ICA unethical conducts and violations of the regulations

ICA Diploma in GRC: Module 5 AssignmentQuestion 1Post 2008 financial crisis, the financial services industry has been rocked by a series of financial scandals, where regulators had imposed billion dollar of fines to multiple renowned Financial Institutions (FIs) for infringement of regulaltions, compliance breaches and controls failures. Many of these regulatory actions could have been avoided if FIs maintain a strong Governance, Risk and Compliance framework incorporating mandatory compliance training programme. Compliance training is widely regarded as one of the key priority as it helps to meet the organization’s regulatory obligations and entrench corporate standards. Further, training is one of the important ways to communicate the importance of compliance efforts, that helps to create awareness of employees’ roles and responsibilities, understand the importance of regulatory compliance which potentially helps to prevent any unethical conducts and violations of the regulations and laws. Prior to creating an effective compliance training programme, FIs should first properly identify and assess what are the organization’s current training needs. To determine this, FIs should perform training needs analysis (TNA) which identifies its employees’ current level of skills and knowledge and spots gaps in employee training and related training needs required for their role.The difference between the current and required competencies is the training gap which determine what are the training needs required for organization.

Training is a means to ensure that employees have the knowledge and right skills to be able to do their work effectively and competently. Training may be needed when there is a gap between the desired performance, and the current performance, and the reason for that gap is lack of skill or knowledge.Typically, a TNA will help the organization to address following questions:Why do you need the training (Perform a skill gap analysis)How can you fix the skill gap (Does training help to bridge the gap?)Who needs to be trained (the targeted training audience)What is the training that has to be imparted (general content of the training)When should the training take place (Timeline and venue to deliver the training)The flows of a TNA can be illustrated as follows:In summary, the training needs of an organization would be the gap between the current capability of its employees and the competency level of skills and knowledge required for their roles.

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The result of a TNA is a structured process to ensure your training becomes a t, effective activity that is a key component of a compliance training programme.Compliance1 training if often regards as the process of educating employees on the relevanat laws, regulations and company policies that they need to strictly adhere to and ensuring compliance when perform their daily job responsibilities.When designing a compliance training program, FIs opt to identify who are the targeted audience and they should be trained on topics and issues that are relevant to their respective job function and roles.Training modules can be tailored according to specific groups as follows:New employees; junior vs senior staffDepartments / Units / BranchesSenior Management and Board of DirectorsFor example2: Customer-facing employees: Since this is typically the first line of defense of a Governance, Risk and Compliance framework, they hold a heavy responsibility in protecting the FIs against potential money laundering (ML) and terrorist financing (TF) risks. Trainings should be focused on ML/TF typologies, practical understanding of why anti money laundering efforts are important, common understanding of prevalent ML/TF red flags and escalation procedures for suspicious activities noted.

AML Compliance officers: This group of employees is responsible for the organization’s compliance program. They should participate in regular in-house compliance training, external conference and seminar to achieve up-to-date knowledge that enables them to provide sound compliance advice to other stakeholders. Also they need to keep abreast of the latest compliance trends and developments that will impact the organization and the way it manages compliance risk.Senior management and board of directors: Compliance issues should be regularly and thoroughly communicated to the board. It is important that the compliance department has strong senior management and board of directors’ support, and one way to ensure that is to keep them aware of the reputational risk. They should also set the tone at the top and help to build a culture of compliance within the organization by actively participating in compliance trainings.Generally, both Front Office Sales Staff (FOSS) and Junior Compliance Officers (JCOs) should be euqipped with basic compliance knowledge as such practical understanding of local laws and regulations that they need to adhere to.

