According to Section 82(1) of the SFA, a corporation conducting regulated activities like fund management in Singapore requires a Capital Markets Services (CMS) license unless exempted. The definition of ‘fund management’ under the SFA includes managing a portfolio of securities or futures contracts on behalf of a customer, whether discretionary or otherwise, or engaging in foreign exchange trading to manage customer funds. The key is whether the entity exercises direct or indirect control over the management of the investment portfolio. Factors considered by MAS include involvement in portfolio construction, access to non-public portfolio holdings, and being named in fund prospectuses or marketing materials. Therefore, if the Singapore-based entity has discretionary authority to manage the portfolio, it requires a CMS license for fund management, regardless of where the funds are domiciled.

According to Section 339(2) of the SFA, an act carried out outside Singapore can be treated as having occurred in Singapore for the purposes of market misconduct if it has a substantial and reasonably foreseeable effect in Singapore. This provision ensures that individuals cannot evade Singapore’s market conduct regulations by performing manipulative acts from abroad that impact the Singaporean market. The key criteria are that the effect must be both ‘substantial’ and ‘reasonably foreseeable.’ A ‘substantial’ effect implies a significant impact on the market, while ‘reasonably foreseeable’ means that a person could reasonably anticipate that their actions would affect the Singaporean market. The penalties for market misconduct, as outlined in the SFA, include criminal penalties (fines up to SGD250,000 or imprisonment up to 7 years, or both), civil penalties (up to three times the profit gained or loss avoided, or SGD50,000/SGD100,000), and civil liabilities for losses incurred by market players. CMS license holders and representatives are obligated to report any suspicion of market manipulation, false trading, or insider trading to SGX-ST immediately.

A Recognized CIS, as defined under the Securities and Futures Act (SFA), is a collective investment scheme authorized in a foreign jurisdiction and recognized by the Monetary Authority of Singapore (MAS) for offering to retail investors in Singapore. According to the SFA, the local representative plays a crucial role in ensuring compliance with Singaporean regulations. One of the key responsibilities is to facilitate the inspection of the instruments constituting the CIS, ensuring transparency and accessibility for potential investors. Additionally, the representative must maintain a subsidiary register of participants who subscribed for or purchased their units in Singapore, or maintain a facility that enables the inspection or extraction of the same information, facilitating regulatory oversight and investor protection. The representative is also obligated to notify MAS within 14 days of any change in the particulars of the representative or such other information as MAS may prescribe, ensuring that MAS has up-to-date information. Furthermore, the representative must furnish any information or record regarding the CIS as required by MAS, supporting MAS’s regulatory and supervisory functions. These measures collectively aim to safeguard the interests of Singaporean investors and maintain the integrity of the financial market.

Under Singapore’s regulatory framework for financial institutions, particularly concerning the prevention of financial crimes, the reporting of suspicious transactions is a critical obligation. CMS license holders are mandated to report any suspicious transactions to the Commercial Affairs Department (CAD) of the Singapore Police Force, and simultaneously extend a copy of the report to the Monetary Authority of Singapore (MAS). This dual reporting ensures that both law enforcement and the regulatory body are informed promptly. The stipulated timeframe for filing a Suspicious Transaction Report (STR) is within 15 days of the initial suspicion arising, allowing sufficient time for Compliance and Management to conduct a thorough investigation. Failing to report within this timeframe could result in regulatory penalties, emphasizing the importance of timely and diligent compliance with AML/CFT regulations. The regulations aim to ensure that financial institutions act as gatekeepers, preventing the flow of illicit funds through the financial system and maintaining its integrity.

Under the Securities and Futures Act (SFA) in Singapore, a ‘tippee’ is defined as someone who possesses non-public, price-sensitive information. The critical element is that the tippee must know that the information is both not generally available and price-sensitive. It’s irrelevant where the information came from or whether the tippee has any connection to the company or an insider. The focus is on the knowledge that the information is confidential and could materially affect the price of the securities if it were publicly known. This contrasts with the requirements for connected insiders, where a lower threshold of ‘ought reasonably to have known’ applies. The regulations aim to prevent unfair advantage in the market by prohibiting trading based on inside information, regardless of its source. The regulations do not require proof that the person intended to use the information, only that they possessed it with the requisite knowledge.

