Identify any specific MAS regulation for a Firm in a Regulated Financial Services Sector with Which You are Familiar: Diploma In Regulatory Compliance Assignment, ICTA, Singapore

Core Module 1 – Regulatory Compliance

Question 1. Identify any specific MAS regulation (e.g. the requirement to report suspicion rather than the whole of MAS 626) for a firm in a regulated financial services sector with which you are familiar, e.g. banking, capital markets, insurance. Discuss the regulation’s objective and identify the business units it primarily affects, and comment on the measures that need to be taken to fulfill this requirement.

Question 2. You are part of a small team presenting to staff who have just joined your organization. One of the attendees asks you to explain ‘the risk-based approach’. How would you reply?

Question 3. Your firm has recently been visited by the Regulator. As part of the debrief, the firm was advised that the regulator does not believe that the firm’s current practice in dealing with joint accounts is adequate. Your firm takes the view that customer due diligence (CDD) on the primary account holder is enough. Your tasks are a) to outline the key regulatory requirement(s) that are not being met. b) in light of your answer to a) above, to draft a short paragraph for distribution to all relevant staff outlining what action(s) they need to take  . c) to prepare a short paragraph for inclusion in the overall report to the board of directors that identify what corrective action/additional controls will need to be put in place to address the issues.

Question 4. The MAS Notice on Prevention of Money Laundering and Countering the Financing of Terrorism (the ‘Notice’) outlines controls that must be implemented to counter the risks associated with money laundering/terrorism financing.

Draft a paragraph explaining each of the following terms mentioned in the Notice:

simplified customer due diligence. existing customers. (5 marks) (circa 150 words)

Core Module 2 – Identifying and Reporting Compliance Risk

Question 1. Your firm is considering launching a new (to the firm) and complex product. The sales director wants to proceed but the CEO is not convinced that the firm should be entering into such a high-risk and high-profile market. Your CEO understands that one option in managing the risks is to avoid them completely, by not launching the product. He recognizes that the new launch will increase profits. He has approached you to identify what risk-mitigating measures could be taken to reduce the potential risks for the firm if it goes ahead with the launch. Suggest ways in which you would seek to minimize the risks. 8 marks) (circa 250 words)

Question 2. Your firm has recently undertaken a very successful marketing campaign. As a result, it has seen a sudden and substantial increase in new customer applications. It has been reported to you that the teams involved are not equipped to handle such a sudden and large increase in applications and that now, owing to customers due to diligence requirements, there is an increasing backlog in onboarding new clients. The delay is now causing these potential clients to complain, and this is stretching the resources of the onboarding team even further. You have been asked why the firm cannot onboard all customers immediately upon application and then obtain the necessary documentation later. Identify the risks associated with this suggestion and support your position with the key regulatory requirements and examples of the consequences of failing to meet these requirements.

Question 3. In your firm, all department heads are required to receive and process internal suspicious transaction reports (STRs) and report their subsequent actions to the compliance department. You note that the onboarding teams have not filed any internal STRs with compliance for over two years, but the last audit reports refer to confirmations from staff in the onboarding teams that they had submitted internal reports of suspicion to the department heads. You undertake to improve this process. What changes will you make to the current system, what information do you propose be supplied to the head of compliance and how often do you recommend that reports be made in the future?

Core Module 3 – Developing a Compliance Culture

Question 1. . a) Your business monitoring unit, as part of its regular screening checks, has identified a case where they believe a customer has been sold the wrong product, according to the information gained and provided by the relationship manager (RM). The product sold is clearly beyond the customer’s stated risk appetite, according to the firm’s suitability assessment criteria. The product he has been sold pays double the amount of commission to the RM than an alternative, lower risk, and more suitable, product. You raise this issue with your manager, who agrees with your findings. What action do you propose to be taken?

