The Securities and Futures (Financial Resources) Rules (FRR) set out specific requirements for how a licensed corporation must prepare its financial statements for regulatory capital calculations. Statement I is correct because the FRR mandates that transactions be recognised on their trade date, not the settlement date, to accurately reflect the firm’s immediate financial commitments. Statement II is correct as a fundamental principle of the FRR is to recognise the economic substance of transactions over their legal form, ensuring the true financial position is captured. Statement IV is correct because the FRR requires the inclusion of off-balance sheet liabilities to provide a comprehensive view of the corporation’s obligations, unless the SFC has specifically permitted their exclusion. Statement III is incorrect because while the balance sheet must be prepared in accordance with generally accepted accounting principles (like HKFRS), the FRR requires specific adjustments (such as using trade dates and including certain off-balance sheet items) that go beyond standard accounting presentation. Therefore, statements I, II and IV are correct.

Under the Securities and Futures Ordinance (SFO), specifically sections 271 and 292, several defences are available against an allegation of insider dealing. One such defence is the ‘excluded purpose’ defence. This defence applies if the person can demonstrate that the purpose for which they dealt in the securities (or counselled or procured another to deal) was not for making a profit or avoiding a loss by using the inside information. In the scenario presented, Mr. Lau’s claim that the sale was to fund a medical emergency directly invokes this defence. However, the burden of proof lies with him to convince the Market Misconduct Tribunal or a court that this was his genuine and sole purpose, and that the timing relative to the negative news was coincidental rather than a calculated move to avoid a loss. The other options misrepresent other SFO defences. The ‘exercise of an existing right’ defence applies to rights like share options acquired before possessing inside information, not to a discretionary sale of existing shares. The ‘Chinese Wall’ defence is an institutional defence for corporations to separate departments possessing inside information from those that trade, and it is not applicable to an individual director acting on their own behalf. Lastly, insider dealing is not a strict liability offence; the SFO explicitly provides for these defences, which consider the person’s purpose and circumstances.

According to the Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission, a licensed or registered person must provide a client with a monthly statement of account. This obligation exists if, during the monthly period, there has been any activity in the account (such as transactions), if there is an outstanding cash balance, or if the licensed person has held any client assets (including securities) on behalf of the client. The requirement to send a statement is waived only if the account has been inactive, there is no outstanding balance, and no client assets have been held during the reporting period. Therefore, the mere holding of securities, even with no transactions and a zero cash balance, triggers the requirement to issue a monthly statement.

This question assesses the understanding of Section 175 of the Securities and Futures Ordinance (SFO) concerning advertisements and offers made by intermediaries. Section 175 generally prohibits the issuance of advertisements that invite the public to enter into agreements to deal in securities or other regulated products. However, a crucial exemption exists under s. 175(5)(a) for communications made by a licensed or registered person to their clients in the ordinary course of carrying on a regulated activity. Therefore, a licensed representative communicating with their existing clients is generally exempt from the advertising prohibition in s. 175. Despite this exemption, the intermediary must still adhere to all other applicable regulatory requirements, most notably those within the SFC’s Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission. This includes General Principle 2 (Diligence), which requires information provided to clients to be accurate and not misleading, and Paragraph 5.2 (Suitability), which mandates that any recommendation or solicitation made to a client must be reasonably suitable for that client, having regard to their financial situation, investment experience, and investment objectives. Sending a communication about a complex product without considering these factors would breach the Code of Conduct, even if the communication itself is exempt under s. 175.

The Securities and Futures (Client Money) Rules and the Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission mandate specific disclosures in daily statements for margin accounts to ensure client transparency. Statement I is correct as the daily statement must show all floating profits and losses on open positions to give the client a clear picture of their unrealised P&L. Statement II is correct because informing the client of their margin excess or shortfall is a critical daily risk management function. Statement IV is also correct; details of closed transactions, including the realised P&L and whether the closure was initiated by the firm (e.g., a forced liquidation), must be disclosed. However, Statement III is incorrect. The expiry date of the overall margined transactions arrangement is a contractual term established in the client agreement and is not a piece of information that changes daily; therefore, it is not a required component of a daily transactional statement. Therefore, statements I, II and IV are correct.