According to the Monetary Authority of Singapore (MAS) regulations and the Investment Management Association of Singapore (IMAS) guidelines, investment managers must prioritize client interests and avoid conflicts of interest. Soft dollar commissions, also known as soft commissions or directed brokerage, arise when an investment manager receives goods or services from a broker in exchange for directing trades to that broker. While not inherently prohibited, MAS and IMAS emphasize transparency and client benefit. The key principle is that any soft dollar arrangement must primarily benefit the client. Disclosing the existence of soft dollar arrangements is essential, but it is insufficient if the arrangement does not genuinely benefit the client’s portfolio. The investment manager must demonstrate that the goods or services received enhance the quality of investment decisions and are used for the benefit of the client. Failing to ensure a direct benefit to the client and merely disclosing the arrangement would violate the principles of prioritizing client interests and avoiding conflicts of interest. The arrangement must be documented, reviewed periodically, and subject to compliance oversight to ensure adherence to regulatory standards and ethical conduct.

Under the Securities and Futures Act (SFA), specifically Sections 222-229, certain scenarios provide exceptions or defenses against insider trading accusations. One such exception involves trustees or managers acting on behalf of a Collective Investment Scheme (CIS), provided they adhere to specific conditions. This exception recognizes that fund managers routinely handle price-sensitive information as part of their duties. The key is that their actions must be in line with their fiduciary responsibilities and not for personal gain or to exploit non-public information unfairly. The ‘Parity of Information’ principle under Section 231 of the SFA further supports this, suggesting that if both parties in a transaction possess the same information, they are on equal footing. It’s also important to note that the SFA and SGX rules address market conduct issues like securities hawking, excessive trading (churning), and unauthorized trading, each carrying its own penalties and regulatory implications. Therefore, the trustee’s action, if compliant with CIS guidelines, falls under a legitimate exception.

According to Regulation 7(1) of the Securities and Futures Regulations – Financial Resources (SFR-FMR), as amended, a licensed fund management company (LFMC) must maintain sufficient financial resources such that its Financial Resources are equal to or greater than 120% of its Total Risk Requirement (TRR). If the LFMC fails to meet this requirement, it must notify MAS immediately. Upon notification, MAS has the authority to direct the LFMC to take corrective actions, including ceasing any increase in positions, transferring customer assets, operating its business under conditions imposed by MAS, or ceasing business operations until its financial resources are at least 120% of the TRR. MAS may also revoke the LFMC’s CMS license if it deems necessary. This regulatory framework ensures that LFMCs maintain adequate financial stability to protect investors and the integrity of the financial market in Singapore.

According to Appendix B of the Code on Collective Investment Schemes, significant changes relating to an index fund must be promptly communicated to participants. These changes include alterations in the methodology or rules concerning the construction, compilation, or calculation of the index, the selection of its constituents, the collection of price data, or the rebalancing process. Furthermore, changes in the objective or characteristics of the index, or in the index tracking strategy of the fund, also necessitate notification. The guidance specifies that for index funds listed on an organized exchange, such notifications can be made through announcements on the exchange. This ensures transparency and allows investors to make informed decisions based on the most current information available about the fund’s underlying index and tracking approach, aligning with the regulatory objectives of investor protection and market integrity as enforced by the Monetary Authority of Singapore (MAS). Failing to disclose these changes promptly would be a breach of regulatory requirements under the Securities and Futures Act (SFA).

Under Singapore’s Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act (CDSA), specifically Sections 43(1) and 44(1), it is an offense to assist another person in retaining the benefits of drug trafficking or criminal conduct. This includes entering into an arrangement where the retention or control of benefits is facilitated, or where such benefits are used to secure funds or acquire property for that person’s benefit. The key element is knowing or having reasonable grounds to believe that the arrangement facilitates the retention or use of benefits derived from drug trafficking or criminal conduct, and that the other person is involved in such activities. The penalty for money laundering offenses, as stated in Sections 43(5), 44(5), 46(6), and 47(6) of the CDSA, can be a fine up to SGD 500,000, imprisonment up to 7 years, or both for individuals, and a fine of SGD 1 million for non-individuals.

