The Monetary Authority of Singapore (MAS)

 

The Monetary Authority of Singapore (MAS) is the central bank of Singapore. It formulates the monetary policy and regulates the financial services sector of Singapore. Financial institutions and payment systems are required to comply with the MAS’s AML policy.

Role of the MAS

As ML/TF threats continue to evolve, MAS periodically issues new AML/CFT recommendations and guidelines that document the changes to legislation governing the financial sector, and reporting entities.

The MAS has developed business model specific rules for AML/CFT compliance that can be assessed here.

The key roles of Singapore’s regulator are as follows:

Central Banking – As Singapore’s central bank, MAS issues the currency notes, monitors the economy, manages Singapore’s official foreign reserves and oversees payment systems in the financial sector.

Developmental – MAS works closely with other government departments, financial institutions, as well as technological innovators, to develop a competitive and robust financial industry.

Financial supervision – It regulates and supervises the functioning of all financial institutions: banks, insurers, capital market intermediaries, financial advisors, FinTech firms, and the stock exchange.

Regulatory – MAS issues guidelines to ensure that the financial sector is not misused for ML/TF. For this purpose, it has established various internal departments that function in cooperation with Singapore’s government agencies to ensure rigorous compliance.

 

The MAS partners with various government departments to control ML/TF

To enforce AML/CTF compliance and prosecute offences related to ML /TF, the MAS has recently enhanced the penalties for non-compliance.  It acts in conjunction with other departments of the government for sharing of financial intelligence and acting upon them.

Corruption, Drug Trafficking and Other Serious Crimes (confiscation of benefits) Act [CDSA] oversees the misuse of the financial system for drug trafficking and other illicit activities and criminalises the laundering of accrued monetary benefits.

Terrorism (Suppression of Financing) Act [TSOFA] regulates financial transactions or services that a business or individual may have with any terrorist entity. The Act applies to the businesses listed here.

Commercial Affairs Department’s (CAD) Financial Investigation Division enforces the AML/CFT regime through the detection of high-risk activities, investigation and prosecution of deemed offences, and seizure of illegal proceeds.

Payment Services Act 2019 lays down the list of services deemed “payment services”, and licenses and monitors the conduct of financial service businesses.

Who must comply?

In 2018, the MAS introduced significant changes in its legislative and regulatory framework to allow for safety in the markets, while enabling the development of a robust financial system.

The AML regulations apply to the following entities registered in Singapore:

–  Banks

–  Merchant Banks

–  Digital Banks

–  Finance companies

–  Approved Trustees

–  Trust Companies

–  Credit Card or Charge Card Holders

–  Holders of Prepaid Electronic Cash/Cards or Stored Value Facilities

–  Licensed Money Changers and Remitters

–  Insurers

–  Life Insurers

–  Cryptocurrency businesses and Digital Token Offerings

–  Fund Management Companies and Capital Market Intermediaries

 

What are the compliance requirements?

Financial services firms and regulated entities are expected to:

1.  Identify ML and TF risks in their company; based on customer type and jurisdiction, products and services, third-party data providers, and delivery channels.

2.  Mitigate risks – appoint a compliance officer, train and screen staff, implement policies and procedures.

3.  Identify and know their customers – conduct KYC, identity verification, CDD, PEP checks, beneficial ownership checks; and determine if a customer is from a high-risk jurisdiction. The MAS additionally suggests the creation of customer profile: business relationships, types of transactions, business activity, sources of funds, income and wealth profile.

4.  Conduct regular assessments and EDD for high-risk customers, jurisdictions and transactions; periodical reviews of risk assessments and adherence to compliance procedures.

5.  Monitor and report any suspicious transactions – Put in place systems to scrutinise suspicious, complex, and unusually large transactions; and report any suspicious activity to the CAD. The CAD has implemented an internationally-benchmarked cash transaction reporting regime to mitigate the risks of ML/TF.

Failure to comply may result in criminal liability, confiscation of property and benefits, or fines of up to $1 million.