Singapore consults on strengthening AML reporting rules

The Monetary Authority of Singapore (MAS) issued, on 8 April, a consultation paper in respect of proposed amendments to its anti-money laundering and countering the financing of terrorism (AML/CFT) Notices and Guidelines applicable to financial institutions (FIs) and variable capital companies (VCCs). They are due to take effect from 30 June.

In scope FIs include banks, merchant banks, finance companies, payment service providers, direct life insurers, capital markets intermediaries, financial advisers, the central depository, approved exchanges and recognised market operators, approved trustees, trust companies, non-bank credit and charge card licensees and digital token service providers.

MAS proposes to amend the AML/CFT Guidelines to state that the filing of suspicious transaction reports (STRs) should not exceed five business days after suspicion was first established, unless the circumstances are exceptional or extraordinary.

In cases involving sanctioned parties and parties acting on behalf of or under the direction of sanctioned parties, FIs and VCCs should file the STRs as soon as possible and no later than one business day after suspicion was first established.

MAS proposes to set out its supervisory expectations with respect to the controls and processes for timely review of suspicious transactions and mitigation of ML/TF concerns identified, such as the need for FIs and VCCs to identify, prioritise and promptly review concerns of higher ML/TF risks and escalate any such concerns to senior management where necessary.

MAS further proposes to remove the requirement for FIs and VCCs to extend a copy of STRs filed to MAS for information and to replace it with a requirement for FIs and VCCs to extend a copy of STRs to MAS upon request.

MAS proposes to expand the definition of money laundering (ML) to include proliferation financing (PF) and to mandate that FIs and VCCs are to include PF risk assessments in their ML/TF risk evaluations. This aligns with the latest Financial Action Task Force (FATF) Standards, which require FIs and designated non-financial businesses and professions to identify, assess, understand and mitigate PF risks.

In respect of trusts, MAS proposes to amend the wording of MAS Notice TCA-N03 to align with the Trustees Act 1967 and anticipated legislative changes following the revised FATF Recommendation 25 regarding beneficial ownership and transparency of legal arrangements such as trusts. These amendments will broaden the definition of a trust relevant party and clarify the requirements for identifying all related parties to a legal arrangement and to collecting relevant information.

The amendments will further mandate the collection of certain information about the trust, such as the full name, unique identifier, trust deed and the purpose for which the trust was established, in line with the FATF’s recommendations.

Other proposed amendments include:

• Clarifying that ML/TF information sources for screening should include relevant search engines used in countries or jurisdictions closely associated with the person screened, and that screening should be conducted in the native language(s) of the person screened.
• Ensuring processes are in place to share customer and related account information across business units, including customer due diligence and source of wealth (SoW) information.
• Providing staff with adequate guidance on identifying indicators of fraudulent or tampered data, documents or information, and ensuring timely application of appropriate ML/TF risk mitigation measures.
• Clarifying the need for corroboration of SoW and source of funds (SoF) that are more material and/or present a higher risk for ML/TF and the assessment of the plausibility and legitimacy of SoW and SoF.
• Clarifying the need to assess whether a further or supplementary STR is warranted when further suspicion is raised.
• Including characteristics of a higher-risk shell company as examples of potentially higher-risk categories.
• Including participation in a tax amnesty programme under examples of suspicious transactions related to tax crimes.
• Replacing references to ‘settlors’ and ‘protectors’ with ‘trust relevant parties’ to reflect the expanded definition and replacing the term ‘trust’ with ‘legal arrangement’ in the guidelines.