The Securities and Futures (Keeping of Records) Rules and the Securities and Futures (Contract Notes, Statements of Account and Receipts) Rules are not intended to penalise genuine administrative errors or technical mistakes where there is no fraudulent intent and a reasonable excuse can be demonstrated. The SFC’s enforcement approach considers the context and materiality of any non-compliance. Statement I is incorrect because a breach is not automatically a strict liability offence leading to severe penalties; the element of intent or lack of reasonable excuse is critical. Statement IV is an extreme and incorrect exaggeration of the consequences for a minor, isolated error. Conversely, Statement II accurately reflects the regulatory focus on non-compliance committed with an intent to defraud or without a reasonable excuse. Statement III is also correct, as the SFC would consider mitigating factors such as the isolated nature of the incident, the absence of client detriment, and the firm’s overall control environment when assessing the situation. Therefore, statements II and III are correct.

Under Hong Kong’s anti-money laundering and counter-terrorist financing regime, specifically ordinances like the Drug Trafficking (Recovery of Proceeds) Ordinance (DTRPO) and the Organized and Serious Crimes Ordinance (OSCO), a person has a legal obligation if they know or suspect that property is connected to an indictable offence. The primary duty in such a situation is to report these suspicions to an authorised officer as soon as it is reasonable to do so. Within a licensed corporation, this report is typically made to the designated Money Laundering Reporting Officer (MLRO) or compliance department, who will then assess the situation and file a Suspicious Transaction Report (STR) with the Joint Financial Intelligence Unit (JFIU). This legal obligation to report overrides any duty of confidentiality owed to the client. Furthermore, it is a separate offence, known as ‘tipping off’, to disclose to the client or any third party that a report has been made or is being considered, as this could prejudice an investigation. Therefore, continuing with the transaction, refusing it without reporting, or warning the client are all inappropriate and potentially illegal actions.

According to the Securities and Futures (Client Money) Rules and the Securities and Futures (Client Securities) Rules, a licensed corporation or an associated entity must issue a receipt whenever it receives client assets. This receipt must be provided no later than the end of the second business day following the receipt of the assets. However, there are specific exemptions to this requirement. A receipt is not required if client money is deposited directly by the client into the intermediary’s designated bank account, as the bank’s deposit slip serves as evidence. Similarly, no separate receipt is needed if scrip securities are deposited directly with the intermediary’s custodian and the custodian issues a receipt to the client. Another key exception is when the required information is already included in a contract note or statement of account that explicitly states it also serves as a receipt. When an intermediary’s employee directly receives a client asset, such as a physical cheque at their office, none of these exceptions apply, and the firm is therefore obligated to issue a formal receipt to the client to acknowledge the transaction and ensure a proper audit trail.

Under the Securities and Futures (Financial Resources) Rules (FRR), a licensed corporation’s liquid capital is calculated as its liquid assets minus its ranking liabilities. This calculation is crucial for ensuring the firm has sufficient liquid resources to meet its obligations as they fall due and to wind down its business in an orderly manner if necessary. Ranking liabilities represent all liabilities of the corporation, with certain specific exceptions. Common examples of ranking liabilities include trade payables, amounts due to counterparties and clearing houses, bank overdrafts, loans, accrued expenses (such as salaries and rent), and tax payable. A key item to include is any provision for a contingent liability, provided that the liability is probable and its amount can be reasonably estimated. This is because it represents a likely future outflow of economic resources. Conversely, certain liabilities are excluded. A critical exclusion is any amount payable to a client that is held in a segregated account maintained in accordance with the Securities and Futures (Client Money) Rules. These funds are legally separated from the firm’s own money and are protected for the benefit of clients, so they are not included in the ranking liabilities calculation. Assets, such as investments in securities or prepaid expenses, are part of the liquid assets side of the calculation (often subject to haircuts) and are not liabilities at all.

According to the Securities and Futures (Licensing and Registration) (Information) Rules, a licensed corporation is required to notify the SFC in writing of any changes to the ‘relevant information’ submitted during its license application. This notification must be made within 7 business days of the change. The ‘relevant information’ is detailed in Schedule 1 of the Rules. A change in the appointed auditor of the licensed corporation is explicitly listed as a notifiable event. Other events, such as minor, non-criminal offenses by personnel, or internal administrative changes that do not affect the corporation’s regulatory status or information held by the SFC, are generally not reportable. Similarly, while changes concerning associated entities are reportable, they are limited to specific details like changes in executive officers, not typically non-executive roles at a distant parent company level. The key is to distinguish between significant corporate changes that impact regulatory oversight and routine internal or minor personal matters.

