Mon Mar 9, 2009 3:38pm EDT
By Matthew Robinson
http://www.reuters.com/article/hotStocksNews/idUSTRE5210GO20090309
NEW YORK (Reuters) - Oil jumped more than 3 percent to $47 a barrel on Monday as a naval incident between the United States and China, the world's top oil consumers, boosted geopolitical tensions and as dealers pondered the possibility of deeper production cuts by OPEC.
The U.S. State Department said five Chinese ships, including a naval vessel, harassed an unarmed U.S. Navy ocean surveillance ship in international waters in the South China Sea on Sunday.
"Crude prices are up, I think, in a knee-jerk reaction to the news of Chinese vessels harassing a U.S. Navy ship in the South China Sea," said Phil Flynn, analyst at Alaron Trading in Chicago.
U.S. crude settled up $1.55 at $47.07 a barrel, while London Brent crude fell 72 cents to settle at $44.13 a barrel.
Monday, March 9, 2009
Gold slides more than 2 percent as dollar rises
Mon Mar 9, 2009 1:00pm EDT
By Jan Harvey
LONDON (Reuters) - Gold prices slipped more than 2 percent on Monday after the dollar rose and data showed a small fall in holdings of exchange traded funds.
Spot gold fell to a low of $913.53 an ounce and was at $916.60/917.60 an ounce at 1629 GMT from $939.60 late in New York on Friday.
"Right now the dollar is a little bit stronger and equity markets (generally) are a bit stronger as well so we don't see much inflows into gold exchange traded funds (ETFs)," said Commerzbank analyst Eugen Weinberg.
The world's largest gold-backed exchange traded fund (ETF) recorded its first decline since January 8. Its holdings dipped 0.3 tonnes to 1,028.99 tonnes as of March 8.
UBS analyst John Reade said the total gold holdings of the nine major ETFs the bank follows fell to 48.30 million ounces on March 6 from a revised total of 48.40 million ounces previously.
The dollar gained across the board as global recession fears and banking sector concerns weighed on world stock markets, spurring safe-haven demand for the greenback.
A higher U.S. currency makes metals priced in dollars more expensive for holders of other currencies. Gold is often also used as an alternative when the dollar falls out of favor.
Earlier a rise in U.S. stocks also weighed on gold, which is used a hedge against financial market instability. .N
SOLID ETF DEMAND
Equity weakness broadly supported gold toward the end of last week, although the precious metal was caught up in a stocks sell-off last Monday as investors sought liquidity.
Demand for the precious metal from ETFs, which issue securities backed by physical stocks of gold, was a major price driver earlier in the year. Taders said expected these inflows to resume as uncertainty grows.
"I think that there will be enough worrying news in the first half of 2009 for ETF demand to remain solid," said David Thurtell, an analyst at Citigroup.
Holdings of Julius Baer's (BAER.VX) gold-backed exchange traded fund rose 109,000 ounces or 18 percent last week, the bank said in a weekly statement on Monday.
Demand for gold from jewelry buyers in traditionally strong markets such as India and China remained weak, however.
Traders said scrap sales also put pressure on premiums for gold bars.
By Jan Harvey
LONDON (Reuters) - Gold prices slipped more than 2 percent on Monday after the dollar rose and data showed a small fall in holdings of exchange traded funds.
Spot gold fell to a low of $913.53 an ounce and was at $916.60/917.60 an ounce at 1629 GMT from $939.60 late in New York on Friday.
"Right now the dollar is a little bit stronger and equity markets (generally) are a bit stronger as well so we don't see much inflows into gold exchange traded funds (ETFs)," said Commerzbank analyst Eugen Weinberg.
The world's largest gold-backed exchange traded fund (ETF) recorded its first decline since January 8. Its holdings dipped 0.3 tonnes to 1,028.99 tonnes as of March 8.
UBS analyst John Reade said the total gold holdings of the nine major ETFs the bank follows fell to 48.30 million ounces on March 6 from a revised total of 48.40 million ounces previously.
The dollar gained across the board as global recession fears and banking sector concerns weighed on world stock markets, spurring safe-haven demand for the greenback.
A higher U.S. currency makes metals priced in dollars more expensive for holders of other currencies. Gold is often also used as an alternative when the dollar falls out of favor.
Earlier a rise in U.S. stocks also weighed on gold, which is used a hedge against financial market instability. .N
SOLID ETF DEMAND
Equity weakness broadly supported gold toward the end of last week, although the precious metal was caught up in a stocks sell-off last Monday as investors sought liquidity.
Demand for the precious metal from ETFs, which issue securities backed by physical stocks of gold, was a major price driver earlier in the year. Taders said expected these inflows to resume as uncertainty grows.
"I think that there will be enough worrying news in the first half of 2009 for ETF demand to remain solid," said David Thurtell, an analyst at Citigroup.
Holdings of Julius Baer's (BAER.VX) gold-backed exchange traded fund rose 109,000 ounces or 18 percent last week, the bank said in a weekly statement on Monday.
Demand for gold from jewelry buyers in traditionally strong markets such as India and China remained weak, however.
Traders said scrap sales also put pressure on premiums for gold bars.
Gold: Weak jewelry demand, strong dollar hit prices
Weak jewelry demand, strong dollar hit prices
SPDR gold ETF records first outflow since early January
Julius Baer's gold ETF up 18 percent last week (Recasts, updates prices, market activity; adds second byline, dateline, previously LONDON)
By Frank Tang and Jan Harvey
http://www.guardian.co.uk/business/feedarticle/8394276
NEW YORK/LONDON, March 9 (Reuters) - Gold prices dropped more than 2 percent on Monday, as a dollar rise and slight drop of holdings of gold-backed exchange traded funds triggered heavy sell-stop orders.
Higher gold prices and global recession weighed down gold jewelry buying, which accounts for about 60 percent of total gold demand, traders said. "There is a big bull-and-bear disparity in gold. There is investment buying but no jewelry buying, which has dropped sharply," said Jonathan Jossen, a COMEX gold floor trader.
