INSTITUTE OF BANKERS IN MALAWI

ADVANCED DIPLOMA IN BANKING EXAMINATION

SUBJECT: ADVANCED BANKING LAW (IOBM – AD318)

Date: Monday, 4th May 2015

Time Allocated: 3 hours (13:30 – 16:30 Hours)

INSTRUCTIONS TO CANDIDATES

1 This paper consists of TWO Sections, A and B.

2 Section A consists of 4 questions, each question carries 15 marks.

Answer ALL questions.

3 Section B consists of 4 questions, each question carries 20 marks.

Answer ANY TWO questions.

4 You will be allowed 10 minutes to go through the paper before the

start of the examination, you may write on this paper but not in the
answer book.

5 Begin each answer on a new page.

6 Please write your examination number on each answer book

used. Answer books without examination numbers will not be
marked.

7 All persons writing examinations without payment will risk expulsion

from the Institute.

8 If you are caught cheating, you will be automatically disqualified in all

subjects seated this semester.

9 DO NOT open this question paper until instructed to do so.

SECTION A (60 MARKS)

Answer ALL questions from this section.

QUESTION 1
Banks are continuously performing multifunctional roles such as
bancassurance, pension scheme management, unit trusts and trust services.
Critically evaluate the adequacy and inadequacies of the traditional definitions
of a ‘bank’. (Total 15 marks)

QUESTION 2

Discuss the obligations for a paying bank upon presentment of a cheque.

(Total 15 marks)

QUESTION 3

Write brief notes on the following:

(a) The role of the bank as an Arranger. (5

marks)

(b) Underwriting and issue of securities. (5

marks)

(c) Placement Agreement. (5 marks)

(Total 15 marks)

QUESTION 4
Neymar issued a payment instruction to Catalonya Bank to transfer US$5
million to Iker Cassilas. Unknown to Neymar, the bank mistakenly transferred
the funds to Iker Cassilla. Advise whether Catalonya Bank can recover the
money paid to Iker Cassilla. (Total 15 marks)

A qualification examined by the Institute of Bankers in Malawi

SECTION B (40 MARKS)

Answer ANY TWO questions from this section

QUESTION 5
Write brief notes on the following pre-requisites for licensing banks in Malawi:

(a) Financial capacity. (5

marks)
(b) Legal structure. (5 marks)
(c) Management structure. (5
marks)
(d) Business plan. (5
marks)
(Total 20 marks)

QUESTION 6

In Malawi, the Money Laundering and Proceeds of Serious Crimes and

Terrorist Financing Act 2006 promotes the idea of ‘know your customer’ as a
prerequisite to effective money laundering controls. Discuss any five
requirements for a financial institution before entering into a business
relationship with a customer. (Total 20 marks)

QUESTION 7

Briefly discuss the functions of the Financial Intelligence Unit established

under the Money Laundering and Proceeds of Serious Crime and Terrorist
Financing Act 2006. (Total 20 marks)

QUESTION 8
(a) Compare and contrast the terms ‘in-house payment’ and ‘domestic
payment’. (10 marks)

(b) To what extent does the Financial Services Act deal with Corporate
Governance of a financial institution? (10 marks)
(Total 20 marks)
A qualification examined by the Institute of Bankers in Malawi
 END OF EXAMINATION PAPER

A qualification examined by the Institute of Bankers in Malawi