Compliance Insight – September 2023
In August, the Monetary Authority of Singapore (MAS) unleashed a flurry of guidance and updates.
- Circular on ensuring effective detection of sanctions-related risks: In this circular, the MAS highlights that financial institutions must strictly adhere to sanctions applicable in Singapore and the board of directors and senior management must define the financial institution’s risk appetite and approach to unilateral sanctions that are imposed by other jurisdictions. In addition to their initial and ongoing screening processes, financial institutions should implement a lookback mechanism to check on interactions with sanctioned individuals, namely transactions by their customers, when new sanctions are imposed. This lookback should cover at least 12 months.
Financial institutions, including external asset managers (EAMs) are expected to review their AML/CFT frameworks and controls against this guidance.
- Information paper on “Strengthening AML/CFT controls on risks of misuse of legal persons/arrangements and complex structures”: In this information paper, the MAS once more highlights money laundering risks from complex structures. Through case studies, the MAS reiterates the importance of analysing and understanding the entire structure of customers. For example, where an EAM provides services for an investment-linked life policy, the EAM must understand the policy owner and related components, such as the settlor and the beneficiary of the policy, including, where applicable, the structure of legal persons or arrangements holding these positions. In addition, the information paper emphasises ongoing monitoring, including transaction monitoring, and the exchange of information among business units of a financial institution.
- FAQs on Licensing and Business Conduct (Other than for Fund Management Companies): The MAS indicates that they will only approve subsidiaries or branches of holders of capital markets services (CMS) licence (presumably including registered fund management companies) in case of exceptional reasons. The branch or subsidiary must primarily support the business of the CMS licence holder, and the CMS licence holder must demonstrate its ability to effectively oversee and take responsibility for the subsidiary’s or branch’s activities.
- Moreover, the MAS updated a number of forms, including “Form 3A – Notification for Appointment of an Appointed Representative”, “Form 11 – Appointment of Chief Executive Officer or Director / Change of Director’s Nature of Appointment from Non-Executive to Executive (For Licensed Fund Management Companies)”, “Form 23A – Notice of Change of Particulars for a Registered Fund Management Company or a Venture Capital Fund Manager”, “Form 25A – Annual Declaration by a Registered Fund Management Company or a Venture Capital Fund Manager”. In any case, EAMs should predominantly access these forms in MAS-Tx where the latest forms are available.
In addition, we witnessed a highly publicised AML/CFT case. On 15 August, the police arrested ten individuals for suspected involvement in offences, including forgery and/or money laundering. Assets of about SGD 1 billion were frozen. Major banks in Singapore had business relations with the accused. Authorities are requesting documents from at least ten financial institutions. EAMs should check if they have any relationships with any of the accused persons.