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You recently joined Prime Bank (PB), which has been operating as a retail bank in Singapore, regulated by the MAS, for 11 years. PB’s parent company is based in New York, USA, and has been operating in the USA for 14 years. Part of the reason you wanted to work at PB is the forward-looking nature of its strategy, which was articulated in its last annual report. The report underlined the board’s commitment to continued aggressive expansion throughout Asia.
In that last annual report, issued in July 2021, the board reaffirmed their 2021 to 2024 strategy, which specifically included plans to:
- increase shareholder value by reducing costs
- increase revenue by 20% and profits by 30%
- take a 20% share of the private banking market, by acquisition
- invest in technology to increase customer ease of access and build an integrated payment solution
- become a data-driven organization.
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At 10 a.m. your head of department makes an announcement that all staff is to cease what they are working on and access the company’s intranet. The staff is directed to watch a video featuring the CEO. The purpose of the video is to advise staff that the firm has received the findings of the recent MAS inspection visit and that significant gaps were found, which must be addressed immediately. The following specific issues were identified.
- PB’s senior management had very poor and ineffective oversight that contributed to unacceptable risk culture.
- Where higher-risk applications were identified, they were not appropriately escalated for a decision as to whether to proceed with the onboarding. Instead, the staff member simply had to record that the customer was onboarded under the Enhanced Due Diligence protocols.
- PB failed to establish, by appropriate and reasonable means, basic information such as the source of wealth and source of funds before onboarding customers who presented a higher risk of money laundering or terrorism financing.
- PB failed to identify and investigate unusually large or unusual patterns of customer transactions that appeared to serve no obvious economic purpose or objective.
- PB often relied on the customers’ declarations, without obtaining further information to corroborate them.
- During the onboarding of new customers, PB failed to consider each applicant’s occupation as a factor when deciding the level of customer risk.
With reference to the above scenario, produce a note for the head of compliance, from the compliance function’s point of view, that contains a SWOT analysis (incorporating any other appropriate analytical tools, such as PESTLE) and highlights the key regulatory compliance and financial crime compliance concerns (from the functional and operational process perspectives) for PB in its efforts to remediate the findings of the regulator.
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After the video has finished, the compliance director advises you that she has put together a project plan to attend to the various issues. One of the first tasks is to prepare a proposal for the senior management that outlines the strategies and policies to be implemented in response to the fine. You have been asked to produce the proposal.
Your next task is to complete a Stakeholder Management and Communication Plan (using appropriate tools), identifying the five most influential stakeholder groups that you would want to address.
After completing the Stakeholder Management and Communication Plan, you have been asked to produce a note for the compliance director to outline the strategic key performance indicators (KPIs) of the compliance department staff. Your note should include the plans for assessing their performance against the KPIs.
An announcement of significant lapses by a regulated firm usually adversely affects consumer confidence in, and the share price of, the firm involved. Managing the perceptions of the staff and the public is paramount in countering the negative impacts. You have therefore been tasked with producing compliance-specific mission and vision statements (one of each; they may later form part of the firm’s overall statements). Articulate the
statements and briefly explain why you chose those words.