The MAS has broad powers to intervene in the operations of a Licensed Fund Management Company (LFMC) to protect the interests of affected persons, which include investors. These powers extend to directing the LFMC to take or refrain from specific actions, appointing a statutory advisor, or assuming control of the LFMC’s business. Furthermore, MAS can impose a moratorium, preventing the LFMC from conducting its business, or direct compulsory transfers of business or shares, and even restructure the share capital. These measures are outlined under Section 4.9.2 and 4.9.3 of the regulatory requirements. The scenario illustrates a situation where MAS identifies potential risks to investors due to the LFMC’s operational practices. Therefore, MAS is most likely to exercise its authority to ensure investor protection and maintain market stability, in accordance with the Securities and Futures Act (SFA).

Fund Management Companies (FMCs) operating under the CPFIS are subject to stringent reporting requirements to ensure transparency and compliance. Specifically, FMCs domiciled in Singapore, or their Singapore-registered representatives if domiciled outside Singapore, must furnish an annual external auditor’s report on the fund to the CPF Board. For authorized CISs, this report is due within 3 months from the close of the fund’s financial year. However, for recognized CISs, the deadline is either within the timeframe mandated by the law of the jurisdiction where the fund was constituted or within 5 months from the close of the fund’s financial year, whichever is earlier. This dual timeframe acknowledges the varying regulatory environments in which recognized CISs may operate, ensuring that the CPF Board receives timely and relevant information regarding the fund’s financial health and operational integrity. The Securities and Futures Act (SFA) and the Code on Collective Investment Schemes (CIS) further govern these requirements, emphasizing the importance of regulatory adherence and investor protection within the CPFIS framework. The MAS actively enforces these regulations to maintain market integrity and safeguard CPF members’ investments.

Under Section 43(1) & 44(1) of the CDSA, it is an offense to enter into an arrangement knowing or having reasonable grounds to believe that the arrangement facilitates the retention or control of another person’s benefits from drug trafficking or criminal conduct, or that such benefits are used to secure funds or acquire property for that person’s benefit. This includes scenarios where the arrangement involves concealment, removal of assets from jurisdiction, or transfer to nominees. The key element is the knowledge or reasonable suspicion that the funds are derived from illicit activities and that the arrangement assists in managing or utilizing those funds. The penalty for such offenses, as stated in Sections 43(5), 44(5), 46(6) & 47(6), can include a fine of up to SGD 500,000, imprisonment up to 7 years, or both for individuals, and a fine of SGD 1 million for non-individuals. Therefore, knowingly facilitating the use of criminal proceeds for investment purposes constitutes a money laundering offense.

Under Singapore’s Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act (CDSA), specifically Section 39(2), failure to report a suspicious transaction carries significant penalties. This section mandates that any individual who, during the course of their trade, profession, business, or employment, becomes aware of information that suggests drug trafficking or criminal conduct, must promptly disclose this information to an authorized officer. The authorized officer, upon receiving such a report, is then obligated to report the matter to the relevant authorities, such as the Commercial Affairs Department (CAD) or the Monetary Authority of Singapore (MAS). The penalty for failing to comply with this reporting requirement is a fine not exceeding SGD 20,000. This provision underscores the importance of vigilance and proactive reporting in combating financial crimes and maintaining the integrity of Singapore’s financial system. The stringent penalty serves as a deterrent against negligence or willful ignorance of suspicious activities, reinforcing the responsibility of financial professionals to uphold ethical standards and contribute to the prevention of illicit financial flows.

According to the IMAS Code of Ethics & Standards of Professional Conduct, specifically under disciplinary procedures, a member has the right to appeal against any disciplinary action imposed upon them. This right ensures fairness and allows for a review of the disciplinary decision. The appeal must be lodged within five working days, and an appeal panel consisting of members of the Executive Committee will be formed to hear the appeal. The panel’s decision is final, and the disciplinary penalty will be reviewed during the appeal process. This entire process aligns with principles of natural justice, ensuring members are treated fairly and have recourse if they believe a disciplinary action was unwarranted. The disciplinary procedures are designed to address unacceptable conduct promptly and consistently, while also safeguarding the rights of the members involved, as emphasized by the Capital Markets Financial Advisory Services Examination Module 3.

