Core Module 1 – Regulatory Compliance
Question 1.
The MAS Guidelines to Notice 626 on Prevention of Money Laundering and Countering the Financing of Terrorism (the ‘Notice’) outlines controls that must be implemented to mitigate the risks associated with money laundering/ terrorism financing.
Draft a paragraph explaining the following term mentioned in the Notice:
• existing customers.
Question 2.
Identify a specific MAS regulatory requirement, other than that in Q1 (e.g., the requirement to report suspicion, rather than the whole of MAS 626), for a firm in a regulated financial services sector (e.g., banking, capital markets, insurance) with which you are familiar. Prepare a note for the head of compliance which:
highlights the objective
identifies the business unit(s)/activity(ies) it primarily affects
comments on the measures that need to be taken to fulfil this requirement.Question 3.
The term ‘three lines of defence’ is often used. Explain the term ‘three lines of defence’ as it relates to the management of compliance risks.
Question 4.
You have received the results of a recent internal audit. The audit team have advised that they discovered a significant failing in the firm’s onboarding process. Specifically, they have stated that the firm’s current practices in identifying and verifying politically exposed persons (PEPs) are not robust.
They highlight a number of cases where PEPs were not identified as such and were onboarded and assigned a Standard Due Diligence rating. Your tasks are to:
a) outline the key regulatory requirement(s) that are not being met
b) in light of your answer to a) above, draft a short paragraph for distribution to all relevant staff outlining what action(s) they need to take
c) prepare a short paragraph for inclusion in the overall report to the board of directors that identifies what corrective action/additional controls will be put in place to address the issue.
Core Module 2 – Identifying and Reporting Compliance Risk
Question 1.
Your head of compliance has asked you to review the way in which the firm deals with breaches, including breaches of internal policies and procedures in addition to regulatory breaches. The current requirement is for all departments to keep their own ‘breaches register’, detailing any breaches.
The recent internal audit revealed that no breaches have been recorded in any of the registers for the last 12 months, even though your department dealt with a number of breaches that occurred during that period.
What changes to the current system will you propose, 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?
Question 2.
A recent increase in the volume of business being received has caused a backlog in completing the onboarding process. The delays are continuing to increase and are now causing these potential clients to complain, and this is stretching the resources of the onboarding team even further.
The head of the onboarding team has asked to be allowed to onboard all customers immediately upon application, and then obtain the necessary documentation later, until such time as new staff can be recruited.
Identify the risks associated with the request and support your position with the key regulatory requirements and examples of the consequences of failing to meet these requirements.
Question 3.
Your firm has been suffering a decline in profits due to a downturn in the volume of sales. To combat this, the sales director has proposed that the firm launch a new, lucrative, but complex and high-risk, product. Historically, your firm has not provided any complex products and the board are concerned about this strategy.
The board members do, however, recognise that some action needs to be taken. To address their concerns, you have been asked to provide a note that:
a) identifies the compliance risks related to the launch of high-risk and/or complex products
b) states how you would seek to mitigate the risks you identified in a) above.
Core Module 3 – Developing a Compliance Culture
Question 1.
a) You have recently been involved in reviewing a sample of the business submitted to the firm, as part of a thematic review. One case that you review involves a product sold to Mr Kwan. You believe that the product sold to Mr Kwan is not the best product from the range available.
Although it does meet some of his stated needs, there is another product that is clearly better suited to his requirements. The product he has been sold pays the relationship manager (RM) over double the amount of commission that the other product would have paid. Your manager agrees with your findings and asks you to document your proposed course of action.
Produce a note of your recommendations.
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 manager that Mr Kwan is a new customer to the firm.
He is the owner of a large company in Singapore and is about to make introductions to his board members and senior managers that may lead to a substantial business stream. The RM states that any suggestion at this initial stage that he has been mis-sold will put all that future revenue in jeopardy.
The RM states that the client is so wealthy that the additional charges under this contract are of no consequence to him. 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 be taken?
Question 2.
Your firm recently required staff to watch a video dealing with anti-bribery and corruption (ABC) and then answer 10 multiple-choice questions based on the content of the video. The results of the assessment revealed that a very high proportion of staff could not get at least 7 of the 10 questions correct.
The evidence clearly indicates that this form of training is not effective and interviews with some of the staff who failed the assessment record that they would welcome a better approach to the provision of training.
Discussions with other parts of the business reveal that they have also tried this training approach with little true success. It is evident that a review of the firm’s training delivery is necessary, and you have been asked to produce a note that:
a) documents the various stages that you will consider when reviewing, re-designing and delivering training
b) identifies how you will measure the success of the revised programme.
Question 3.
‘Ethics and ethical behaviour must be embedded within a regulated firm’. Analyse and elaborate on this statement.
Question 4.
Implementing changes required by new or amended regulation can be a challenge. Articulate how you propose that such changes are communicated to the affected groups of stakeholders in a way that ensures that they are kept informed, addresses their concerns and interests and identifies how any conflict will be managed, including an escalation process.
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 Singapore office has increased, year on year. You think that this may simply be because the volume of business has increased but you are concerned that the Singapore office may be receiving a higher-than-average number of complaints.
You therefore think that it would be a good idea to look at the average complaints ratio across the region to decide whether the Singapore office has a relatively high or low ratio. Note that this is not an exercise in looking at trends but is designed to compare the ratio between offices.
When you suggest this to your supervisor, she agrees with the proposal. 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) Your research uncovers the following pieces of data.
Last year the Singapore office processed around 170,000 pieces of business per quarter and received 604 complaints.
The Philippines office processed around 34,000 pieces of business per quarter and received 11 complaints.
The Malaysia office processed around 105,000 pieces of business per quarter and received 442 complaints.
The Hong Kong office processed around 78,000 pieces of business per quarter and received 339 complaints.
The Cambodia office processed around 56,000 pieces of business per quarter and received 618 complaints.
i. Identify how you will organise the data for analysis.
ii. Analyse the figures above and present the results. Using the results, state whether there is cause for your original concerns or not and highlight any issues that you think the data reveals that need to be investigated further.
Question 2.
Your internal audit department has reported that a recent review suggests 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 the clients often cited an inability to continue to afford making payments as the reason for cancellation. You feel that this conclusion is misleading.
a) How would you test the outcome that they have arrived at?
b) What other data would you consider needs to be reviewed to reach an accurate understanding?
Question 3.
a) You have been asked to present the findings of your analysis of complaints as detailed in Question 1 (Core Module 4) to the heads of all the regional business units at their forthcoming monthly meeting.
i) What visualisation technique(s) will you use, and why?
ii) What audience needs will you cater for and what is the objective of the presentation?
iii) Explain and comment on:
a. the context behind the visualised data patterns and
b. the limitations of the data set and the interpretation of the findings.
iv) How will you organise the data to be presented?
b) 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:
i. the data trends and patterns
ii. the key meanings and insights.
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