Spot gold fell to a low of $911.95 an ounce and was at $918.15 an ounce at 1:22 p.m. EDT (1722 GMT), down 2.3 percent from its last quote $939.60 in New York late Friday.
Gold for April delivery settled down $24.70, or 2.6 percent, at $918.00 an ounce on the COMEX division of the New York Mercantile Exchange. Demand for gold from jewelry buyers in traditionally strong markets remained weak.
On Monday, the dollar rose amid global recession fears and banking sector concerns, prompting investors to divert money out of gold and into U.S. Treasuries. A stronger dollar makes metals more expensive for holders of other currencies. Gold often rises when the dollar falls.
The world's largest gold-backed exchange traded fund (ETF) recorded its first decline since Jan. 8. Its holdings dipped 0.3 tonnes to 1,028.99 tonnes as of March 8.
Investors also favored oil at the expense of gold on Monday. Oil rallied 4 percent at above $47 per barrel. "A lot of people think gold is much too high compared to where crude is, so they are taking profit," Jossen said.
SOLID ETF DEMAND
Demand for gold from ETFs, which issue securities backed by physical stocks of gold, helped drive bullion higher earlier in the year. Traders said they expected these inflows to resume. "I think that there will be enough worrying news in the first half of 2009 for ETF demand to remain solid," said David Thurtell, an analyst at Citigroup. Holdings of Julius Baer's gold-backed exchange traded fund rose 109,000 ounces or 18 percent last week, the bank said in a weekly statement on Monday.
(Additional reporting by Paul Lauener and Pratima Desai; Editing by David Gregorio)
SPDR gold ETF records first outflow since early January
Julius Baer's gold ETF up 18 percent last week (Recasts, updates prices, market activity; adds second byline, dateline, previously LONDON)
By Frank Tang and Jan Harvey
http://www.guardian.co.uk/business/feedarticle/8394276
NEW YORK/LONDON, March 9 (Reuters) - Gold prices dropped more than 2 percent on Monday, as a dollar rise and slight drop of holdings of gold-backed exchange traded funds triggered heavy sell-stop orders.
Higher gold prices and global recession weighed down gold jewelry buying, which accounts for about 60 percent of total gold demand, traders said. "There is a big bull-and-bear disparity in gold. There is investment buying but no jewelry buying, which has dropped sharply," said Jonathan Jossen, a COMEX gold floor trader.
Spot gold fell to a low of $911.95 an ounce and was at $918.15 an ounce at 1:22 p.m. EDT (1722 GMT), down 2.3 percent from its last quote $939.60 in New York late Friday.
Gold for April delivery settled down $24.70, or 2.6 percent, at $918.00 an ounce on the COMEX division of the New York Mercantile Exchange. Demand for gold from jewelry buyers in traditionally strong markets remained weak.
On Monday, the dollar rose amid global recession fears and banking sector concerns, prompting investors to divert money out of gold and into U.S. Treasuries. A stronger dollar makes metals more expensive for holders of other currencies. Gold often rises when the dollar falls.
The world's largest gold-backed exchange traded fund (ETF) recorded its first decline since Jan. 8. Its holdings dipped 0.3 tonnes to 1,028.99 tonnes as of March 8.
Investors also favored oil at the expense of gold on Monday. Oil rallied 4 percent at above $47 per barrel. "A lot of people think gold is much too high compared to where crude is, so they are taking profit," Jossen said.
SOLID ETF DEMAND
Demand for gold from ETFs, which issue securities backed by physical stocks of gold, helped drive bullion higher earlier in the year. Traders said they expected these inflows to resume. "I think that there will be enough worrying news in the first half of 2009 for ETF demand to remain solid," said David Thurtell, an analyst at Citigroup. Holdings of Julius Baer's gold-backed exchange traded fund rose 109,000 ounces or 18 percent last week, the bank said in a weekly statement on Monday.
(Additional reporting by Paul Lauener and Pratima Desai; Editing by David Gregorio)
DOW, STI, HSI, SSE Intra Day Lowest in 2008
DOW, STI, HSI, SSE Intra Day Lowest in 2008
21/11/08 DOW 7392.27 (Dow already broke...)
28/10/08 STI 1473.77 HERE
27/10/08 HSI 10676.29
28/10/08 SSE 1664.93
Source: Posted by Bangkok Kid in CNA forum
21/11/08 DOW 7392.27 (Dow already broke...)
28/10/08 STI 1473.77 HERE
27/10/08 HSI 10676.29
28/10/08 SSE 1664.93
Source: Posted by Bangkok Kid in CNA forum
Wall St Week Ahead: GM, banks' fate to keep investors on edge
NEW YORK (Reuters) - With stocks mired in multi-year lows and the fate of General Motors and banks hanging in the balance, investors are unlikely to curb their flight from risk this week, putting Wall Street on track for another brutal sell-off.
One focal point will be a meeting between the U.S. auto task force and GM, Chrysler and officials from the United Auto Workers in Detroit this week after auditors raised doubts about GM's ability to survive outside bankruptcy.
Uncertainty over the plan to salvage banks will also hang over the struggling sector until more concrete details from Washington are revealed, leaving investors to fret that companies that were once pillars of the financial system will have to be nationalized.
The weak economy will likely be confirmed by a handful of economic reports, including a government report on February retail sales and a survey of consumer sentiment.
"There are, unfortunately, no guideposts to a lot of the market to allow investors to get a better sense of direction of where the market is going, where corporate America is going," said Jack Ablin, chief investment officer at Harris Private Bank in Chicago.
"Short of that, we're going to likely have to rely on Washington. Unfortunately, it just seems like Washington's relationship with the stock market is strained."
"PAINFUL" MARKET
With the Dow and S&P trading at 12-year lows, and the Nasdaq sliding to six-year lows, market watchers will be looking for signs of whether a bottom has been found, or if indexes still have another leg down to go.
