Scenario

Targa Bank (TB) has been operating as a retail bank in Singapore, regulated by the MAS, for six years. TB’s parent company is based in London, England and has been operating in the UK for eight years. The bank’s last annual report reaffirmed the board’s commitment to continue aggressive expansion throughout the UK and Singapore and an objective to open branches in other jurisdictions. You have worked in the Singapore branch compliance department for three years.

In the last annual report, issued in April 2021, the board reaffirmed their 2020 to 2023 strategy, which specifically included:

• to embrace technology by building an integrated payment solution to increase customer ease of access

• to increase revenue by 20% and profits by 30%

• to further increase shareholder value by reducing overheads

• to open branches in Africa and Malaysia

• to launch a series of new products aimed at the high-net-worth market. At 5pm yesterday you were called to attend a meeting with the compliance director.

As you headed to the meeting room you noticed all the staff heading to various large meeting rooms although nobody was aware of the purpose of these meetings. Once seated, the compliance director announced that all staff had been called in to meet their department heads to be advised that the morning news would report that the MAS has handed TB a composition penalty of S$1.2 million for AML/CFT failures.

She outlined the issues that led to the penalty and sought to reassure her staff that the lapses are historic and that the firm is fully committed to improving matters within two years. The specific issues identified were:

a) TB failed to adequately investigate unusually large or unusual patterns of customer transactions that appeared to serve no obvious economic purpose or objective

b) TB failed to establish, by appropriate and reasonable means, basic information such as source of wealth and source of funds before onboarding customers who presented a higher risk of money laundering or terrorism financing

c) TB often relied on the customers’ declarations, without obtaining further information to corroborate them

d) TB’s senior management had very poor and ineffective oversight and contributed to an unacceptable risk culture

e) during the onboarding of new customers, TB failed to include geographic risk as a factor when deciding the level of customer risk.

Question 1

Based on the above scenario, produce a note from the compliance function’s point of view for the head of compliance, 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 functional and operational process perspectives) for TB in its efforts to remediate the findings of the regulator.

Question 2

The following day the compliance director advises you that she has put together a project team to lead the firm’s efforts to deal with the matters leading to the fine. Your first task is to prepare a proposal for the senior management that outlines the strategies and policies to be implemented in response to the fine.

Question 3

The perceptions of the staff and the public need to be managed well at such a time. In order to help with this you have been tasked with producing compliance-specific mission and vision statements for the firm (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.

Question 4

Based on the scenario, complete a Stakeholder Management and Communication Plan (using appropriate tools), identifying the five most influential stakeholder groups that you would want to address.

Question 5

As part of the compliance strategic plan to address the deficiencies, you have been asked to produce a note for the compliance director to outline the strategic KPIs of the compliance department staff. Your note should include the plans for assessing their performance against the KPIs.