According to the guidelines for hedge fund prospectuses under Singapore’s regulatory framework, specifically within the context of Collective Investment Schemes (CIS) and the Capital Markets Financial Advisory Services (CMFAS) Examination Module 3, several key disclosures are mandatory. These disclosures aim to ensure that potential investors are fully aware of the unique risks and characteristics associated with hedge funds. The cover page of a hedge fund prospectus must explicitly state that the investment carries different risks compared to other CISs, particularly those that invest in listed securities and do not engage in short selling. It must also highlight that investors may lose a significant portion or all of their investment if the fund is not capital guaranteed or protected. Furthermore, if the fund is capital guaranteed or protected, the prospectus must disclose that investors are subject to the guarantor’s credit risk or the issuer’s default risk. The prospectus must also state that investing in a hedge fund should not be considered a complete investment program and that investors should carefully assess its suitability based on their individual circumstances, financial resources, and overall investment strategy. Finally, the frequency of redemption and the period within which realization proceeds will be paid to investors must be clearly stated.

The IMAS Code of Ethics emphasizes best execution when selecting brokers. This means prioritizing the client’s interests by seeking the most favorable terms for transactions. While soft dollar arrangements are permitted under specific conditions, the primary focus must always be on achieving best execution. The selection of brokers should not be influenced by directed brokerage, which involves compensating brokers for promoting fund units through brokerage transactions. The key consideration is whether the goods or services received under a soft dollar arrangement genuinely assist in providing investment services to clients generally. The arrangement must not lead to unnecessary trades solely to qualify for soft dollars. Members must maintain records of soft dollar arrangements and activities to ensure transparency and compliance. The Securities and Futures Act (SFA) also underscores the importance of fair dealing and prioritizing client interests in all financial advisory activities.

The IMAS Standards of Professional Conduct emphasize the importance of prioritizing clients’ interests above all else. This includes avoiding situations where the fund manager’s or its employees’ interests could potentially conflict with those of the client. A clear policy stating that clients’ interests take precedence is crucial. Furthermore, transparency is key. Requiring employees to disclose directorships and substantial shareholdings in companies allows the fund manager to identify and manage potential conflicts of interest. This ensures that investment decisions are made solely in the best interest of the client, without any undue influence from personal holdings or affiliations. Disclosing portfolio risk to clients is also essential for informed decision-making, but it primarily addresses transparency rather than directly preventing conflicts of interest. Therefore, the most effective methods for preventing the appearance of conflicts of interest involve prioritizing client interests and ensuring transparency through employee disclosures.

Embargoes and sanctions are critical tools used to influence a country’s behavior, and financial institutions must be vigilant in preventing their circumvention. The Monetary Authority of Singapore (MAS) actively enforces regulations related to these measures, as highlighted in MAS Notices pertaining to specific countries or entities. A CMS license holder’s failure to comply with these regulations can lead to significant penalties, including fines and reputational damage. The key lies in robust due diligence, transaction monitoring, and understanding the ultimate beneficial ownership (UBO) of entities involved in transactions. Shell companies and bearer share structures are often used to obscure the true beneficiaries, making it crucial for CMS license holders to implement stringent policies against dealing with such entities. Regular training for staff on identifying red flags and understanding the implications of sanctions is also essential. Ignoring these regulations can have severe legal and financial consequences for the CMS license holder, potentially impacting their ability to operate within Singapore’s financial system. Therefore, a proactive and comprehensive approach to sanctions compliance is not just a regulatory requirement but also a fundamental aspect of responsible fund management.

The IMAS Code of Ethics and Standards of Professional Conduct mandates that members engaged in fund management submit an annual Professional Conduct Statement (PCS). This statement confirms their adherence to the Code. Failure to submit the PCS within the stipulated timeframe may result in disciplinary actions by IMAS, potentially including revocation or suspension of membership. The PCS requires members to acknowledge they have read and understood the IMAS Code of Ethics and Standards of Professional Conduct. Furthermore, they must confirm their compliance with the Code for the specified period, disclosing any exceptions previously reported to IMAS or other relevant disclosures. This requirement ensures accountability and promotes ethical conduct within the fund management industry in Singapore, aligning with regulatory expectations and fostering investor confidence. The PCS serves as a crucial mechanism for self-regulation and compliance monitoring within the industry.