Also, they must be cognizant of the organization’s compliance policies and procesures and ensuring compliance when delivering their daily responsibilities.Yet, there are also subtle differences in the content of GRC training programmes between these two groups which are indicated in following tables.Front Office Sales Staff Junior Compliance OfficersFrequency of Training – Semi-Annual or Annually – Quarterly or Semi-AnnualCommon methods of Training – In-house training conducted by Compliance officer- Case studies discussion- E-Learning- Quiz- External (Workshop,Conference, Seminar etc)- In-house (Townhall, web conference)- Exams or assignmentsDuration of Training – Approximately 60 to 90 minutes – Varies from 120 minutes (2 hours) to full dayTopics – General compliance issues- Non-compliance cases- Refresher trainings- Key regulations changes- Updates of new regulations – Amendment of organization’s compliance policies and proceduresLearning Styles – Activist – Theorists, ReflectorsFactors that contribute to the success of a training programme.

One of the key objectives of an organization compliance programme is to provide regular trainings to its employees to raise an awareness compliance risk, understand the company’s compliance policies and foster a culture of compliance. Effective compliance training compliance is becoming more crucial than ever to help mitigate risks and minimize any violations of regulations, law and compliance breaches. Compliance training should be taken very seriously; it’s more than just checking a box to meet the minimum regulatory requirements.Key factors of an effective Compliance Training Programme can be summarize as follows:1. Commitment from the “Top” – Promote commitment from the Top-Down where everybody within the organization must embrace compliance.

Senior management and Board of Directors should participate and emphasize the importance of compliance training. They have the primary responsibility in ensuring tranings are conducted on a regular basis and it is mandatory for all employees an organizaiton to attend the training. 2.

Learning outcomes achieved- The objectives must be fulfilled for all relevant employees. Training content should be tailored to employees’ needs and risk level. A training calendar that identifies the topics and frequency of each course shoud be established.3. Training delivery methodologies: Web-based training gives employees the flexibility to access the training materials at their convenience.

For example: E-learning, intranet and pre-recorded audio or video. Other methods of training could be face-to-face, townhall meeting, case studies (role-play) and interactive media books (Videos, newsletters, booklets, PDFs).4.

Track the results3. A training program won’t be effective unless you monitor its progress. Choose a metric, such as productivity or profit, to help determine the return on investment for your training efforts and establish concrete results.Choosing the right method of training is crucial, especially when approaching a topic like compliance. To have an effective training programme, the training materials should be also adequate and informative. It is also imperative to ensure the training is also interactive such as involving group discussion activity, role-play and case study presentation5.

The tools and methods to evaluate whether the training programmes have been effective.Implemention training programme not necessary a key indicator to measure the organization’s compliance efforts. FIs should also conduct a periodic review of its training programme to check for effectiveness. There may be many ways to measure whether FIs’ training programme has served its intended purposes. One solid proof is number of internal whistleblowers have burgeoned.

Some would perhaps shake their heads at the rising number of reports of misconduct, but remember that this indicates heightened awareness amongst employees and the accessibility of the reporting tools. More importantly, it allows the compliance department to effectively and rapidly address cases and avoid potential violations before authorities come knocking at the door4. Other components in measuring the effectiveness of your training programme include, but not limited to:Audit findings and corrective action plans: Effective trainings will help the organization reduce the number of audit issues and corrective action plans as compared to previous yearRegulator’s inspection: Did regulator provide positive feedback regarding the organization’s training programme and satisfy that it meets the regulatory requirement?Communication: Effective training will allow other stakeholders such as business to establish regular communication with compliance to identify compliance risk faced and seek advice from compliance team to tackle any risk arise during the work of their daily work.Post-training assessment: A critical part of any training programme is the assessment. It is importanat to know that employees have benefited from the training. A key indicator is the number of employees passed the quiz or test on the 1st attemptTraining evaluation form: Are employees truly engaged? If yes, there should be positive feedbacks received from them and provides a positive indicator that the training provided was beneficial and effective in answering their questions and concerns.