b) After hearing your proposals, the RM gets extremely angry. You are called to a meeting with your manager, the RM, and the regional sales manager (RSM). The RSM explains to you and your boss that this client is new to the firm. He is extremely wealthy and there are significant opportunities for further business with him in the future. Any suggestion at this initial stage that he has been mis-sold will put all that future revenue in jeopardy. Additionally, he is so wealthy that if this product were to lose all its value it would have little impact on the client’s overall finances. The RM states that he can balance out the portfolio by recommending very low-risk investments in the future. The RSM asks that you be pragmatic and business-focused and allow this sale to continue. He guarantees that there will be no complaint from the client. 
 What action do you propose to be taken? (8 marks) (circa 225 words)

Question 2. Following a recent survey and audit, which both focused on the firm’s activities to prevent bribery and corruption, it has become apparent that the firm’s training programs in this area are outdated and not achieving the required objectives. You have been asked to put forward a proposal that documents the various stages that you will consider when reviewing, re-designing, and delivering training in this area. Write the proposal and identify how you will measure the success of the revised program. (7 marks) (circa 225 words)

Question 3. You have been asked to help your head of compliance prepare for an upcoming seminar talk she is due to give. She has chosen the title ‘Does ethical behavior require someone else to be watching?’ She wants to focus particularly on the fact that, as mandated in your firm, we should behave ethically at all times, not just when being watched. Produce a note of three to five talking points for her to cover in her talk.

Question 4. ‘Regulatory requirements are constantly changing. The best-run firms have adopted a practice which communicates the changes to the affected groups of stakeholders, ensures that they are kept informed, addresses their concerns and interests, and identifies how any conflict will be managed or escalated.’ Imagine that a new piece of regulation has just been issued by the MAS which affects the requirements at the boarding stage. Articulate how you would deal with this change in order to demonstrate that your firm meets the standards in the quote above.

Core Module 4 – Leveraging Data for Business Advantage

Question 1. . a) You have noticed that over the past three years the number of complaints recorded in your office has fallen, year on year, despite increased business across the period. You are concerned that this may reflect a lack of identification and reporting rather than a genuine decline in the volume of complaints. You wonder whether this means that the Singapore office is now below the average for STR reporting. When you report this to your supervisor, she agrees that this must be investigated further. You are tasked with preparing a short note outlining: i) the techniques and tools you will use to investigate the issue and ii) how you will ensure that sufficient data exists and is used.

b) You now wonder whether the Singapore office has a relatively high or low ratio of complaints when compared with regional offices that have a similar client and product bases. Upon investigation, you identify the following pieces of information.

• Last year the Singapore office processed around 150,000 pieces of business per quarter and received 597 complaints.

• The Thailand office processed around 20,000 pieces of business per quarter and received 25 complaints.

• The Hong Kong office processed around 100,000 pieces of business per quarter and received 431 complaints.

• The Malaysia office processed around 70,000 pieces of business per quarter and received 362 complaints.

• The Indonesia office processed around 50,000 pieces of business per quarter and received 612 complaints.

Identify how you will organize the data for analysis.

Analyze the figures and produce the results to show whether there is cause for your original concerns.

Question 2. You have noticed that the number of regular premium policies canceled in their first six months has been increasing. When you report this, internal audit department staff carry out a small review of the canceled policies. Their conclusions suggest that RMs are not properly considering the clients’ ability to afford the products they are recommending.

The audit finding was made after reviewing a small sample of cancellation requests and noting that some clients had cited an inability to continue to afford to make payments as the reason for cancellation. You feel that this conclusion is misleading. .

a) How would you test the internal audit findings?

b) What other data do you consider should be reviewed to reach an accurate understanding?

Question 3. a) You have been asked to present the findings of your review of complaints as detailed in Question 1 (Core Module 4) to the rest of the compliance team.

i) What audience needs will you cater for and what is the objective of the presentation?

ii) How will you organize the data to be presented? 
 . iii) What visualization technique(s) will you use, and why?

iv) Explain and comment on: – the context of the visualized data patterns and – the limitations of the data set and the interpretation of the findings.

Bearing in mind that the staff attending the session understand the complaints- reporting mechanisms but are not statisticians or analysts, provide a short summary (suited to the level of understanding of your audience) which indicates:

b) i) the data trend and patterns

ii) the key meanings and insights