This question assesses the understanding of key internal controls required for licensed corporations under the SFC’s Internal Control Guidelines (ICG). Statement I describes a robust asset protection measure by establishing clear authority and parameters for client asset movements, which is a core principle of safeguarding client assets. Statement II outlines a fundamental back-office procedure for trade reconciliation, ensuring accuracy and the identification of errors by comparing internal records with external reports, as recommended by the ICG. Statement III details an effective risk management technique for derivatives trading, highlighting the importance of having properly established and enforced margin collection policies to mitigate credit and liquidity risks. Statement IV, however, describes a serious breach of ‘Chinese Wall’ principles. Sharing price-sensitive information from the corporate finance department with the proprietary trading desk creates a significant conflict of interest and potential for insider dealing, which is strictly prohibited. Effective internal controls require the strict segregation of departments that handle non-public, price-sensitive information from those that engage in trading activities. Therefore, statements I, II and III are correct.

This question assesses the understanding of specific market misconduct offences under the Securities and Futures Ordinance (SFO), particularly the offence commonly known as ‘bucketing’. Section 302 of the SFO makes it a criminal offence for a person to represent that a futures contract has been executed on behalf of another person when, in fact, no such transaction has been carried out. This is a serious form of deception that undermines client trust and the integrity of the futures market. It is important to distinguish this specific offence from other forms of market misconduct. For instance, general fraudulent or deceptive acts are covered under Section 300 of the SFO, but Section 302 provides a more precise definition for the act of falsely claiming a futures trade was executed. Insider dealing, defined in Part XIII and Part XIV of the SFO, involves trading on non-public, price-sensitive information and is not relevant to this scenario. Market manipulation involves actions intended to interfere with the fair and orderly operation of the market, which is different from deceiving a single client about the execution of their order.

This question assesses the understanding of the roles, responsibilities, and reporting lines of internal and external audit functions within a licensed corporation, as guided by the SFC’s Internal Control Guidelines.

Statement I is incorrect. For the internal audit or review function to be effective, it must be independent of the operational areas it reviews. Reporting to the Head of Operations would create a direct conflict of interest and compromise its objectivity. The guidelines state it should report directly to senior management (such as the CEO or the Board) or an audit committee, and be free of operating responsibilities.

Statement II is correct. External auditors may coordinate with and rely on the work performed by an internal audit function. However, this is conditional. The external auditors must first satisfy themselves as to the competence, experience, and, critically, the independence and authority of the internal audit staff. This collaboration can improve efficiency but does not absolve the external auditor of their ultimate responsibility.

Statement III is incorrect. Senior management cannot unilaterally limit the scope of an external audit. External auditors have a statutory duty to the company’s shareholders and regulatory obligations to bodies like the SFC. While management and auditors agree on an engagement letter, this cannot override the auditor’s professional judgment and legal responsibilities to perform a thorough audit.

Statement IV is correct. A fundamental responsibility of senior management is to ensure that the findings from any audit or review, whether internal or external, are not ignored. They must establish and oversee a process for timely reporting of findings and ensure that appropriate follow-up actions are taken to rectify any identified control weaknesses. Therefore, statements II and IV are correct.

According to the HKCC Rules concerning settlement defaults, HKCC has several remedies. Statement I is correct because if the contract specifications allow for more than one type or issue of an underlying commodity, HKCC has the discretion to deliver an appropriate alternative to the buying participant. Statement II is correct as the rules explicitly state that if the underlying commodity is not freely available, the Chairman of the Board of HKCC, in consultation with the SFC, can determine a final cash compensation amount in lieu of physical delivery. Statement IV is also correct; one of HKCC’s primary tools in a delivery default is to effect a buy-in or borrow the required commodity to ensure the delivery obligation is met. However, Statement III is incorrect. The HKCC Rules explicitly state that HKCC is not liable to a participant for any loss or damage arising from a late settlement caused by another participant’s failure to meet its obligations. Therefore, statements I, II and IV are correct.