Last week was the fourth week of declines for all three major U.S. stock indexes, as the Dow Jones industrial average dropped 6.2 percent and the Nasdaq composite index fell 6.1 percent. The Standard & Poor's 500 slid 7 percent, its worst week since November.
"I've been in the business since 1963 and I've truthfully never seen a market that is so discouraging or painful," said Carl Birkelbach, chief executive officer of Birkelbach Investment Securities in Chicago.
"I've been through a lot, but this is the worst I've seen."
The Wall Street Journal reported on Friday that about $50 billion of more than $173 billion of U.S. government bailout money poured into American International Group Inc has been paid to at least 24 financial institutions around the world.
Already cheap bank stocks continued their tumble last week. The stock price of Dow component Citigroup, once the world's most valuable bank by market capitalization, fell under $1 for the first time, reigniting anxiety over the bank's health and that of the entire banking sector.
Clarity on how toxic assets will be cleared off banks' balance sheets and how those assets will be valued is key to stabilizing the financial sector and seeing markets manage a sustainable recovery, analysts said.
"In order to move forward, we need (Treasury Secretary) Geithner to come out and tell us the answer to the question: 'How do you value the assets?'," said Marc Pado, U.S. market strategist at Cantor Fitzgerald & Co. in San Francisco.
"We may be happy about it, we may not be happy about it, but at least we'll know."
Members of the U.S. autos task force will visit Detroit this week to meet with GM, Chrysler and officials from the United Auto Workers labor union, an official for the Obama administration said Friday.
GM's failure could trigger round of massive layoffs and hurt companies that supply and manufacture parts, said Joseph LaVorgna, chief U.S. economist at Deutsche Bank in New York.
In all, GM's bankruptcy could lop off 4 percentage points from the U.S. gross domestic product, of which two-thirds is driven by consumer spending, LaVorgna said.
CONSUMER PSYCHOLOGY 101
Ahead of the Fed's policy-making meeting the following week, Federal Reserve Chairman Ben Bernanke is set to address the Council on Foreign Relations on Tuesday. Investors will be watching for any comments on the state of the economy and the outlook for banks.
Economic data on February retail sales on Thursday and a preliminary reading on March consumer sentiment on Friday, coupled with quarterly results from office supplies and electronics retailer Staples Inc on Wednesday, should give a gauge of consumer spending. January's international trade deficit report is due on Friday.
Economists polled by Reuters forecast that retail sales will slip 0.5 percent in February, after January's unexpected gain of 1 percent. They forecast a preliminary March reading on consumer sentiment of 55.0, down from 56.3 for February, from the Reuters/University of Michigan Surveys of Consumers. The international trade deficit is forecast to drop to $38.1 billion in January from $39.93 billion in December.
Last week, U.S. retailers posted better-than-expected same-store sales for February, helped by a strong gain at Wal-Mart, the world's largest retailer and the leading U.S. discount chain. But analysts cautioned that stores will have to show consistent improvement for expectations of weakness to change.
One focal point will be a meeting between the U.S. auto task force and GM, Chrysler and officials from the United Auto Workers in Detroit this week after auditors raised doubts about GM's ability to survive outside bankruptcy.
Uncertainty over the plan to salvage banks will also hang over the struggling sector until more concrete details from Washington are revealed, leaving investors to fret that companies that were once pillars of the financial system will have to be nationalized.
The weak economy will likely be confirmed by a handful of economic reports, including a government report on February retail sales and a survey of consumer sentiment.
"There are, unfortunately, no guideposts to a lot of the market to allow investors to get a better sense of direction of where the market is going, where corporate America is going," said Jack Ablin, chief investment officer at Harris Private Bank in Chicago.
"Short of that, we're going to likely have to rely on Washington. Unfortunately, it just seems like Washington's relationship with the stock market is strained."
"PAINFUL" MARKET
With the Dow and S&P trading at 12-year lows, and the Nasdaq sliding to six-year lows, market watchers will be looking for signs of whether a bottom has been found, or if indexes still have another leg down to go.
Last week was the fourth week of declines for all three major U.S. stock indexes, as the Dow Jones industrial average dropped 6.2 percent and the Nasdaq composite index fell 6.1 percent. The Standard & Poor's 500 slid 7 percent, its worst week since November.
"I've been in the business since 1963 and I've truthfully never seen a market that is so discouraging or painful," said Carl Birkelbach, chief executive officer of Birkelbach Investment Securities in Chicago.
"I've been through a lot, but this is the worst I've seen."
The Wall Street Journal reported on Friday that about $50 billion of more than $173 billion of U.S. government bailout money poured into American International Group Inc
Already cheap bank stocks continued their tumble last week. The stock price of Dow component Citigroup, once the world's most valuable bank by market capitalization, fell under $1 for the first time, reigniting anxiety over the bank's health and that of the entire banking sector.
Clarity on how toxic assets will be cleared off banks' balance sheets and how those assets will be valued is key to stabilizing the financial sector and seeing markets manage a sustainable recovery, analysts said.
"In order to move forward, we need (Treasury Secretary) Geithner to come out and tell us the answer to the question: 'How do you value the assets?'," said Marc Pado, U.S. market strategist at Cantor Fitzgerald & Co. in San Francisco.
"We may be happy about it, we may not be happy about it, but at least we'll know."
Members of the U.S. autos task force will visit Detroit this week to meet with GM, Chrysler and officials from the United Auto Workers labor union, an official for the Obama administration said Friday.
GM's failure could trigger round of massive layoffs and hurt companies that supply and manufacture parts, said Joseph LaVorgna, chief U.S. economist at Deutsche Bank in New York.
In all, GM's bankruptcy could lop off 4 percentage points from the U.S. gross domestic product, of which two-thirds is driven by consumer spending, LaVorgna said.
CONSUMER PSYCHOLOGY 101
Ahead of the Fed's policy-making meeting the following week, Federal Reserve Chairman Ben Bernanke is set to address the Council on Foreign Relations on Tuesday. Investors will be watching for any comments on the state of the economy and the outlook for banks.
