MS. DIANTHA HO MR. MARKUS POH LEONG KEE
Legal Associate (Corporate Practice) Legal Associate (Corporate Practice)
T: (65) 6322 2235 T: (65) 6322 2217
F: (65) 6534 0833 F: (65) 6534 0833
E: dianthaho@loopartners.com.sg E: markuspoh@loopartners.com.sg
Loo & Partners LLP
143 Cecil Street, Level Ten, GB Building
Singapore 069542
www.loopartners.com.sg
On 24 April 2015, the Monetary Authority of Singapore (“MAS”) issued revised notice to financial institutions on anti-money laundering and countering the financing of terrorism (“AML/CFT”). This article will focus on the key changes in the revised MAS Notice 626 on the Prevention of Money Laundering and Countering the Financing of Terrorism - Banks (“Notice 626”), which is applicable to all banks in Singapore, as defined under Section 2 of the Banking Act (Chapter 19) of Singapore (“Banks”).
1. Comprehensive Assessment of Risks
Notice 626 imposes new obligations on Banks to identify and assess the overall money laundering and terrorism financing (“ML/TF”) risks they each face as an institution, and to take commensurate steps to effectively mitigate such risks. Banks are also required to undertake risk assessments of new products, practices and technologies prior to their launch, to ascertain whether such launch will lead to ML/TF risks, and to take appropriate measures to manage and mitigate such risks.
2. Cross-border Wire Transfers Exceeding S$1,500
Banks are now required to perform customer due diligence (“CDD”) when effecting or receiving funds by domestic wire transfer or by cross-border wire transfer that exceeds S$1,500 for any customer who has not otherwise established business relations with them.
3. Identification and Verification of the Identity of Beneficial Owners
Notice 626 elaborates on the cascading measures Banks need to undertake when identifying and verifying the identity of beneficial owners of non-individual customers, such as companies and trusts. When dealing with customers which are companies, Banks are to identify and verify the identity of the natural person who ultimately owns the company. When dealing with customers which are trusts, Banks are to identify and verify the identity of the trustee(s), settlor, protector (where applicable), beneficiaries, and any natural person exercising ultimate ownership or control over the trust.
4. Customer Screening
Banks are required to screen their customers, natural persons appointed to act on behalf of their customers, connected parties of their customers and beneficial owners of their customers against relevant ML/TF information sources, as well as lists and information provided by the MAS and any relevant Singapore authorities for the purpose of determining if there are any ML/TF risks.
5. Politically Exposed Persons (“PEPs”)
The MAS has introduced a new category of PEPs, a category of customers considered to be of high risk. In addition to performing CDD measures, Banks are required to perform enhanced CDD on PEPs, their family members and close associates. In addition, Banks are to adopt a risk-based approach, in determining whether to perform enhanced CDD or the extent of enhanced CDD to be performed, for specified categories of PEPs, their family members and close associates.
Banks in Singapore should ensure that they are kept up to date with the AML/CFT regime in Singapore as this will affect their internal processes and compliance costs.