Statement I is incorrect. According to the rules of the Hong Kong Futures Exchange (HKFE) and the HKFE Clearing Corporation Limited (HKCC), HKCC participantship is not open to anyone other than HKFE Participants. Therefore, a firm must first be registered as an HKFE Participant before it can apply to become an HKCC Participant. Statement II is correct. This accurately describes the specific function of an HKFE Participant registered as a ‘Broker’. They can act as an agent for another HKFE Participant to conclude trades but are explicitly not allowed to carry a trading account for them. Statement III is correct. This is a unique and specific condition for an applicant seeking HKFE participantship in the ‘Trader’ category. The ownership, management, and control of the entity must be effectively vested in a single individual. Statement IV is incorrect. The ‘Futures Commission Merchant’ (FCM) category is the most comprehensive. An FCM is entitled to trade in contracts on its own account, for the account of other HKFE Participants, and for the account of any other persons (i.e., clients). The statement incorrectly restricts them from proprietary trading. Therefore, statements II and III are correct.

This question assesses understanding of General Principle 9 of the SFC Code of Conduct, which addresses senior management responsibility. The principle states that a firm’s senior management is primarily responsible for ensuring appropriate standards of conduct and adherence to procedures. In determining where responsibility lies, the SFC considers an individual’s apparent or actual authority over the specific business operation. The Manager-In-Charge (MIC) regime further clarifies this by assigning principal responsibility for core functions to specific individuals. In this scenario, while the representative is accountable for their direct actions and the compliance function has a monitoring role, the primary responsibility for the standards, supervision, and procedures within the private wealth division rests with the senior manager who has direct authority over it—the MIC for that key business line. This individual is expected to properly manage the risks associated with their business area, including ensuring that staff are properly trained and supervised and that internal controls are effective.

According to the Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission, when a licensed corporation deals in futures and options, it should provide clients with an additional risk disclosure statement. Statement I is correct because this disclosure must specifically explain the effect of ‘leverage’ or ‘gearing’ in futures trading, where a small market movement can lead to a large impact on the client’s funds. Statement II is correct as the Code of Conduct allows for client identity documents to be certified by a professional person, which includes a bank branch manager, for non-face-to-face account opening. Statement III is incorrect; disclosing risks of electronic trading does not exempt a firm from disclosing other potential risks, such as those related to off-exchange transactions, which must be covered in the comprehensive risk disclosure. Statement IV is incorrect because while a Justice of the Peace is an acceptable certifier, it is not the sole mandatory option; other professionals like lawyers, certified public accountants, or bank branch managers are also permitted. Therefore, statements I and II are correct.

Under the HKFE Rules, every HKFE Participant has a set of general continuing obligations. One of the most critical is ensuring that all its trades can be properly cleared. This is achieved through one of two methods as stipulated in Rule 530. The participant must either become an HKCC Participant itself (as a General or Clearing Participant) to handle its own clearing, or, if it operates as a Non-Clearing Participant, it must enter into a formal, legally binding agreement with a General Clearing Participant of HKCC to clear all its contracts. This ensures the integrity of the clearing and settlement system. In contrast, while participants must be limited companies incorporated in Hong Kong, there is no requirement for them to be publicly listed. The rules also mandate that a participant must hold at least one HKFE trading right, but there is no provision that requires this number to increase based on the size of its client base. Finally, while financial reporting to the regulator is required under the FRR, a specific obligation to send audited statements to all clients quarterly is not a prescribed continuing obligation under the HKFE Rules.

Under the Securities and Futures Ordinance (SFO), regulated activities are defined broadly to capture various intermediary functions. Statement I is correct because the definition of Type 2 regulated activity (‘dealing in futures contracts’) explicitly includes introducing persons to each other with the intention that they negotiate or conclude sales or purchases of futures contracts that result in a binding transaction. Statement II is correct as providing an electronic system or facility where offers to buy or sell financial products (including futures contracts) are made, or which connects parties to effect transactions, falls under the definition of Type 7 regulated activity (‘providing automated trading services’). Statement IV is also correct; individuals performing a regulated function for a licensed corporation, such as operating the introduction service, must be licensed as representatives. The SFO provides specific exemptions for staff performing purely clerical or administrative duties (like accountants, clerks, or cashiers), but not for those actively involved in the regulated function itself. Statement III is incorrect because the SFO regulates the act of intermediation itself. A firm does not need to handle client assets or execute the final trade to require a licence; the act of introducing parties or providing an automated trading platform is sufficient to trigger the licensing requirement. Therefore, statements I, II and IV are correct.