Front running, as per Singapore’s regulatory framework under the Securities and Futures Act (SFA) and specifically addressed in the context of the CMFAS RES4 exam, involves a licensed individual or entity using advance knowledge of a pending customer order to execute a trade for their own benefit. This is strictly prohibited because it undermines market integrity and disadvantages the customer. The key element is the misuse of confidential order information before it becomes public knowledge. Cross trades, where buy and sell orders from different customers are matched internally, are permissible under specific conditions to ensure fairness and transparency. According to SGX-DT Futures Trading Rule 4.1.10 and SFR(LCB) 47D, such trades must be executed at a price better than the last traded price or, in the absence of a last traded price, the last settlement price. This prevents the firm from unfairly profiting at the expense of its customers. The 10-second rule provides a guideline to avoid pre-arranged trading, but firms must still ensure compliance with pre-arranged trading rules, regardless of the time elapsed. Therefore, the scenario described constitutes front running because the representative is using non-public information about the client’s impending large order to benefit personally before executing the client’s order. This violates the principles of fair dealing and market conduct expected of CMS license holders and representatives under Singaporean regulations.

According to the Code on Collective Investment Schemes, specifically paragraph 6.13, when a scheme or its agent receives cash as collateral, it may be reinvested, but with specific stipulations. The investments must align with the eligible collateral types outlined in paragraphs 6.8 and 6.9, which include cash, money market instruments, and bonds issued by entities with a minimum long-term rating of A by Fitch, Moody’s, or Standard & Poor’s. Furthermore, these investments must be considered on a portfolio basis to meet the spread of investments requirements as detailed in Section 2 of Appendix B. The investments must be held by a custodian that is a prudentially supervised financial institution independent of the counterparty. Critically, these investments must be legally secured against the failure of the custodian, counterparty, or agent and their related corporations, and they cannot be sold or used as security interests. Finally, the manager must be reasonably satisfied that the reinvestment of cash collateral will enable the scheme to meet its redemption obligations and other payment commitments. Paragraph 6.14 explicitly prohibits investing cash collateral in transferable securities issued by or placed on deposit with the counterparty or its related corporations, ensuring further risk mitigation.

The Terrorism (Suppression of Financing) Act (TSOFA) enacted in Singapore, aligns with international conventions and UN resolutions, specifically criminalizing the financing of terrorism. A crucial aspect of this legislation is the mandatory duty imposed on all individuals to report information pertaining to terrorism financing to the Police. Failure to comply with this reporting obligation constitutes a criminal offense. This provision underscores the importance of vigilance and proactive reporting in combating terrorism financing. The TSOFA also empowers authorities to seize and confiscate property linked to terrorism, further disrupting terrorist networks and preventing future acts of terrorism. This legislative framework is designed to safeguard Singapore’s financial system and national security by actively preventing and suppressing the financing of terrorist activities.

Bucketing, as defined under Section 207(1) and (2) of the SFA, involves a representative taking the opposite side of a customer’s order into their own account or an account in which they have an interest, without the customer’s prior consent. This practice deprives the customer of the opportunity to receive competitive bids or asks and achieve the best possible price. SFR(LCB) 47C further reinforces this by stating that a representative must obtain the customer’s prior consent before trading against them. The penalties for bucketing under the SFA can include a fine not exceeding SGD 250,000 and/or imprisonment for up to 7 years. SGX-DT Futures Trading Rule 3.4.3 also stipulates that such offenses are not compoundable and are subject to a mandatory minimum imposable penalty. Withholding orders, as prohibited by SFR(LCB) 47 and SGX-DT Futures Trading Rule 4.1.9, further supports the principle that CMS license holders must not withhold or withdraw orders from the trading system unless it benefits the customer. Therefore, the most appropriate action for the representative is to decline to execute the trade without the client’s explicit consent, ensuring compliance with regulatory requirements and ethical standards.

Under the Securities and Futures Act (SFA) in Singapore, a corporation undertaking fund management activities on behalf of clients typically requires a Capital Markets Services (CMS) license. Fund management is defined as managing a portfolio of securities or futures contracts, or engaging in foreign exchange trading to manage a client’s funds. However, Section 99(1) of the SFA provides exemptions from this licensing requirement for specific entities. These exemptions are designed to avoid unduly burdening entities that are already subject to sufficient regulatory oversight or that engage in fund management activities only incidentally to their primary business. The Monetary Authority of Singapore (MAS) closely monitors these exemptions to ensure that the integrity of the financial markets is maintained and that investors are adequately protected. Therefore, understanding these exemptions is crucial for determining whether a CMS license is necessary for a given fund management activity in Singapore.

