MAS has benchmarked the revised notices and guidelines against the international best practices and the latest recommendations of the Financial Action Task Force and guidelines from Basel Committee for Banking Supervision (BCBS). The revisions and supporting guidelines apply to a broad range of firms including banks, fund managers, finance companies, and remittance/foreign exchange service providers (collectively known as Financial Institutions or FIs).
In line with these efforts, in February 2016, MAS shared an updated guidance paper issued by the BCBS on sound management of risks related to money laundering and terrorist financing. It now includes guidance on due diligence for bank account opening as the customer information collected and verified at this stage is crucial to the bank in order for it to fulfil its financial crime prevention obligations.
What does this mean for FIs?
- Risk-based approach: The revised notices and guidelines focus on applying a risk-based approach, in particular with respect to the level of due diligence applied to customers and politically exposed persons
- Enterprise-wide Risk Assessment (EWRA): FIs are required to identify and assess the financial crime risks posed by their customers, the countries and jurisdictions in which they and their customers operate, and their products, services, and delivery channels. The results of this exercise should be documented and must be updated at least once every two years or at any time a material change happens in the business profile of the FI or if new products or services are introduced
- Compliance culture: MAS expect an FI’s Board of Directors and senior management to take responsibility for compliance with AML/CFT laws, regulations and guidelines. This calls for them to set the tone from the top and to embed a culture of compliance throughout the organisation
How can Bovill help?
The changes introduced by MAS echo the growing regulatory trend around the world – FIs need to go beyond a tick-box exercise for a successful and effective financial crime prevention programme. We strongly advise FIs to re-evaluate their programme as non-compliance with the existing regime will not be looked at favourably by MAS, given that considerable time has passed since the regulations have been revised.
Whether you’re newly licensed or have been around for a while, we can help you to ensure that your financial crime prevention framework is fit-for-purpose and meets both the letter and spirit of the revised requirements. Bovill can:
- Prepare or review your policies and procedures
- Work with you to put in place your EWRA to identify all risks, and sets out practical ways to mitigate them
- Train your staff on the new requirements, using case studies and examples which are specific to you