In Hong Kong’s legal framework for combating financial crime, several key ordinances have distinct roles. The Anti-Money Laundering and Counter-Terrorist Financing Ordinance (AMLO) is the primary legislation that imposes preventative obligations on financial institutions, including licensed corporations. It specifically mandates the implementation of Customer Due Diligence (CDD) and record-keeping procedures as outlined in its schedules. In contrast, the Drug Trafficking (Recovery of Proceeds) Ordinance (DTRPO) and the Organized and Serious Crimes Ordinance (OSCO) are the principal statutes that criminalize the act of money laundering itself and provide for the confiscation of criminal proceeds. The United Nations (Anti-Terrorism Measures) Ordinance (UNATMO) is primarily concerned with implementing United Nations Security Council resolutions, such as freezing the assets of designated terrorists and terrorist associates.

Under the Securities and Futures Ordinance (SFO), the definition of a ‘futures contract’ for licensing purposes is specific and does not encompass all instruments that might be considered derivatives internationally. Statement I is incorrect because a convertible bond is a hybrid instrument but is regulated as a ‘security’ under the SFO, requiring a Type 1 (Dealing in Securities) license, not a Type 2 license. Statement II is incorrect because while a forward contract is a derivative, the SFO’s definition of a ‘futures contract’ generally applies only to those traded on a futures market or exchange, not to bilaterally agreed over-the-counter (OTC) contracts. Statement III is correct; the SFO explicitly includes contracts for differences (CFDs) within the definition of a ‘futures contract’ when they are made under the rules or conventions of a futures market. Statement IV is also correct as the SFO definition of a ‘futures contract’ explicitly includes an option on a contract that is itself a futures contract, particularly when traded on a designated futures exchange. Therefore, statements III and IV are correct.

Under the Securities and Futures (Client Securities) Rules, a licensed corporation can only deal with a client’s securities based on a specific direction or a valid standing authority. A standing authority allows the firm to use the client’s securities for purposes like pledging them as collateral for financial accommodation. A key feature of this authority is its limited duration; it is only valid for a maximum period of 12 months from the date it is granted. Before this period expires, if the firm wishes to continue the arrangement, it must explain the consequences to the client and obtain a renewed written authority. However, for any use within the valid 12-month period, the firm’s primary obligation is to ensure that the authority granted by the client remains effective. This means verifying that the 12-month period has not lapsed and that the client has not issued any instruction to withdraw or revoke the authority. While other operational procedures and future renewal requirements are important, the fundamental prerequisite for acting upon the authority is its current validity.

The Securities and Futures (Keeping of Records) Rules stipulate specific minimum retention periods for records maintained by licensed corporations. The general rule requires that most records, including those that explain the intermediary’s business operations, financial position, and transactions, must be kept for a period of not less than 7 years. This includes items such as ledgers, trial balances, client account opening documentation, and statements of account. However, there is a specific exception for records that show the particulars of orders and instructions received from or given to clients. These particular records are only required to be kept for a period of not less than 2 years. Therefore, when determining which records can be disposed of, a firm must distinguish between general accounting and business records (7-year rule) and specific client order/instruction records (2-year rule).

This question assesses the understanding of documentation requirements under the SFC Code of Conduct, specifically concerning margined transactions and arrangements between multiple intermediaries. For margined transactions, such as futures contracts, an intermediary must provide the client with a daily statement of account. This statement must be issued no later than the end of the second business day following the event (e.g., opening or closing a position). Furthermore, when a client is served by two intermediaries in Hong Kong (like an introducing broker and an executing broker), they can have a written agreement stipulating which firm is responsible for issuing client documentation like contract notes and statements. This arrangement prevents duplication of documents. In the given scenario, the executing broker is designated by a written agreement to handle documentation, and since a futures position was opened, the specific rules for daily statements of account, including the T+2 deadline, apply.

According to the SFC’s Internal Control Guidelines, a licensed corporation must have robust procedures for its back office operations. A key function is the reconciliation of trades. When a discrepancy is found between an internal record (like a deal ticket) and an external report (from an exchange or counterparty), it signals a potential error. The proper procedure is not to unilaterally correct the record, as this would break the audit trail. Instead, the discrepancy should be formally recorded in a designated account, often called an error account or suspense account. This action isolates the problematic trade, ensures it is not processed incorrectly, and creates a formal record that triggers an investigation by appropriate personnel, such as a supervisor, compliance, or internal audit. This process maintains the integrity of the firm’s records and ensures that dealing errors are promptly identified, investigated, and rectified in a controlled manner.

