Enhancing Anti Money Laundering and Countering the Financing of Terrorism (AML/CFT) controls within the VCC sector

Some key observations for VCCs and their EFIs are set out below:

• in some instances, there was insufficient oversight by VCCs of appointed EFIs
• some VCCs failed to put in place arrangements to oversee the ongoing implementation of AML/CFT controls by their VCCs
• in some instances, there was no agreed escalation process between its mandated EFI and the VCC to ensure pertinent issues were escalated to the VCC in a timely manner
• where there was an escalation process, some VCCs failed to specify sufficient details within policies and procedures
• some VCCs did not indicate that they had appointed an EFI even though it was a Notice requirement.

In addition, MAS discovered instances where there were gaps in controls, such as:

• a lack of a robust framework for assessing customers’ ML/TF risks
• a failure to consider relevant risk factors in assessing country or geographic risks
• customer risk assessments were not sufficiently documented.

Supervisory expectations for VCCs and their EFIs

VCCs should note that they remain ultimately responsible for fulfilling their AML/CFT obligations, and they should ensure that they exercise adequate oversight over their relationship with their EFIs.

VCCs should also ensure that the AML/CFT policies and procedures (P&Ps) implemented by their EFIs to mitigate money laundering and terrorism financing (ML/TF) risks are appropriate.

In addition to the responsibility of having defined reporting and oversight obligations and stringent policies and procedures in place, VCCs also need to conduct robust risk assessments to correctly identify, understand and assess the ML/TF risks of their customers, so that they can apply the appropriate customer due diligence and ongoing monitoring measures.

Ongoing monitoring is key to detecting customers that present higher ML/TF risks post-onboarding.

These key observations noted in the Circular should help VCCs to better understand their AML/CFT obligations.

How can Waystone help?

To find out how Waystone can help, reach out to your usual Waystone representative or contact us below.