Ethics, Integrity, Conduct and Anti-Money Laundering
This domain tests conduct standards and the practical AML/CFT duties that come with handling client money.
Conduct standards
Integrity, fairness, confidentiality, competence and client priority. Conflicts must be identified, disclosed and managed; personal account dealing and gifts need pre-clearance under firm policy. Market abuse - insider dealing, manipulation, false trading, front running - is an offence under ISA 2025 and a disciplinary matter.
The AML/CFT framework
The Money Laundering (Prevention and Prohibition) Act 2022, SEC AML/CFT rules and NFIU guidance impose a risk-based approach:
- Customer due diligence before the relationship; enhanced due diligence for PEPs, high-risk jurisdictions and complex structures.
- Beneficial ownership identified for corporate and trust clients.
- Ongoing monitoring and periodic KYC refresh.
- Currency transaction and suspicious transaction reports go to the NFIU, not SEC, and there must be no tipping off.
- Five-year record retention, sanctions screening and staff training.
- Capital market operators are reporting financial institutions; SCUML registration applies to designated non-financial businesses.
Worked example
A new client wants to place ₦40m cash into a bond fund, says it came from a contract but has no documents, and asks to pay from a friend's account. Reasoning: cash intensity, unclear source of funds and a third-party payer are red flags. Do not onboard; request source-of-funds evidence, obtain senior management approval for any continuation, refuse third-party payment, and file a suspicious transaction report with the NFIU without alerting the client.
Traps
Sending reports to SEC; relying on long acquaintance instead of CDD; assuming AML is banking-only; tipping off the client.