Banks. MAS •. Money Changers and Remitters. MAS •. Finance Companies. MAS .. continue correspondent banking relations with a shell bank. This article focuses on the MAS Notice to Banks on the if there are any ML/ TF risks in relation to the customer and such other persons. ) (“MAS Act”) and applies to all banks in Singapore, as defined in section “ beneficial owner”, in relation to a customer of a bank, means the “ correspondent banking” means the provision of banking services by a.
Clearing obligations are proposed to only apply to trades in which both transacting counterparties have booked in their Singapore-based operations. As yet, there have been no indications on when such proposals will take effect.
The Guidelines on Margin Requirements for Non-Centrally Cleared OTC Derivatives Contracts stipulate that variation and initial margin requirements for certain non-centrally cleared OTC derivatives apply to banks transacting with bank counterparties for transactions booked in Singapore.
This took effect last year. These proposed amendments are targeted for implementation in the third quarter of This represents a significant departure from the current regulatory regime, which only applies for securities-based derivatives, futures and leveraged foreign exchange trading, and amongst the effects flowing therefrom, may be the mandatory registration as representatives of employees of banks dealing in such OTC derivatives and the need to comply with business conduct requirements.
The SFAA has not yet come into operation, however, and consultation is ongoing on amendments to accompanying subsidiary legislation. The timeline for implementation is expected to be in the course of Banks and merchant banks will be afforded a two-year transitional period commencing on the date the amendments take effect, to comply with the new business conduct requirements.
Banking Regulation 2018 | Singapore
MAS has also communicated its intention to impose risk-mitigating requirements for non-centrally cleared derivatives on all OTC intermediaries, including banks. The third line of defence is the bank s internal audit function As part of the first line of defence, business units require robust controls to detect illicit activities. They should be allocated sufficient resources to perform this function effectively. This implies sample testing and the review of exception reports.
The board of directors and senior management should ensure that the bank s processes are robust and there are adequate risk mitigating measures in place.
PREVENTION OF MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM - BANKS
The term manager as it appears in limb b of the definition of connected parties takes reference from section 2 1 of the Limited Liability Partnership Act Cap. An example of a natural person with executive authority in a partnership is the Managing Partner. In such cases, the underlying investors of the portfolio shall be beneficial owners within the meaning of the Notice. However, the Authority recognises that a bank may not be able to perform CDD measures on the underlying investors.
Banking Regulation | Singapore | Laws and Regulations | GLI
For instance, the portfolio manager may be reluctant, for commercial reasons, to reveal information on the underlying investors to the bank. In such circumstances, the bank should evaluate the risks arising from each case and determine the appropriate CDD measures to take. However, where the customer falls within paragraph 6.
Therefore, the bank does not need to identify and verify such underlying investors. A merchant for whom the bank opens or maintains an account including a ledger account for the purchase of goods by, or provision of services to, any person from the merchant, using any credit card or charge card, should be considered a customer for the purposes of the Notice.
The Authority will generally look at the substance of the relationship management as a whole. A bank should perform the applicable CDD measures if in substance, the relationship or account is managed by an employee or officer of the bank in Singapore even though the account is booked in another country or jurisdiction.
PREVENTION OF MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM - BANKS - PDF
However, the bank may rely on the CDD measures carried out by its related entity or in the case of a branch network, another branch of the bank in accordance with paragraph 9 of the Notice.
Financial Advice The bank need not perform the CDD measures where the bank solely prospects natural persons, legal persons or legal arrangements, without the provision of financial advice. Legal Arrangements In relation to the definition of legal arrangement in the Notice, examples of legal arrangements are trust, fiducie, treuhand and fideicomiso. Legal Persons In relation to the definition of legal person in the Notice, examples of legal persons are companies, bodies corporate, foundations, anstalt, partnerships, joint ventures or associations.
Officer A reference to officer refers to a bank s board of directors and senior management. For a customer who is a legal person or arrangement, this refers to both the country or jurisdiction of establishment, incorporation, or registration, and, if different, the country or jurisdiction of operations as well. Other Relevant Authorities in Singapore Examples include law enforcement authorities e. Where appropriate, a bank should also take these results into account as part of the bank s ongoing monitoring of the conduct of customers accounts and the bank s scrutiny of customers transactions.
Frequency of Review To keep its enterprise-wide risk assessments up-to-date, a bank should review its risk assessment at least once every two years or when material trigger events occur, whichever is earlier. Such material trigger events include, but are not limited to, the acquisition of new customer segments or delivery channels, or the launch of new products and services by the bank.
The results of these reviews should be documented and approved by senior management even if there are no significant changes to the bank s enterprise-wide risk assessment. These assessments should be approved by senior management and heads of business, risk and compliance. A bank should be aware that transactions may be entered into consecutively to deliberately restructure an otherwise single transaction, with the intention of circumventing applicable thresholds set out in the Notice in relation to the circumstances set out in paragraphs 6.
These may include government-issued identity cards or passports, reports from independent company registries, published or audited annual reports and other reliable sources of information.
The rigour of the verification process should be commensurate with the customer s risk profile A bank should exercise greater caution when dealing with an unfamiliar or a new customer. Apart from obtaining the identification information required by paragraph 6.
Such additional identification information enables a bank to obtain better knowledge of its customer s risk profile, as well as the purpose and intended nature of the account. Notice Paragraph Identification of Customer With respect to paragraph 6. Notice Paragraph Identification of Customer that is a Legal Person or Legal Arrangement Under paragraph 6 and paragraph 8 of the Notice, a bank is required to identify and screen all the connected parties of a customer.
However, a bank may verify their identities using a risk-based approach 1. A bank is reminded of its obligations under the Notice to identify connected parties and remain apprised of any changes to connected parties Identification of connected parties may be done using publicly available sources or databases such as company registries, annual reports or based on substantiated information provided by the customers In relation to legal arrangements, a bank shall perform CDD measures on the customer by identifying the settlors, trustees, the protector if anythe beneficiaries including every beneficiary that falls within a designated characteristic or class and any natural person exercising ultimate ownership, ultimate control or ultimate effective control over the trust including through a chain of control or ownershipas required by paragraph 6.