Economic data on February retail sales on Thursday and a preliminary reading on March consumer sentiment on Friday, coupled with quarterly results from office supplies and electronics retailer Staples Inc on Wednesday, should give a gauge of consumer spending. January's international trade deficit report is due on Friday.
Economists polled by Reuters forecast that retail sales will slip 0.5 percent in February, after January's unexpected gain of 1 percent. They forecast a preliminary March reading on consumer sentiment of 55.0, down from 56.3 for February, from the Reuters/University of Michigan Surveys of Consumers. The international trade deficit is forecast to drop to $38.1 billion in January from $39.93 billion in December.
Last week, U.S. retailers posted better-than-expected same-store sales for February, helped by a strong gain at Wal-Mart, the world's largest retailer and the leading U.S. discount chain. But analysts cautioned that stores will have to show consistent improvement for expectations of weakness to change.
Saturday, March 7, 2009
CMFAS M5 Chapter 8: Money Laundering
Key sections covered:
The Notice contains principles that serve as guidelines for the conduct of business:
A financial adviser shall perform CDD measures when:
(a) A financial adviser shall maintain documentation on its business relations and transactions with customers such that:
(d) A financial adviser shall retain records for as long as needed such as in accordance with any request from STRO or other authorities.
3. SUSPICIOUS TRANSACTIONS REPORTING
Key Concepts of Notice:
Terrorism seeks to compel governments into a particular course of action or seeks to intimidate the public. Sources of terrorist financing may be legitimate or illegitimate. Terrorist financing involves amounts that are not always large and the associated transactions may not necessarily be complex given that some sources of terrorist funds may be legitimate
Non-Face-to-Face Verification
As a guide, financial advisers should take one or more of the following measures to mitigate the risk associated with not being able to have face-to-face contact when establishing business relations:
The responsibilties of ALM/CFT compliance officer should include the following:
1. Definition of Money Laundering: A process intended to mask benefits derived from drug trafficking or criminal conduct so that it appears to originate from a legitimate source
2. The 3 stages of Money Laundering in the following order; Placement, Layering and Integration.
3. Verification of personal customers. If applicant and insured are different people, the applicant’s identity needs to be verified.
4. Non face-to-face identification procedures should be at least as stringent as those of face-to-face verification.
5. For Group Polices
- Customer Due Diligence
- Record Keeping
- Suspicious Transaction
- Internal Policies
- Terrorist Financing
- AML/CFT - means anti-money laundering and countering the financing of terrorism;
- CDD – means customer due diligence;
- FATF - means the Financial Action Task Force; is an inter-governmental body founded in 1989 by the G7. The purpose of FATF is to develop policies to combat money laundering and terrorist financing. [Source: Wikipedia]
- STR - means suspicious transaction report;
- STRO - means the Suspicious Transactions Reporting Office, Commercial Affairs Department of the Singapore Police Force
- Beneficial Owner as defined in the MAS Notice on Prevention of Money Laundering and Countering the Financing of Terrorism means the natural person who ultimately owns or controls a customer or the person on whose behalf a transaction is being conducted and includes the person who exercises ultimate effective control over a body corporate or unincorporate.
The Notice contains principles that serve as guidelines for the conduct of business:
- A financial adviser must exercise due diligence when dealing with customers.
- A financial adviser must conduct its business in conformity with high ethical standards.
- A financial adviser should cooperate with law enforcement authorities to prevent money laundering and terrorist financing.
A financial adviser shall perform CDD measures when:
- the financial adviser establishes business relations with any customer;
- there is a suspicion of money laundering or terrorist financing;
- there are doubts about the accuracy or adequacy of any information obtained.
- put in place policies to address any related risks that may arise;
- shall carry out CDD measures that are as stringent as face-to-face situations
- there are no concerns about the adequacy of the information;
- any due diligence conducted has not raised any doubts about the adequacy of the AML/CFT of the acquired institution.
- A financial adviser shall complete verification of the identity of the customer and beneficial owner before business relations are established;
- A financial adviser may establish business relations before verification if:
- the deferral of verification is essential in order not to interrupt business operations; and
- the risks of money laundering and terrorist financing can be effectively managed.
- If business relations are established before verification, the financial adviser shall complete such verification as soon as possible.
- If CDD Measures are not completed, the financial adviser shall terminate the business relationship and consider if the filing of an STR is warranted.
- In the case of joint accounts, a financial adviser shall perform CDD measures on all holders as if each were individual customers.
- A financial adviser shall perform CDD measures on its existing customers after assessing materiality and risk.
- if it is satisfied that the risks of money laundering and terrorist financing are low
- but not in relation to customers that are related to countries known to have inadequate AML/CFT measures
- in relation to a customer that is a financial institution supervised by the Authority (other than holders of money changer’s and remittance licences)
- Politically Exposed Persons (PEP) – for example, persons with prominent public functions in a foreign country, heads of state and senior military officials.
- customers assessed to have a higher risk for money laundering and terrorist financing.
- persons from countries known to have inadequate AML/CFT measures.
- A financial adviser may rely on an intermediary to perform CDD measures if:
- the financial adviser is satisfied that the intermediary has adequate measures to comply with AML/CFT requirements;
- the intermediary has not been precluded by the Authority;
- any information needed can be relayed to the financial adviser without delay
- The financial adviser shall not rely on an intermediary to conduct ongoing monitoring of customers.
- Where a financial adviser relies on an intermediary to perform CDD measures, it shall document the basis except where the intermediary is a financial institution supervised by the Authority.
- For the avoidance of doubt, the financial adviser shall remain responsible for AML/CFT obligations to Notice.
(a) A financial adviser shall maintain documentation on its business relations and transactions with customers such that:
- legal requirements are met;
- any transaction can be reconstructed to provide evidence for prosecution of criminal activity;
- the Authorities and auditors of the financial adviser are able to assess transactions and level of compliance; and
- the financial adviser can satisfy any enquiry from Authorities for information.