Training attendance records: Is there an increasing number of employees attending the training as compared to previous year?Question 2Slide 1: Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT)Slide 2: AgendaWhat is Money Laundering & Terrorist Financing?What is the link? Key stages of Money LaunderingTypologies (Red Flags)Consequences of violating AML regulationsImpacts on Financial InstitutionsKey Components to Combat AML/CFTKey Agencies and Legislations in SingaporeInternational Groups & InitiativesDevelopments & TrendsQ&ASlide 3: What is Money Laundering & Terrorist Financing ?- Involves taking criminal proceeds and disguising their illegal source in anticipation of ultimately using the criminal proceeds to perform legal and illegal activities.- The process by which terrorists fund their operations in order to perform terrorist acts. Terrorists need financial support to carry out their activities and to achieve their goals.Slide 4: What is the link?ML and TF often display similar transactional features, mostly having to do with concealment and disguiseThough different, there is still a subtle relationship between ML and TF as the techniques used to launder money are essentially the same as those used to conceal the sources of, and uses for, TFWhile ML is the process of concealing proceeds of crime, TF conceals the usage of funds for terrorist purposesA significant difference between ML and TF would be that funds involved in TF could originate from both legal and illegal sources. Such legitimate sources may include donations to charities, that may in turn be used to support terrorist activities or terrorist organizationsSlide 5: Stages of Money LaunderingSlide 6: Typologies (Red Flags)Structuring (smurfing): A method involving numerous transactions (deposits, withdrawals, transfers), often various people, high volumes of small transactions and sometimes numerous accounts to avoid detection threshold reporting obligationsWire transfers: to electronically transfer funds between financial institutions and often to another jurisdiction to avoid detection and confiscation Trade-based money laundering: usually involves invoice manipulation and uses trade finance routes and commodities to avoid financial transparency laws and regulationsShell companies: a technique to obscure the identity of persons controlling funds and exploit relatively low reporting requirements Foreign bank accounts: to move funds away from interdiction by domestic authorities and obscure the identity of persons controlling illicit funds Identity fraud / false identification: used to obscure identification of those involved in many methods of money laundering and terrorist financingSlide 7: Consequences of Violating AML RegulationsSlide 8: Impact on Financial InstitutionsFinancial institutions are an integral component of the money laundering processRegulatory risks and impactReputational risks and impactEconomic and social impactIncreased criminal activities and social costsUndermining the legitimate private sectorLoss of tax revenue etc.Slide 9: Key Components To Combat AML/CFTSlide 10: Key AML/CFT Agencies & Legislations in SingaporeMonetary Authority of Singapore – Home Regulator of Financial InstitutionsMAS Notice 626: on Prevention of Money Laundering and Countering the Financing of Terrorism MAS Notice 641: Reporting of Suspicious Activities and Incidents of FraudCommercial Affairs Department – Commercial Crime Investigation AgencySuspicious Transaction Reporting Office – Singapore’s Financial Intelligence Unit CDSA – Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act TSOFA Terrorism (Suppression of Financing) Act Slide 11: Reporting of Suspicious TransactionsA Suspicious Transaction Report(STR) should be lodged when a person has knowledge or has reasonable grounds to suspect that any property or proceeds  is directly or indirectly associated with a criminal conduct or drug traffickingSection 39(1) of the CDSA (Corruption, Drug Trafficking and Other serious Crimes (Confiscation of Benefits) Act imposes a duty to disclose knowledge or suspicion that any property represents  the proceeds of, or is linked to a criminal activityFailure to report suspicious transaction is an offence under CDSA.

According to Section 39(2), if found guilty, the person will be liable on conviction to a fine not exceeding $20,000″Tipping-off” – an offence to disclose to any other person that a suspicious transaction report has been made or to disclose any other matter which is likely to prejudice any investigation which may be conducted following the disclosure. (A fine not exceeding $30,000 or to imprisonment for a term not exceeding 3 years or to both)Slide 12: International Groups ; InitiativesSlide 13: Developments ; TrendsSingapore MAS set-up dedicated AML department -2016Public-private partnerships on fighting financial crime (ACIP) -2017MyInfo: Non-face-to-face KYC initiative – 2018International FinCEN CDD Final RuleEU 4th Anti-Money Laundering Directive (4AMLD)FATF Guidance on Counter Proliferation Financing (2018)Slide 14: Questions? This is a simple multiple choice questions designed to test your level of understanding on AML/CFT. Please circle the letter for the correct answer to each question.1. What is the primary legislation for money laundering in Singapore?Corruption, Drug Trafficking and Other Serious Crimes Act (CDSA) MAS 626 Notice to Banks on Prevention of Money Laundering and Countering the Financing of Terrorism Securities and Futures Act (Chapter 289)Personal Data Protection Act 2012 2.

