CMFAS Anti-Money Laundering 3 — Questions and Answers
Question 1: What is the Terrorism (Suppression of Financing) Act (TSOFA) in Singapore?
- An act to fund counter-terrorism
- Legislation criminalising the financing of terrorism and related activities (Correct answer)
- An act to regulate financial advisers
- An act to control immigration
Correct answer: Legislation criminalising the financing of terrorism and related activities
TSOFA criminalises the provision or collection of property for the purpose of terrorism, providing legal tools to combat terrorism financing in Singapore.
Question 2: What is a risk-based approach to AML?
- Ignoring low-risk customers
- Allocating resources and applying measures proportionate to the assessed risk level (Correct answer)
- Treating all customers the same
- Only monitoring high-value transactions
Correct answer: Allocating resources and applying measures proportionate to the assessed risk level
A risk-based approach means applying AML measures proportionate to the level of risk identified — higher risk warrants more intensive measures.
Question 3: What is 'structuring' or 'smurfing' in money laundering?
- Building financial structures
- Breaking large transactions into smaller ones to avoid detection thresholds (Correct answer)
- Investing in structured products
- Organizing financial records
Correct answer: Breaking large transactions into smaller ones to avoid detection thresholds
Structuring (smurfing) involves deliberately breaking a large cash transaction into multiple smaller transactions to avoid triggering reporting thresholds.
Question 4: What records must financial institutions maintain for AML purposes?
- Only customer names
- Customer identification documents, transaction records, and account files (Correct answer)
- Only transaction amounts over $10,000
- Only records for foreign customers
Correct answer: Customer identification documents, transaction records, and account files
Financial institutions must maintain comprehensive records including customer identification documents, transaction details, account files, and correspondence for a minimum of 5 years.
Question 5: What is the Financial Action Task Force (FATF)?
- A Singapore government agency
- An international body that sets global AML/CFT standards (Correct answer)
- A private banking association
- A law enforcement agency
Correct answer: An international body that sets global AML/CFT standards
FATF is the global standard-setting body for anti-money laundering and counter-terrorism financing. It issues recommendations that countries are expected to implement.
Question 6: What are FATF Recommendations?
- Suggestions for investment
- International standards for countries to implement effective AML/CFT frameworks (Correct answer)
- Banking product recommendations
- Career advice for financial professionals
Correct answer: International standards for countries to implement effective AML/CFT frameworks
FATF Recommendations are internationally recognized standards that provide a comprehensive framework for combating money laundering and terrorism financing.
CMFAS Anti-Money Laundering 3
What is the Terrorism (Suppression of Financing) Act (TSOFA) in Singapore?