HKSI Licensing Examination Paper 1 (Regulation)

Under the AMLO and the SFC's AML/CFT Guideline, a licensed corporation opening an account for a new client must first:

1. AObtain the SFC's written consent
2. BWait 90 days before any transaction
3. CReport the prospective client to the police as a criminal suspect before opening any account or accepting funds
4. DCarry out customer due diligence to identify and verify the client and any beneficial ownerCorrect

Why: The Anti-Money Laundering and Counter-Terrorist Financing Ordinance requires customer due diligence (CDD): identifying and verifying the customer and beneficial owners and understanding the purpose of the relationship, on a risk-based approach, with enhanced due diligence for higher-risk clients such as politically exposed persons.

General Principle 1 of the SFC Code of Conduct requires a licensed person, in conducting business, to act:

1. ASo as to maximise commission income
2. BIn the firm's own commercial interest first, provided the client is not deliberately deceived during the process
3. CHonestly, fairly, and in the best interests of clients and the integrity of the marketCorrect
4. DOnly within the letter of the law, ignoring fairness

Why: General Principle 1 (Honesty and fairness) requires licensed persons to act honestly, fairly and in the best interests of their clients and the integrity of the market. It is the foundational conduct principle of the Code of Conduct.