- keep records for at least 5 years following the termination of business relations;
- keep records for at least 5 years following the completion of transactions.
(d) A financial adviser shall retain records for as long as needed such as in accordance with any request from STRO or other authorities.
3. SUSPICIOUS TRANSACTIONS REPORTING
- A financial adviser shall keep in mind the legal provisions regarding Corruption, Drug Trafficking and Terrorism regarding transactions suspected of being connected with money laundering or terrorist financing, including the following:
- establish a single reference point within the organisation to whom all staff are instructured to promptly refer all transactions suspected of being connected with money laundering or terrorist financing, for possible referral to STRO via STRs; and
- keep records of all transactions referred to STRO, together with all internal findings and analysis done in relation to them.
- A financial adviser shall submit reports on suspicious transactions to STRO, and extend a copy to the MAS for information
- A financial adviser shall consider if any circumstances are suspicious so as to warrant the filing of an STR
- A financial adviser shall implement internal policies to help prevent money laundering and terrorist financing and communicate these to employees.
- The policies shall include CDD measures, record retention, detection of suspicious transactions.
- A financial adviser shall take into consideration money laundering and terrorist financing threats that may arise from the use of new technologies.
Key Concepts of Notice:
- Money laundering is a process intended to mask the benefits derived from criminal conduct so that they appear to have originated from a legitimate source.
- The CDD function may be outsourced to third party but the financial adviser remains fully accountable.
- Placement - physical disposal of the benefits of criminal conduct;
- Layering - separation of the benefits from their source by creating layers of financial transactions designed to disguise the audit trail; and
- Integration - provision of apparent legitimacy to the benefits of criminal conduct such that laundered funds return to the economy as “legitimate business funds”.
- Smuggling bulk currency
- Mix illicit proceeds with legitimate deposits
- Deposit amounts in small denominations
- Subdivide bank or commercial transactions
- Multiple transfers
- Multiple transactions
Terrorism seeks to compel governments into a particular course of action or seeks to intimidate the public. Sources of terrorist financing may be legitimate or illegitimate. Terrorist financing involves amounts that are not always large and the associated transactions may not necessarily be complex given that some sources of terrorist funds may be legitimate
Non-Face-to-Face Verification
As a guide, financial advisers should take one or more of the following measures to mitigate the risk associated with not being able to have face-to-face contact when establishing business relations:
- telephone contact with the customers at a residential or business number than can be verified independently
- confirmation of customer's address through an exchange of correspondence or other appropriate method
- subject to the customer's consent, telephone confirmation of the customer's employment status with the customer's employer's personnel department at a listed business number of the employer.
- confirmation of the customer's salary details by requiring the presentation of recent bank statements;
- certification of identification documents by lawyers or notary publics presented the customers;
- requring the customer to make an initial deposit using a cheque drawn on the customer's personal account with a bank in Singapore; and
- any other reliable verification checks adopted by the financial adviser for non-face-to-face provision of financial advisory services.
The responsibilties of ALM/CFT compliance officer should include the following:
- ensuring speedy and appropriate reaction to ALM/CFT related matter
- advising and training on development and implementing internal policies, procedures and controls on AML/CFT;
- carrying out ongoing monitoring and sample reviewing of accounts for compliance.
- promoting compliance with MAS Notice and Guidelines on AML/CFT.
1. Definition of Money Laundering: A process intended to mask benefits derived from drug trafficking or criminal conduct so that it appears to originate from a legitimate source
2. The 3 stages of Money Laundering in the following order; Placement, Layering and Integration.
3. Verification of personal customers. If applicant and insured are different people, the applicant’s identity needs to be verified.
4. Non face-to-face identification procedures should be at least as stringent as those of face-to-face verification.
5. For Group Polices
- It is the identity of the holder of the master policy that has to be verified
- Clubs, societies and charities - constitution of the applicant to be produced
- Shell Companies, Trust, Nominee and Fiduciary Accounts – must obtain satisfactory evidence of beneficial owners
- Setting Document Retention Policy (retention period: 5 years)
- Methods of Retention
- Licensees are required to set up a system for reporting suspicious transactions.
- It is the obligation of the employees to report suspicious transactions.
- Internal Audit should monitor the effectiveness of the measures taken to combat money laundering.
- New staff must be trained in specific areas of Money Laundering.
- Refresher training should be held at least once every 2 years.
CMFAS M5 Chapter 7: CPF and SRS
CPF MINIMUM SUM SCHEME (MSS)
A scheme which aims to help CPF members set aside sufficient savings to support a modest standard of living during retirement. All CPF members are required to set aside the Minimum Sum when they turn age 55 and pensioners may apply for exemption from the Minimum Sum.
Options To Meet The MSS Requirement
Members are given the following three options to invest their Minimum Sum when they turn age 55:
Buying a life annuity is the best choice amongst the three options because the monthly payment will continue for as long as the annuitant is alive. As for the other two options, once the Minimum Sum is fully utilised, the monthly payment will be discontinued.
Option For Combined MSS For Married Couples
They can opt to set aside a combined Minimum Sum of 1.5 times the Minimum Sum provided they nominate each other as the beneficiary for the balance of their Minimum Sum. Once the nomination is made, it cannot be revoked. Should one of the account holders die, the deceased’s Minimum Sum would be transferred to the surviving spouse’s Retirement Account to make up the full Minimum Sum. Any excess amount will be paid in a lump sum to the surviving spouse as nominee of the money.
Commencement Date Of Monthly Payout
For members who reach age 55 before 1 January 1999, the Minimum Sum monthly payout will commence from age 60 and for those who reach age 55 on or after 1 January 1999, the Minimum Sum monthly payout will commence from age 62 .
Retirement Age Determined At Age 55
The retirement age is based on the one prevailing at the time a member turns 55 years old. This means to say that whenever the legislated retirement age is changed, it will only affect those who are below 55 years old.
