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 4 of 32

Discover more Topics under IC 14 Regulations of Insurance Business

Q31.
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.
Q32.
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.
Q33.
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.
Q34.
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.
Q35.
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.
Q36.
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.
Q37.
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.
Q38.
Why is it important for insurance companies to have adequate screening procedures when hiring employees and agents?

a.

To increase paperwork

b.

To discourage genuine employees

c.

To prevent misuse of the insurance sector by money launderers

d.

To limit the number of employees and agents

Discuss
Answer: (c).To prevent misuse of the insurance sector by money launderers Explanation:It is important for insurance companies to have adequate screening procedures when hiring employees and agents to prevent misuse of the insurance sector by money launderers. Proper screening helps ensure that individuals with questionable backgrounds or intentions are not able to infiltrate the system and exploit it for illicit activities.
Q39.
What is the role of employees and agents in effective compliance with Anti-Money Laundering (AML) and Counter Financing of Terrorism (CFT) programs?

a.

They handle customer complaints

b.

They process claims

c.

They collect premiums

d.

They provide face-to-face interaction with customers and may identify suspicious activities

Discuss
Answer: (d).They provide face-to-face interaction with customers and may identify suspicious activities Explanation:The role of employees and agents in effective compliance with AML/CFT programs is to provide face-to-face interaction with customers and may identify suspicious activities. They are in a position to access information about customers, which can provide leads on suspicious financial transactions, making their training on AML/CFT crucial.
Q40.
Why is it important for employees and agents to be properly trained on AML/CFT?

a.

To increase paperwork

b.

To discourage genuine employees

c.

To bring about awareness on possible misuse of the financial system by money launderers

d.

To limit the number of employees and agents

Discuss
Answer: (c).To bring about awareness on possible misuse of the financial system by money launderers Explanation:It is important for employees and agents to be properly trained on AML/CFT to bring about awareness on possible misuse of the financial system by money launderers. This training helps them recognize suspicious activities and take appropriate action to prevent illicit financial transactions.
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