Regulations on Conduct of Business MCQs

Welcome to our comprehensive collection of Multiple Choice Questions (MCQs) on Regulations on Conduct of Business, a fundamental topic in the field of IC 14 Regulations of Insurance Business. Whether you're preparing for competitive exams, honing your problem-solving skills, or simply looking to enhance your abilities in this field, our Regulations on Conduct of Business MCQs are designed to help you grasp the core concepts and excel in solving problems.

In this section, you'll find a wide range of Regulations on Conduct of Business mcq questions that explore various aspects of Regulations on Conduct of Business problems. Each MCQ is crafted to challenge your understanding of Regulations on Conduct of Business principles, enabling you to refine your problem-solving techniques. Whether you're a student aiming to ace IC 14 Regulations of Insurance Business tests, a job seeker preparing for interviews, or someone simply interested in sharpening their skills, our Regulations on Conduct of Business MCQs are your pathway to success in mastering this essential IC 14 Regulations of Insurance Business topic.

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Regulations on Conduct of Business MCQs | Page 22 of 32

Discover more Topics under IC 14 Regulations of Insurance Business

Q211.
What should insurers be cautious about regarding payments on insurance contracts according to KYC norms?

a.

Allowing payments to any third parties

b.

Allowing payments only to superannuation/gratuity accumulations

c.

Allowing payments to legal heirs in case of death benefits

d.

Allowing payments only to persons with known criminal backgrounds

Discuss
Answer: (a).Allowing payments to any third parties Explanation:According to KYC norms in insurance, insurers should not allow payments on insurance contracts to third parties except in cases like superannuation/gratuity accumulations and payments to legal heirs in case of death benefits. This requirement helps prevent misuse of insurance funds for fraudulent or illegal activities.
Q212.
How does the insurance business compare to other participants in the financial sector in terms of vulnerability to money laundering?

a.

It is more vulnerable

b.

It is less vulnerable

c.

It is equally vulnerable

d.

It is immune to money laundering

Discuss
Answer: (b).It is less vulnerable Explanation:The insurance business is relatively less vulnerable to money laundering compared to other participants in the financial sector, such as banks. While it is not completely immune, certain enabling features of insurance contracts can be misused by money launderers, making it important for insurance companies to implement robust anti-money laundering (AML) measures.
Q213.
What are some enabling features of insurance contracts that can be misused for money laundering purposes?

a.

Free look period, single premiums, top-ups

b.

Premium payments, death benefits, policy loans

c.

Policyholder dividends, beneficiary designations, policy surrenders

d.

Underwriting, claims processing, policy issuance

Discuss
Answer: (a).Free look period, single premiums, top-ups Explanation:Enabling features of insurance contracts that can be misused for money laundering purposes include "free look period," "single premiums," and "top-ups." These features provide opportunities for money launderers to exploit insurance products for their illicit activities.
Q214.
What responsibility do insurance companies have regarding anti-money laundering (AML) programs according to IRDA guidelines?

a.

Responsibility lies with the government

b.

Responsibility lies with the policyholders

c.

Responsibility lies with the insurance companies

d.

Responsibility lies with the reinsurers

Discuss
Answer: (c).Responsibility lies with the insurance companies Explanation:According to IRDA guidelines, insurance companies have the responsibility for implementing robust anti-money laundering (AML) programs to guard against the misuse of insurance products for money laundering or financing terrorist acts.
Q215.
What is the role of the senior level officer appointed by insurance companies in implementing AML programs?

a.

To handle customer complaints

b.

To oversee claims processing

c.

To implement the AML program and monitor compliances

d.

To manage investment portfolios

Discuss
Answer: (c).To implement the AML program and monitor compliances Explanation:The senior level officer appointed by insurance companies, such as the Chief Risk Officer, is responsible for implementing the AML program and monitoring compliances. This includes ensuring adherence to AML guidelines, conducting periodic risk management reviews, and maintaining a strong ethical and control environment within the company.
Q216.
Why are restrictions placed on acceptance of cash beyond Rs. 50,000 in premium or proposal deposit remittances in the insurance sector?

a.

To encourage cash transactions

b.

To prevent money laundering processes

c.

To simplify transactions

d.

To promote transparency in financial dealings

Discuss
Answer: (b).To prevent money laundering processes Explanation:Restrictions are placed on acceptance of cash beyond Rs. 50,000 in premium or proposal deposit remittances in the insurance sector to prevent money laundering processes. Cash transactions are highly vulnerable to money laundering, as they leave no audit trail, making it essential to impose limits to mitigate this risk.
Q217.
What is the purpose of setting up Financial Intelligence Units (FIUs) in various jurisdictions?

a.

To facilitate money laundering processes

b.

To analyze financial transactions

c.

To aid in investigations on money laundering and terrorist financing

d.

To promote transparency in financial systems

Discuss
Answer: (c).To aid in investigations on money laundering and terrorist financing Explanation:The purpose of setting up Financial Intelligence Units (FIUs) in various jurisdictions is to aid in investigations on money laundering and terrorist financing. FIUs serve as centralized units to have a macro-level view of all transactions in the financial system, facilitating the detection and prevention of illicit financial activities.
Q218.
What is the obligation of financial institutions regarding reporting to the Financial Intelligence Unit in India (FIU-IND)?

a.

Reporting all cash transactions regardless of the amount

b.

Reporting transactions involving proceeds of crime or financing terrorism

c.

Reporting transactions involving counterfeit currency notes

d.

Reporting all transactions exceeding Rs. 1 lakh

Discuss
Answer: (b).Reporting transactions involving proceeds of crime or financing terrorism Explanation:Financial institutions in India are obligated to report certain transactions to the Financial Intelligence Unit (FIU-IND), including suspicious transactions whether or not made in cash, which may involve proceeds of crime or financing of activities relating to terrorism. This duty helps in combating money laundering and terrorist financing activities.
Q219.
How long are records of transactions reported to the FIU required to be retained by insurance companies?

a.

5 years

b.

7 years

c.

10 years

d.

Indefinitely

Discuss
Answer: (c).10 years Explanation:Records of transactions reported to the Financial Intelligence Unit (FIU) are required to be retained by insurance companies for a period of 10 years beginning from the date of occurrence of the transaction. This ensures that there is a comprehensive audit trail for investigative purposes.
Q220.
What are the record-keeping requirements for customer identification data according to AML guidelines?

a.

Retained for 5 years after the relationship with the customer has ended

b.

Retained for 7 years after the relationship with the customer has ended

c.

Retained for 10 years after the relationship with the customer has ended

d.

Retained indefinitely

Discuss
Answer: (c).Retained for 10 years after the relationship with the customer has ended Explanation:According to AML guidelines, records of customer identification data must be retained by insurance companies for a period of 10 years after the relationship with the customer has ended. This ensures that there is a comprehensive record of customer interactions and transactions for regulatory compliance and audit purposes.
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