Minimum Sum Plus Scheme (MSPS)
Members who are age 55 and above on or after 1 January 2001 can use the balance in their CPF savings in the Ordinary and Special Accounts as well as Medisave Account in excess of the Medisave Minimum Sum, beyond the Minimum Sum to buy Life Annuities. This is an extension of the Minimum Sum Scheme and is optional. Members who have set aside the full Minimum Sum amount as well as the Medisave Minimum Sum amount may make use of this scheme to buy life annuities when they are eligible for CPF withdrawal.
Topping Up The Minimum Sum
It is intended to help individuals (CPF and non-CPF members) set aside money for their own, their spouses’, parents’ or grandparents’ old age needs. The eligibility criteria for this scheme are as follows:
* Must be Singaporeans or Permanent Residents of Singapore
From the above table, it can be seen that members may top-up their own as well as their grandparent’s Retirement Accounts using cash only. As for spouse and parents, they may do so using both cash and CPF savings.
Tax Treatment
MSS: All monthly tax payments are tax free.
MSPS: Amount is also tax free. However if the annuity is discontinued, money will be returned to member and no more exemptions for subsequent investments.
Top Up:
http://ask-us.cpf.gov.sg/explorefaq.asp?category=23004
Q: Can I claim tax relief if I use cash to top up under the Minimum Sum Topping-Up Scheme?
A: You can enjoy tax relief of up to $7,000 per calendar year, if you use cash to top up for yourself and/or receive cash top-ups from your employer. You can enjoy an additional tax relief of up to $7,000 per calendar year if you use cash to top up for your siblings, spouse, parents or grandparents. To qualify for tax relief for cash top-ups for siblings/spouse, the sibling/spouse must have earned $2,000 or less in the preceding year. For cash top-ups made in the year, you can claim tax relief in the following year’s Tax Assessment.
CPF INVESTMENT SCHEME (CPFIS)
Types Of Investment Instruments And Amount Of Savings Allowed Under CPFIS-OA
Mode Of Premium Payment For Life Insurance Products. With effect from 1 January 2001, the CPF Board has discontinued the practice of allowing members to use their CPF savings to purchase regular premium policies. Policies taken after this date have to be paid by single premium or recurring single premium. The insurance coverage is limited to three times the single premium paid. Members who had purchased regular premium policies before 1 January 2001 are allowed to continue with their policies on a regular premium payment basis.
Admission Criteria for Funds Seeking to be Included under CPFIS
From 1 Feb 2006, new funds must meet the following criteria for inclusion under CPFIS:
Release Of Investment Holdings Upon Member Reaching Age 55
The SRS was introduced by the government on 1 April 2001 as a voluntary scheme to encourage working individuals to save for their retirement, over and above their CPF savings, i.e. it complements the CPF scheme.
Eligibility Criteria
Summary Of SRS Regulations Pertaining To Withdrawal Of SRS Savings
* Period may be longer if the statutory retirement age has been increased.
** 10-year period does not apply to investments in life annuities. 50% tax concession will apply to annuity streams in perpetuity.
Similarities Between CPFIS And SRS
Differences Between CPFIS And SRS
A scheme which aims to help CPF members set aside sufficient savings to support a modest standard of living during retirement. All CPF members are required to set aside the Minimum Sum when they turn age 55 and pensioners may apply for exemption from the Minimum Sum.
Options To Meet The MSS Requirement
- When a member reaches age 55, the Minimum Sum that he sets aside is kept in a Retirement Account.
- Setting aside this Minimum Sum amount is a requirement and the amount increases by $4,000 on 1 July each year until it reaches $120,000 (in 2003 dollars) in year 2013, and will be adjusted yearly for inflation.
- (New) The Minimum Sum currently stands at $106,000 (for the period 1-7-2008 and 30-6-2009).
- (Old) The Minimum Sum currently was at $94,600 (for the period 1-7-2006 to 30-6-2007).
- instead of withdrawing the savings in their OA or SA Accounts which they are entitled to, they may request for them to be transferred to the Retirement Account to make up to the Minimum Sum amount. However, such a transfer is irrevocable;
- they can pledge their properties up to 50% of the Minimum Sum (For 1 July 2006 to 30 June 2007, the maximum limit that one can pledge his property is up to a maximum of $47,300);
- they can use their future CPF contributions (i.e. if they are working after age 55) to make up the shortfall in the Minimum Sum;
- they can top-up their Retirement Account by cash.
Members are given the following three options to invest their Minimum Sum when they turn age 55:
- buy a life annuity from a participating insurance company;
- keep it with a participating bank; or
- leave it with the CPF Board.
Buying a life annuity is the best choice amongst the three options because the monthly payment will continue for as long as the annuitant is alive. As for the other two options, once the Minimum Sum is fully utilised, the monthly payment will be discontinued.
Option For Combined MSS For Married Couples
They can opt to set aside a combined Minimum Sum of 1.5 times the Minimum Sum provided they nominate each other as the beneficiary for the balance of their Minimum Sum. Once the nomination is made, it cannot be revoked. Should one of the account holders die, the deceased’s Minimum Sum would be transferred to the surviving spouse’s Retirement Account to make up the full Minimum Sum. Any excess amount will be paid in a lump sum to the surviving spouse as nominee of the money.
Commencement Date Of Monthly Payout
For members who reach age 55 before 1 January 1999, the Minimum Sum monthly payout will commence from age 60 and for those who reach age 55 on or after 1 January 1999, the Minimum Sum monthly payout will commence from age 62 .
Retirement Age Determined At Age 55
The retirement age is based on the one prevailing at the time a member turns 55 years old. This means to say that whenever the legislated retirement age is changed, it will only affect those who are below 55 years old.
Minimum Sum Plus Scheme (MSPS)
Members who are age 55 and above on or after 1 January 2001 can use the balance in their CPF savings in the Ordinary and Special Accounts as well as Medisave Account in excess of the Medisave Minimum Sum, beyond the Minimum Sum to buy Life Annuities. This is an extension of the Minimum Sum Scheme and is optional. Members who have set aside the full Minimum Sum amount as well as the Medisave Minimum Sum amount may make use of this scheme to buy life annuities when they are eligible for CPF withdrawal.