The Terrorism (Suppression of Financing) Act (TSOFA) enacted in Singapore, gives effect to international conventions and UN Security Council Resolutions aimed at combating terrorism financing. A crucial aspect of TSOFA is the mandatory duty imposed on all individuals and entities to promptly provide information pertaining to terrorism financing to the Police. Failure to comply with this duty constitutes a criminal offense, reflecting the seriousness with which Singapore addresses terrorism financing. This obligation underscores the importance of vigilance and cooperation from all stakeholders in identifying and reporting suspicious activities related to terrorism financing. The Act allows for the seizure and confiscation of property related to terrorism, further demonstrating Singapore’s commitment to disrupting and preventing terrorist activities. The penalties for non-compliance are significant, highlighting the critical role of every individual and entity in upholding national security and combating terrorism financing.

The Product Highlights Sheet (PHS) serves as a crucial summary document for investors, providing essential information about an investment product. According to the guidelines stipulated under the Capital Markets and Financial Advisory Services (CMFAS) Regulations in Singapore, specifically concerning fund management, the PHS should not exceed four pages, excluding any diagrams or a glossary. However, the total document, inclusive of diagrams and the glossary, should not exceed eight pages. This constraint ensures that the PHS remains concise and easily digestible for investors, allowing them to quickly grasp the key features and risks associated with the investment. The regulations also emphasize the importance of clear and simple language, discouraging the use of technical jargon unless absolutely necessary, in which case a glossary must be provided. Furthermore, issuers are directed to avoid including disclaimers in the PHS, focusing instead on presenting a balanced and informative overview of the product. The Monetary Authority of Singapore (MAS) mandates these guidelines to promote transparency and facilitate informed decision-making among investors, aligning with the broader objectives of investor protection and market integrity within Singapore’s financial ecosystem.

Under the Securities and Futures Act (SFA) in Singapore, a Capital Markets Services (CMS) license is required for entities engaging in regulated activities related to fund management. Specifically, a company intending to manage unit trusts within Singapore falls squarely under the purview of needing a CMS license. This requirement ensures that entities handling collective investment schemes are properly vetted and regulated by the Monetary Authority of Singapore (MAS) to protect investors. Banks licensed under the Banking Act, clearing houses performing regulated activities due to their clearing facilities, and finance companies licensed under the Finance Companies Act providing securities financing may be subject to different regulatory frameworks or exemptions, depending on the specific nature of their activities and the extent to which they engage in CMS-regulated activities. The key consideration is whether the entity is directly involved in managing funds or providing services that fall under the regulated activities defined by the SFA, such as dealing in securities, advising on corporate finance, or providing custodial services.

According to the Code on Collective Investment Schemes, specifically Appendix B concerning property funds, the manager of a listed property fund must meet certain operational requirements within Singapore. These requirements are designed to ensure that the Singapore office plays a meaningful role in the fund’s activities and that key functions are performed locally. The code explicitly mandates that accounting, compliance, and investor relations activities must be conducted within Singapore. This ensures local oversight and accountability. While the manager has flexibility in other areas, these three functions are considered essential for maintaining standards and protecting investor interests. The Monetary Authority of Singapore (MAS) emphasizes the importance of these functions being performed in Singapore to ensure proper governance and transparency in the management of listed property funds. Failing to adhere to these requirements could result in regulatory scrutiny and potential penalties, as MAS closely monitors compliance with the Code on Collective Investment Schemes to safeguard the integrity of the financial market and protect the interests of investors.

A CMS license holder must be vigilant regarding embargoes and sanctions due to the potential for high-value transactions and the complexity of tracing ultimate beneficial owners (UBOs). Sanctioned parties often use shell companies and offshore accounts to circumvent restrictions, making it difficult to identify them. Unwittingly facilitating transactions for these parties can lead to breaches of regulations and significant fines. MAS Notice on prohibition on transactions with Iran exemplifies this risk in Singapore. ‘Bearer share’ companies, which do not list shareholders, pose an additional challenge, as ownership is determined by possession of the share certificate. While some institutions may deal with bearer share companies for known clients, the risk remains that shareholders can falsely claim lost shares. A robust policy is to avoid dealing with bearer share companies due to the difficulty in verifying the UBO, thereby mitigating the risk of inadvertently violating sanctions and embargoes. This aligns with the broader goal of preventing financial crimes and maintaining regulatory compliance.