In general, what are the HYPERLINK “http://www.fintrac-canafe.gc.ca/fintrac-canafe/definitions/money-argent-eng.asp” “_blank” three stages involved in the money laundering process?Placement, Layering ; StructuringLayering, Placement ; SmurfingPlacement, Layering ; IntegrationIntegration, Manipulation ; Layering3. Who is Singapore’s Financial Intelligence Unit?Commercial Affairs DepartmantSingapore Police ForceMonetary Authority of SingaporeSuspicious Transaction Reporting Office4.

In anti-money laundering terminology a “red flag” is:A warning sign indicating potentially suspicious, risky transactions or activitiesA general banking term used once the balance is negative /overdueThe standard flag of countries not cooperative in fighting money laundering and terrorist financingAn indicator that a customer is listed on an economic sanctions list5. In which case might a Suspicious Transaction Report NOT be necessary?A customer who deposits money of suspicious origins and refuses to answer questions from the financial institution’s staffA customer who tries to move money that is suspected of being derived from criminal activityA customer who owns a large supermarket and deposits large amounts of cash several times a dayA customer whose account is showing transaction activities which are beyond his known financial capabilityQuestions 3I chose to present on the topic of Anti-Money Laundering and Combatting Financing Terrorism (AML/CFT) as it was not heavily covered during our Diploma in Governance, Risk and Compliance (GRC) workshops. In addition, AML/CFT has been a hot topic in recent years since combatting against money laundering and financing of terrorism is widely regards as a top priority among international community in light of the notable enforcement and regulatory actions that have been meted out vis-sa-vis infringement of regulations due to AML breaches, control lapses etc. On hindsight, I’m satisfied with my overall performance during the presentation and my observations are as follows:Strengths:Given the short time frame, I managed to organized my presentation slides within my presentation covered a broad topic of AML/CFT from fundamental knowledge of AML/CFT, key agencies and legislations in Singapore to current developments & trendsSound knowledge of the topic ability that I’ve presented and managed to provide lucid explanation on the two questions askedAbility to keep the audience engaged and caught their attention with of tables, pictures and case studies instead of standard wordingsAudience have a better understanding of AML/CFT and this is evident through the pre and post questionnaire where I number of correct answers have increased. Weaknesses:I’d realized that I could have done better during my presentation since I have tendency to rush through my speech in view of the limited time givenSince my daily job does not require me to do presentation on a regular basis, I tend to feel nervous when facing people during the presentation and it might have resulted me in missing out some crucial points of what I planned to sayTiming was also an issue since I’ve went over the stipulated timeline of 15 minutes. As a result, I stuttered a little during last part of my presentationand there were a few pauses when I forgot what to say.To conclude, I glad that my presentation went off without a hitch and received positive feedbacks from the audience for expanding their knowledge in AML/CFT.

I plan on learning from my weaknesses as aforementioned and hope to improve my public speaking and presentation in the near future since this is one of the requisite skills for compliance officer.Reference Lists1. GRC Solutions, Salt Compliance. 2012. 5 key elements of effective compliance training Accessed 28 July 2018. 2.

Pasley, R., 2015. Study Guide for the ACAMS Certification Examination. 5th ed. USA: ACAMS.3. Thomas.

2008. 10 Tips to Improve Employee Training. Accessed 29 July 2018.4. GAN INTEGRITY,. 2017.

How to Deploy an Effective Compliance Training Program. Accessed 29 July 2018.


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