According to the Securities and Futures (Contract Notes, Statements of Account and Receipts) Rules, a licensed corporation is required to provide a client with a monthly statement of account. This obligation is triggered if, during the month, there has been any activity in the client’s account (such as purchases, sales, deposits, or withdrawals) OR if, at the end of the month, there is an outstanding balance in the account. An ‘outstanding balance’ refers to any money or securities held by the licensed corporation for that client. Therefore, even if a client does not trade or move funds during a particular month, the presence of a securities portfolio or a cash balance at the month’s end necessitates the issuance of a monthly statement. The statement must detail all transactions, the quantity and description of securities held, and any money balance at the beginning and end of the period.

Under the Securities and Futures Ordinance (SFO), the regulatory oversight of financial institutions in Hong Kong is structured to ensure clarity and avoid duplication. For entities that are both Authorized Institutions (AIs) under the Banking Ordinance and Registered Institutions (RIs) for conducting regulated activities, a ‘lead regulator’ principle applies. The Hong Kong Monetary Authority (HKMA) is primarily responsible for the prudential supervision of the AI, focusing on its financial soundness, capital adequacy, and overall stability. In contrast, the Securities and Futures Commission (SFC) is the lead regulator for supervising the conduct of the RI and its relevant individuals when they are engaged in regulated activities, such as advising on securities or dealing in futures contracts. This division of responsibility, formalized in a Memorandum of Understanding between the two regulators, ensures that the SFC’s expertise in market conduct is applied consistently across all licensees and registrants, while the HKMA maintains its focus on banking stability.

This question assesses understanding of the internal control responsibilities of senior management under the SFC Code of Conduct. Statement I is correct as Paragraph 3.9 of the Code of Conduct requires intermediaries to have procedures to ensure a complete audit trail for client orders, including time-stamping. Statement II is correct because General Principle 8 and Paragraph 4.1 require proper safeguards for client assets, which includes defining the authority of staff handling such assets to prevent misappropriation. Statement III is correct as Paragraph 4.1 also mandates regular reconciliations of records to detect errors and discrepancies, ensuring the integrity of asset records. Statement IV is incorrect. While senior management can delegate the performance of tasks, they retain the ultimate responsibility for the adequacy and effectiveness of the firm’s internal control systems and cannot delegate this ultimate accountability to another department or individual. This is a core principle of management accountability (General Principle 9). Therefore, statements I, II and III are correct.

This question assesses the understanding of regulatory requirements for registered institutions under the Securities and Futures Ordinance (SFO). Statement I is correct because the SFO mandates that a registered institution must appoint at least two executive officers for each regulated activity it conducts. Statement III is also correct, as the rules require that at all times, at least one executive officer must be available to supervise the business of the regulated activity. Statement II is incorrect; the 7-business-day notification requirement to the SFC applies when a licensed representative ceases to be employed by a licensed corporation. For a relevant individual of a registered institution, their name is maintained on a register by the HKMA, which has its own notification procedures. Statement IV is incorrect because the requirement is to display the original certificate at the head office and certified copies at all other places of business, not the original at multiple locations. Therefore, statements I and III are correct.

According to the Guideline on Anti-Money Laundering and Counter-Financing of Terrorism (For Licensed Corporations), licensed corporations must implement an effective AML/CFT training program. Statement I is correct as records of training, including details of attendees, dates, and content, must be kept for a minimum of 3 years. Statement II is correct because a critical component of the training is to ensure staff are aware of the firm’s internal policies and procedures for identifying and reporting suspicious transactions to the designated Money Laundering Reporting Officer (MLRO). Statement III is also correct; training must cover international obligations, which includes screening clients against sanctions lists published by bodies such as the United Nations to prevent dealings with designated parties. Statement IV is incorrect as the guidelines do not prescribe a specific format for training. The focus is on the effectiveness of the training, and various methods, including e-learning, are acceptable as long as they ensure staff comprehension and competence. Therefore, statements I, II and III are correct.