Ethics and Professional Conduct Flashcards
7 cards from real CSC practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Ethics and Professional Conduct flashcards as text
Under Canada's Proceeds of Crime (Money Laundering) and Terrorist Financing Act, which transactions must be reported to FINTRAC?
Answer: Large cash transactions of $10,000 CAD or more within a 24-hour period, and suspicious transactions regardless of amount
Financial entities must report large cash transactions of $10,000 CAD or more to FINTRAC, as well as any suspicious transactions that may be related to money laundering or terrorist financing, regardless of the dollar amount.
What is a Suspicious Transaction Report (STR) in the context of anti-money laundering compliance?
Answer: A report submitted to FINTRAC when there are reasonable grounds to suspect a transaction is related to money laundering or terrorist financing
An STR must be filed with FINTRAC when a reporting entity has reasonable grounds to suspect that a transaction or attempted transaction is related to money laundering, terrorist financing, or a predicate offense.
What does 'material information' mean in the context of securities disclosure obligations?
Answer: Information that would reasonably be expected to have a significant effect on the market price or value of a security if publicly disclosed
Material information is defined as information that a reasonable investor would consider important in making an investment decision, and that would likely significantly affect the price or value of the security if made public.
What is the role of a firm's Chief Compliance Officer (CCO) under CIRO regulations?
Answer: To be responsible for establishing and maintaining a compliance system that ensures the firm and its employees meet all regulatory requirements
The CCO is responsible for overseeing the firm's compliance with applicable securities laws and regulatory requirements, including establishing policies and procedures to detect and prevent violations.
What is 'gatekeeper responsibility' as it applies to registered representatives in Canada?
Answer: The obligation to identify and prevent suspicious or illegal activity from entering the financial system, even when acting on client instructions
Gatekeeper responsibility means that registrants must act as the first line of defense against financial crime, including refusing to process transactions that appear suspicious or illegal, even when a client requests them.
Under National Instrument 31-103, what is the 'best interest standard' that applies to portfolio managers?
Answer: Portfolio managers must act in the best interest of their clients and put client interests ahead of their own when making investment decisions
Under NI 31-103, portfolio managers owe a statutory best interest duty to clients, requiring them to prioritize client interests above their own and make investment decisions that genuinely serve the client's needs and objectives.
What must a registrant do if they discover a client has provided false or misleading information on their account application?
Answer: Conduct additional due diligence, update the client's KYC information, reassess suitability, and report to compliance if suspicious activity is indicated
If false or misleading information is discovered, the registrant must correct the KYC records, reassess the suitability of previous and future recommendations, and escalate to compliance if the false information raises concerns about suspicious activity.