Topping Up The Minimum Sum
It is intended to help individuals (CPF and non-CPF members) set aside money for their own, their spouses’, parents’ or grandparents’ old age needs. The eligibility criteria for this scheme are as follows:
- both parties (i.e. the applicant and the recipient of the top-up) must be Singaporeans or Singapore Permanent Residents;
- the recipient of the top-up should be at least 55 years old;
- the party whose money will be used for the top-up must have more than 1.5 the prevailing Minimum Sum amount in their Ordinary and Special accounts, including amount withdrawn for investments
- the amount of top-up must not exceed the maximum limit allowed under the scheme
- members must follow the guidelines on the use of cash and/or CPF savings for the topping up
Person* Whose Account Will Be Topped Up | Using CPF Savings | Using Cash |
Self |
| X |
Spouse | X | X |
Parents | X | X |
Grandparents |
| X |
* Must be Singaporeans or Permanent Residents of Singapore
From the above table, it can be seen that members may top-up their own as well as their grandparent’s Retirement Accounts using cash only. As for spouse and parents, they may do so using both cash and CPF savings.
Tax Treatment
MSS: All monthly tax payments are tax free.
MSPS: Amount is also tax free. However if the annuity is discontinued, money will be returned to member and no more exemptions for subsequent investments.
Top Up:
- Member who used cash to top up their parents’ or grandparents’ Retirement Account can also claim tax relief up to $7,000 per calendar year for the amount of cash top-up subject to the topping up limits.
- Member will also qualify for the relief if the member has made a top-up in cash for his/her non-working spouse who is 55 years old or older and whose income does not exceed $2,000 in the year preceding the year of top-up.
- Topping-up of accounts through transfer of funds from the member’s own CPF account to that of his/her own or spouse’s, parent(s)’ or grandparent(s)’ retirement account will not qualify for deduction.
- The Minimum Sum (or its balance) will be paid out in a lump sum to his CPF nominees
- If there is no nomination, the money would be channelled to the Public Trustee for distribution according to the law of intestacy
- Upon death of the member, the remaining balance in annuity or bank deposit would be transferred back to CPF to be distributed to the CPF nominees
- In the case of topping-ups by children or grandchildren, the money will be returned proportionately (based on the amount contributed) to the children’s or grandchildren’s respective CPF Accounts
- For the combined Minimum Sum cases where an irrevocable nomination had been made, the deceased’s Minimum Sum would be transferred to the surviving spouse to make up the full Minimum Sum for the surviving spouse
http://ask-us.cpf.gov.sg/explorefaq.asp?category=23004
Q: Can I claim tax relief if I use cash to top up under the Minimum Sum Topping-Up Scheme?
A: You can enjoy tax relief of up to $7,000 per calendar year, if you use cash to top up for yourself and/or receive cash top-ups from your employer. You can enjoy an additional tax relief of up to $7,000 per calendar year if you use cash to top up for your siblings, spouse, parents or grandparents. To qualify for tax relief for cash top-ups for siblings/spouse, the sibling/spouse must have earned $2,000 or less in the preceding year. For cash top-ups made in the year, you can claim tax relief in the following year’s Tax Assessment.
CPF INVESTMENT SCHEME (CPFIS)
- The CPFIS comprises the CPF Investment Scheme–Ordinary Account (CPFIS-OA) and CPF Investment Scheme-Special Account (CPFIS-SA).
- The purpose of these two schemes is to give CPF members more options to enhance their retirement savings through investments.
- Currently, the CPF Board pays a guaranteed minimum interest of 2.5% per annum and 4% per annum on the Ordinary and Special Accounts respectively.
- at least 21 years old;
- not undischarged bankrupts; and
- have savings in their Ordinary or Special Accounts
- List Of Investment Instruments Allowed Under CPFIS And The Investment Limits
- Buying And Selling Of Investments From Service/Product Providers Under The CPFIS
- Mode Of Premium Payment For Life Insurance Products
- Admission Criteria for Funds Seeking to be Included under CPFIS
| Instruments | Investment Limits |
| The full balance in the Ordinary Account |
| Up to 35% of investible savings |
| Up to 10% of investible savings |
Types Of Investment Instruments And Amount Of Savings Allowed Under CPFIS-OA
| Instruments | Investment Limits |
| The full balance in the Special Account |
Mode Of Premium Payment For Life Insurance Products. With effect from 1 January 2001, the CPF Board has discontinued the practice of allowing members to use their CPF savings to purchase regular premium policies. Policies taken after this date have to be paid by single premium or recurring single premium. The insurance coverage is limited to three times the single premium paid. Members who had purchased regular premium policies before 1 January 2001 are allowed to continue with their policies on a regular premium payment basis.
Admission Criteria for Funds Seeking to be Included under CPFIS
From 1 Feb 2006, new funds must meet the following criteria for inclusion under CPFIS:
- Top 25 percentile in their global peer group
- Expense ratio lower than median of existing CPFIS funds in its risk category
- Preferably have a track record of at least three years
- CPF Board will publish on its website a list of funds which meets these criteria.
| PFIS-OA | CPFIS-SA |
| Need to open an investment account with DBS/OCBC/UOB | No need to open account. Service Provider will liaise with CPF |
| Sales proceeds will be credited into Investment Account and if inactive for 2 months, money will be transferred to OA | Sales proceeds automatically transferred to SA |
| Profits cannot be withdrawn | Same |
| No need to make good loss | Same |
| Profits and interest earned are not taxable but dividend is taxed at individual tax rate | Same (since shares are not allowed, hence no dividend) |
| Guaranteed interest at 2.5% | Guaranteed interest at 4% |
Release Of Investment Holdings Upon Member Reaching Age 55
- A member’s investments will be released to him when he withdraws his CPF savings at age 55 after setting aside the Required CPF Minimum Sum and Medisave Required Amount.
- If he is unable to set aside the Required CPF Minimum Sum and Medisave Required Amount, his investments will not be released to him.
