Strengthening AML/CFT Controls

Monetary Authority of Singapore (“MAS”) on 15^th of July 2020 published a guidance paper which sets out MAS’ supervisory expectations of sound practices where anti-money laundering / countering of financing of terrorism (“AML/CFT”) control functions are outsourced.

In relation to various thematic inspections that MAS has conducted on several financial institutions, it is clear that financial institutions reviewed their current AML/CFT policies and procedures and ensure they are meeting MAS’ expectations. It is critical to ensure that financial institutions incorporate learning points from the thematic reports published by MAS in a risk based and proportionate manner.

We have given below key learning points that financial institutions should review and map their AML/CFT policies against to verify if their policies and procedures are meeting MAS’ standards.

A. Effective AML/CFT Controls comprises of

• Well calibrated framework, policies and procedures
• Robust risk awareness
• Meaningful integration of systems
• Active oversight and escalation

B. 3 core pillars of any efficient AML/CFT Controls

C. Key ways to improve current AML/CFT Controls

1. Robust Corroboration of Source of Wealth and Funds
   • Obtain supporting documents to assess legitimacy of customer’s wealth and source of funds
   • Understand how customer’s total wealth was accumulated for source of wealth
   • Objective information such as information from commercial databases or credible sources can be obtained.
   • Understand what activity generated funds in determining source of funds
   • Additional security should be placed on funding obtained from third parties
2. Institute Effective Tax Risk Management Framework
   • Strengthen ability at onboarding to identify customers presenting higher tax-related risk and perform enhanced due diligence
   • provide adequate training and support to staff to recognise tax related risks
   •  institute ongoing monitoring controls to enable prompt detection of tax –related red flags such a those relating to customer behaviour and transaction patterns
3. Subject third party transaction flow to higher scrutiny
   • conduct transaction monitoring to  ensure transactions are consistent with the purpose of the account and profile of the customers
   • set clear guidelines on follow up actions to be taken when suspicious money flow is noted. Conduct due diligence process on customer.
4. Strengthen Performance Management Framework
   • provide right incentive structure to foster right culture and behaviour
   • should also have right penalties imposed for non-adherence to regulatory requirement as well as internal policies and procedures
5. Right Tone from Top and Strong Risk Culture
   • set clear risk appetite for managing risks including tax and corruption-related risks
   • build firm wide culture that priorities AML/CFT risk management
   • Establish clear accountability for execution of key AML controls
   • provide adequate training to all employees and increaser their awareness

How can Argus (now Waystone Compliance) Assist?

We, at Argus Global (now Waystone Compliance), are a team of consultants who specialize in Regulatory Compliance for FIs in Singapore that are regulated by MAS. We have worked with several FIs on their various compliance requirements and obligations and have assisted to remediate various gaps we have identified.

We assist to do the following:

• Prepare and implement a comprehensive AML/CFT policy and procedure
• Assist to conduct AML/CFT screenings on customers and enhanced due diligence checks on customers
• Provide gap analysis on your policies and procedures to identify gaps and recommend ways to improvement and alignment with the regulatory requirements
• Assist to provide AML/CFT training

Please reach out to us for an initial discussion at [email protected].

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