Free CISI Global Financial Compliance mock exam

Not quite. The answer is A.

A recognised investment exchange (RIE) sets the highest listing and disclosure standards of any venue, and this is what builds investor confidence and attracts a deep pool of capital. Lower cost and faster execution describe an MTF, deliberately run as 'exchange lite' with no listing process. Full operator discretion over execution describes an OTF, whose operator uses judgement when matching orders. No venue is exempt from oversight - an RIE is itself supervised by the national regulator, so exemption is the opposite of reality.

Not quite. The answer is D.

The division of labour that regulators formalise between themselves gives the home supervisor a firm's structure and organisation, meaning capital and authorisation in the country of incorporation, while the host supervisor takes customer-facing conduct wherever the firm actually operates. The home supervisor is the natural trap because it owns the prudential side, but that is not the same as day-to-day dealings with local customers. A supervisory college coordinates the authorities involved rather than displacing the split.

Not quite. The answer is C.

Technology can aggregate or filter data that may indicate potential compliance problems, such as a rising number of complaints or irregular trading activity. It does not approve new client accounts, which remains a controlled human decision, it cannot replace the head of compliance, and dividend policy is a board matter unconnected with compliance indicators.

Not quite. The answer is A.

An effective compliance function is meant to be seen as a business enabler that contributes to innovation and development, not the stereotypical 'business-prevention unit' image compliance can otherwise attract. It remains independent of the regulator rather than an extension of it, and is not subordinate to the commercial desks it monitors.

Not quite. The answer is B.

FATF defines the beneficial owner as the natural person who ultimately owns or controls an asset, or on whose behalf a transaction is conducted, which is why identifying the ultimate controlling individual sits at the centre of know-your-customer work. An administering firm merely operates the account, a signatory may simply be an authorised employee, and a registered nominee is often the very device used to conceal the true owner.

Not quite. The answer is B.

To be effective, an organisation must commit to its anti-corruption programme from the board down through senior management and the lower levels of the organisation, with policies put in place, acted upon and regularly monitored. Leaving the programme to compliance alone removes the top-level leadership that makes it credible. Adoption by front-office staff only leaves the rest of the business outside it, and an annual audit certificate is a check on the programme rather than a substitute for organisation-wide commitment.

Not quite. The answer is D.

Firms are expected to act in the client's best interest and avoid bias in recommendations arising from commission or other remuneration, so favouring a higher-commission product over an equally suitable alternative breaches this principle. The law of succession, contract term restrictions, and powers of attorney are unrelated legal concepts that do not govern advice bias.

Not quite. The answer is D.

Due diligence on a hedge fund typically examines its disclosed investment strategy, its historical returns, its assets under management and its audited financial statements, so that an investor can judge whether the fund matches their horizon and risk tolerance. The personal tax returns of the fund's investors are private and reveal nothing about the fund, the salaries of cleaning staff are immaterial to it, and the reviewing firm's own audit committee minutes are its internal documents rather than evidence about the fund.