- Upon liquidation of the investments, the proceeds will be credited to his CPF Investment Account for CPFIS-OA or Special Account for CPFIS-SA.
- Up to half of all his new contributions (including his proceeds from the sale of investments) will be transferred to top-up the shortfall in his Retirement and/or Medisave Accounts when he applies to withdraw his CPF savings.
- Investment Management Association of Singapore (IMAS)
- Life Insurance Association (LIA), and
- Security Investors Association of Singapore (SIAS)
- When members die (irrespective of whether they were undischarged bankrupts or not), CPF investments and any cash held in their CPF investment account under the CPFIS-OA, as well as investments held under CPFIS-SA, form part of the deceased members’ estate and will be distributed according to applicable laws.
- These investments cease to be protected from deceased members’ creditors under the CPF laws and may be used to satisfy creditors’ claims in accordance with the Probate and Administration Act.
- This applies whether the deceased member is an undischarged bankrupt or not.
The SRS was introduced by the government on 1 April 2001 as a voluntary scheme to encourage working individuals to save for their retirement, over and above their CPF savings, i.e. it complements the CPF scheme.
Eligibility Criteria
- Singaporeans, PRs and foreigners;
- at least 21 years old;
- not undischarged bankrupts; and
- not of unsound mind.
- All SRS contributions and withdrawals must be made in cash only
- Only single premium and recurring single premium polices are allowed
- Life cover (including total and permanent disability benefits) capped at three times the single premium
- Plans can allow for contribution continuation feature/benefit upon disability
- Other types of life insurance, such as Critical Illness Insurance, Health Insurance and Long-term Care Insurance policies are not allowed under the scheme
- SRS investments cannot be used as a collateral
- SRS balance is not protected from creditors
- Flexibility on frequency of contributions and the selling of investments
- Withholding tax is imposed on all SRS withdrawals by foreigners and PRs
- A participant is not allowed to contribute to SRS after he has started to withdraw from his SRS account at or after retirement, or after he has reach the prevailing statutory retirement age, whichever is earlier
Summary Of SRS Regulations Pertaining To Withdrawal Of SRS Savings
| Situation | Max period* allowed for withdrawal | Amount of withdrawal subject to tax | 5% Penalty |
| On or after the prevailing statutory retirement age at the time of first contribution | 10 years** | 50% | No |
| Before the prevailing statutory retirement age at the time of first contribution | N.A. | 100% | Yes |
| Upon Death | N.A. | 50% | No |
| Upon permanent incapacity or on medical grounds 10 years | 50% | No | |
| Bankruptcy | N.A. | 100% | No |
| FULL withdrawal by a foreigner who has maintained his SRS account for at least 10 years from date of first contribution | N.A. | 50% | No |
* Period may be longer if the statutory retirement age has been increased.
** 10-year period does not apply to investments in life annuities. 50% tax concession will apply to annuity streams in perpetuity.
Similarities Between CPFIS And SRS
- both are voluntary schemes;
- both have eligibility criteria;
- investment returns accumulated are tax free except for dividends which are taxed at the individual tax rate (Note: Shares are not one of the CPFIS-SA instruments, hence, no dividend issues where this scheme is concerned);
- life insurance cover (including total and permanent disability benefits) is capped at three times the single premium;
- most financial instruments (except fixed deposits*) do not guarantee investment return;
- both allow investment in single premium and recurrent single premium products including annuities.
Differences Between CPFIS And SRS
| CPFIS-OA | CPFIS-SA | SRS |
| Limits are only set on investments in stock and gold. Members can invest up to the balances in their OA in professionally- managed products allowed under the CPFIS-OA scheme | No limits set on the amount of savings in the SA account that can be used for investment | Sets limits on the amount of contributions that may be made to SRS Account per year |
| Can only use the savings in the OA for investment | Can only use the money in the SA for investment | Can use earned employment income (excluding directors’ fees) as well as income from self-employment for participation in the SRS |
| Members need to open an investment account with one of the approved agent banks | Members need not open any investment account | Participants need to open an SRS account with one of the SRS operators |
| Can only maintain one investment account at any one time | Not applicable | Can only maintain one SRS account at any one time |
| Members may buy and sell their investments through the service/product providers allowed under the scheme | Members may buy and sell their investments through the service/product providers allowed under the scheme | Participants may buy and sell their investments from any financial institution |
Members may buy and sell their investments through the service/product providers allowed under the scheme | Members may buy and sell their investments through the service/product providers allowed under the scheme | Participants may buy and sell their investments from any financial institution |
Can only purchase investment instruments approved under the scheme | Can only purchase investment instruments approved under the scheme | Can purchase any investment instruments available in the market |
Withdrawal of profits is not allowed | Withdrawal of profits is not allowed | Withdrawals allowed at anytime |
| Not applicable | Not applicable | Penalty charge imposed on early withdrawal |
| No charges imposed on the operation of the investment account (Transaction fees and service charges may be imposed by agent banks) | Not applicable | May need to pay charges for operating the SRS account |
Withdrawals are tax-free, with the exception of dividends received which are taxable at individual tax rates | Withdrawals are tax-free | Withdrawals on or after retirement (prevailing retirement age at first contribution), 50% of the amount withdrawn will be subject to tax |
Not applicable | Not applicable | Withdrawal before the statutory retirement age prevailing at first contribution, 100% of the amount withdrawn is subject to tax |
Not applicable | Not applicable | Withholding tax imposed on withdrawals by foreigners and Singapore Permanent Residents based on the rate prevailing at the time of withdrawal |
Investments cannot be assigned, pledged or used as collateral for any loan purposes | Investments cannot be assigned, pledged or used as collateral for any loan purposes | SRS account balance cannot be used as collateral, security or guarantee for any financial transaction outside the SRS |
Investments will form part of the deceased’s estate except for insurance | Investments will form part of the deceased’s estate except for insurance and fixed deposits | Investments will form part of the deceased’s estate |
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