning off the water) and providing prompt notification to the insurer so that an investigation can commence. Preserving evidence is also crucial for the insurer to verify the cause and extent of the loss under the policy terms.

Incorrect: Waiting until the next business day to take mitigation steps fails the duty to minimize loss. Repairing and replacing everything before the insurer can inspect the damage may prejudice the insurer’s right to assess the loss and could lead to disputes over the claim amount. While documentation is important, waiting for written permission to move undamaged stock violates the duty to mitigate loss, as the insured must take proactive steps to protect remaining property.

Takeaway: Upon a loss, the insured must act proactively to mitigate further damage and notify the insurer promptly to ensure the claim process is not prejudiced.

Correct: In the Singapore insurance market, while the Motor Vehicles (Third-Party Risks and Compensation) Act requires unlimited coverage for third-party death or bodily injury, property damage is subject to a limit. For standard private car policies, the industry-wide standard limit for Third-Party Property Damage (TPPD) is S$5,000,000 per accident.

Incorrect: The idea that property damage is unlimited is incorrect because the statutory requirement for unlimited coverage only applies to death and bodily injury. A S$500,000 limit is common for commercial vehicles but is not the standard for private cars. The S$1,000,000 limit is also incorrect as it does not reflect the standard market practice for private motor insurance in Singapore, which provides a higher threshold of S$5,000,000.

Takeaway: In Singapore, standard private motor insurance policies limit third-party property damage to S$5,000,000, whereas third-party bodily injury and death coverage remains unlimited.

Correct: In the Singapore context, the HDB Fire Insurance Scheme is a basic policy intended to cover the cost of reinstating the building structure and the original fixtures and fittings provided by HDB. It specifically excludes coverage for the homeowner’s personal belongings (contents) and any renovations or improvements made to the flat. Therefore, Mr. Lim needs a separate, voluntary Home Insurance policy to cover his furniture and built-in wardrobes.

Incorrect: The claim that HDB Fire Insurance is all-encompassing is incorrect because it is a basic fire policy focused on the structure only. The idea that Home Insurance cannot cover the building if fire insurance exists is false, as many comprehensive policies offer additional building coverage or ‘top-up’ features. There is no provision in the Insurance Act that mandates a $50,000 contents coverage within the basic HDB Fire Insurance Scheme.

Takeaway: Homeowners must distinguish between basic fire insurance for the building structure and comprehensive home insurance which covers renovations and personal contents.

Correct: Under the Policy Owners’ Protection (PPF) Scheme in Singapore, compulsory insurance policies are given the highest level of protection. Specifically, claims under Motor Third Party Liability and Work Injury Compensation insurance are covered 100% by the SDIC to ensure that statutory requirements and third-party liabilities are fulfilled even if the insurer fails.

Incorrect: Commercial lines of insurance are generally not covered by the PPF Scheme unless they are compulsory by law; therefore, a flat coverage for all commercial lines is incorrect. The scheme is not limited to individuals; corporate entities are covered for compulsory policies like Work Injury Compensation. Furthermore, the PPF Scheme is mandatory for all licensed general insurers in Singapore, not a voluntary arrangement.

Takeaway: The PPF Scheme provides 100% coverage for compulsory general insurance claims in Singapore to ensure statutory liabilities are met regardless of an insurer’s insolvency.

Correct: Under the MAS Notice on AML/CFT for the insurance sector, financial institutions and intermediaries are required to conduct ongoing monitoring of their business relationships. This includes performing periodic reviews of existing Customer Due Diligence (CDD) records to ensure they are kept up-to-date and relevant. This is crucial for sanctions screening because changes in a corporate client’s beneficial ownership or control could involve ‘designated persons’ or entities listed under the MAS (Sanctions and Freezing of Assets of Persons) Regulations or UN Security Council Resolutions, which would prohibit the intermediary from providing services to them.

Incorrect: The suggestion that periodic reviews are for maintaining competitive premium rates is incorrect as this is a commercial pricing strategy, not a regulatory compliance requirement for AML/CFT. The reference to the Personal Data Protection Act (PDPA) for marketing accuracy is incorrect because while the PDPA requires data accuracy, the specific driver for KYC and sanctions screening is the prevention of financial crime and compliance with MAS AML/CFT Notices. Verifying claims history and risk appetite is an underwriting function related to technical risk assessment, which is distinct from the legal obligation to identify and verify the identity of customers and beneficial owners to mitigate money laundering and terrorism financing risks.

Takeaway: Ongoing monitoring and periodic CDD reviews are mandatory in Singapore to ensure that changes in a customer’s ownership structure do not lead to violations of financial sanctions and AML/CFT regulations.