Chapter-5

Question 1

What is FAA-N06?

Answer 1

Prevention Of Money Laundering And Countering The Financing Of Terrorism

Question 2

What are the underlying principles in FAA-N06?

Answer 2

(a) A financial adviser shall exercise due diligence when dealing with
customers, natural persons appointed to act on the customer’s behalf, connected parties of the customer and beneficial owners of the customer. (b) A financial adviser shall conduct its business in conformity with high ethical standards, and guard against establishing any business relations or undertaking any transaction, that is or may be connected with, or facilitates or may facilitate money laundering or terrorism financing.(c) A financial adviser shall, to the fullest extent possible, assist and cooperate with the relevant law enforcement authorities in Singapore to prevent money laundering and terrorism financing.

Question 3

What are the appropriate steps in risk assessment?

Answer 3

(a) documenting the financial adviser’s risk assessments;
(b) considering all the relevant risk factors before determining the level of overall risk and the appropriate type and extent of mitigation to be applied;
(c) keeping the financial adviser’s risk assessments up-to-date; and
(d) having appropriate mechanisms to provide its risk assessment information to the Authority.

Question 4

What are the appropriate steps for risk mitigation?

Answer 4

(a) develop and implement policies, procedures and controls, which are approved by senior management, to enable the financial adviser to effectively manage and mitigate the risks that have been identified by the financial adviser or notified to it by the Authority or other relevant authorities in Singapore;
(b) monitor the implementation of those policies, procedures and controls, and enhance them if necessary;
(c) perform enhanced measures where higher risks are identified, to effectively manage and mitigate those higher risks; and
(d) ensure that the performance of measures or enhanced measures to effectively manage and mitigate the identified risks, addresses the risk assessment and guidance from the Authority or other relevant authorities in Singapore.

Question 5

What are the steps in Customer Due Diligence where There Are Reasonable Grounds for Suspicion prior to the Establishment of Business Relations or Undertaking any Transaction?

Answer 5

Prior to a financial adviser establishing business relations or undertaking any transaction, where the financial adviser has any reasonable grounds to suspect that the assets or funds of a customer are proceeds of drug dealing or criminal conduct as defined in the CDSA, or are property related to the facilitation or
carrying out of any terrorism financing offence as defined in the TSOFA, the financial adviser shall -
(a) not establish business relations with, or undertake a transaction for, the customer; and
(b) file an STR2 , and extend a copy to the Authority for information.

Question 6

In CDD, what are the requirements for identification of customer?

Answer 6

Financial adviser shall obtain at least the following information:
(a) full name, including any aliases;
(b) unique identification number (such as an identity card number, birth certificate number or passport number, or where the customer is not a natural person, the incorporation number or business registration number);
(c) the customer’s -
(i) residential address; or
(ii) registered or business address, and if different, principal place of
business, as may be appropriate;
(d) date of birth, establishment, incorporation or registration (as may be appropriate); and
(e) nationality, place of incorporation or place of registration (as may be appropriate).