CSC Ethics and Professional Conduct 3

Question 1

Under Canada's Proceeds of Crime (Money Laundering) and Terrorist Financing Act, which transactions must be reported to FINTRAC?

Accepted Answer

Large cash transactions of $10,000 CAD or more within a 24-hour period, and suspicious transactions regardless of amount

Answer

All cash transactions over $1,000 CAD

Answer

Only transactions involving foreign currencies

Answer

Electronic fund transfers over $5,000 CAD only

Question 2

What is a Suspicious Transaction Report (STR) in the context of anti-money laundering compliance?

Accepted Answer

A report submitted to FINTRAC when there are reasonable grounds to suspect a transaction is related to money laundering or terrorist financing

Answer

A report filed when a client makes an unusually large profit on a trade

Answer

A regulatory filing required for all transactions involving offshore accounts

Answer

An internal audit report generated when trading anomalies are detected

Question 3

What does 'material information' mean in the context of securities disclosure obligations?

Accepted Answer

Information that would reasonably be expected to have a significant effect on the market price or value of a security if publicly disclosed

Answer

Information that is related to physical or tangible assets of a company

Answer

Any financial data contained in a company's annual report

Answer

Information shared between investment dealers about client trading patterns

Question 4

What is the role of a firm's Chief Compliance Officer (CCO) under CIRO regulations?

Accepted Answer

To be responsible for establishing and maintaining a compliance system that ensures the firm and its employees meet all regulatory requirements

Answer

To manage the firm's investment portfolio and risk exposure

Answer

To approve all individual client transactions over a certain dollar threshold

Answer

To serve as the primary point of contact between the firm and OBSI

Question 5

What is 'gatekeeper responsibility' as it applies to registered representatives in Canada?

Accepted Answer

The obligation to identify and prevent suspicious or illegal activity from entering the financial system, even when acting on client instructions

Answer

The duty to control access to the firm's trading floor

Answer

The requirement to approve new client accounts before trading can begin

Answer

The responsibility to monitor all electronic communications within the firm

Question 6

Under National Instrument 31-103, what is the 'best interest standard' that applies to portfolio managers?

Accepted Answer

Portfolio managers must act in the best interest of their clients and put client interests ahead of their own when making investment decisions

Answer

Portfolio managers must invest primarily in government securities

Answer

Portfolio managers must achieve returns that exceed their benchmark index

Answer

Portfolio managers must obtain written client consent before each individual trade

Question 7

What must a registrant do if they discover a client has provided false or misleading information on their account application?

Accepted Answer

Conduct additional due diligence, update the client's KYC information, reassess suitability, and report to compliance if suspicious activity is indicated

Answer

Immediately close the client's account without notification

Answer

Accept the information as provided since the client signed the application form

Answer

Retroactively adjust all past recommendations made for that client