MAS information paper on ”Strengthening AML/CFT Practices for External Asset Managers”
On 24 August 2022, the Monetary Authority of Singapore published an information paper on ”Strengthening AML/CFT Practices for External Asset Managers”. This information paper is based on thematic inspections and engagements on anti-money laundering and countering the financing of terrorism (AML/CFT) conducted by MAS of selected external asset managers (“EAMs”). It sets out MAS’ supervisory expectations for effective AML/CFT frameworks and controls and includes good practices and illustrative examples observed. Its learnings should also be considered by other financial institutions.
MAS highlighted the following conclusions from their information paper:
- EAMs are inherently vulnerable to ML/TF risks given the nature of their business model where they provide asset management services to high-net-worth customers. Hence, it is important that EAMs remain vigilant to ML/TF risks at every stage of the customer’s lifecycle.
- Board and senior management play a key role in establishing an appropriate risk culture and putting in place necessary frameworks and controls to promote the right conduct among their staff.
- In addition, EAMs should ensure that their staff are equipped with the necessary knowledge, skills and resources to implement the AML/CFT frameworks and controls effectively to prevent the EAMs from being used by criminals for ML/TF purposes.
- MAS’ thematic inspections and engagements of EAMs showed that there was room for EAMs to improve the design and effectiveness of their AML/CFT frameworks and controls to detect and mitigate ML/TF risks. Significant deficiencies were confined to a few EAMs.
- EAMs should continuously enhance their AML/CFT frameworks and controls to ensure they are commensurate with the scale, nature and complexity of their business.
- MAS will continue to provide guidance and share our supervisory expectations and observations from our inspections and engagements to improve industry practices.