Circular on Money Laundering and Terrorism Financing Risks in the Wealth Management Sector

The Monetary Authority of Singapore (MAS) has issued a new circular as regards the anti-money laundering (AML) and the countering of the financing of terrorism (CFT) practices of authorized institutions. Specifically, MAS outlines its expectations as regards firms‘ monitoring of money laundering (ML) and the financing of terrorism (FT) risks in view of the growing „wealth management sector“ in Singapore. The circular thereby covers the following three key issues:
(1) the strengthening of Board and Senior Management (BSM) oversight and risk and control functions: In this context, MAS notes that BSM shall ensure that it is continuously aware of ML and FT risks posed by this growth and shall ensure that responsible persons and relevant departments are adequately staffed and trained to monitor any risks in this area. Additionally, BSM must ensure that it is up-to-date on latest system test results as noted under (2).
(2) the addition or enhanced review of Customer Due Diligence (CDD) practices: Authorized institutions must ensure that adequate measures are in place to monitor ML and FT risks and that adequate testing is done on any systems and controls to prevent and mitigate any risks in that regard. A particular focus should be placed on the identification of high risk customers and the source of funding of such customers.
(3) the performance of enhanced due diligence for higher risk customers and transactions, especially entities: In this context, MAS notes that authorized institutions need to particularly monitor legal entities and their underlying corporate structures. It is of upmost importance to identify beneficial owners of such entities and to evaluate their ML and FT risks independently and together. If an entity withdraws an application for an investment account or bank account following an AI’s request for information, institutions may also need to consider filing a suspicious transaction report (STR). Finally, MAS expects authorized institutions to closely monitor business transactions for any unusual activities in the accounts.
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As the above summary only briefly summarizes the content of the circular, please refer to the original document for more detailed, comprehensive information.