Monday, May 18, 2015

Amendments to MAS Notices and Guidelines to FIs on Prevention of Money Laundering and Countering the Financing of Terrorism, in particular the Notice and Guidelines to Capital Markets Intermediaries

The Monetary Authority of Singapore (“MAS”) has revised the notices and guidelines on anti-money laundering (“AML”) and countering the financing of terrorism (“CFT”) for financial institutions (“FIs”) in order to be better aligned with international best practices and the latest recommendations of the Financial Action Task Force (“FATF”).

FIs are now required to identify and assess money laundering (“ML”) and terrorism financing (“TF”) risks on an enterprise-wide level. Risk assessments must also be performed before using new products, business practices and technologies.

In particular, for capital markets intermediaries (“CMIs”), the definitions of customer and beneficial owner have been amended such that the underlying investors into investment vehicles that the CMI itself manages are treated as the CMI's customers.

The FI is required to screen its customer, natural persons appointed to act on behalf of the customer, connected parties of the customer and beneficial owners of the customer against relevant information sources. For legal entities and legal arrangements, FIs in general must identify the natural persons who ultimately own the legal entities or have executive authority. FIs must identify the trustees, settlors, beneficiaries, protectors and any natural person exercising ultimate control over trusts.

The definition of politically exposed persons (“PEPs”) has become more elaborate, distinguishing domestic PEPs, international organisation PEPs and PEPs who have stepped down from prominent public functions. FIs may adopt a risk-based approach to determine the extent of enhanced customer due diligence (“CDD”) to be performed for such persons.

The FI may rely on a third party to perform CDD on its behalf, as long as the third party is supervised for compliance with AML/CFT requirements and has adequate AML/CFT measures in place.

A CMI providing cross-border services to a foreign FI, must assess the suitability of the foreign FI by gathering adequate information and assess its AML/CFT controls to ensure that they are adequate and effective.

In addition, FIs incorporated in Singapore must develop and implement group policies and procedures for their branches and subsidiaries within the financial group to share information required for the purposes of CDD, and for the management of ML/TF risk.

For more information, please read our regulatory update on the issue here.

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