MAS Consultation Paper on Proposed Amendments to the AML/CFT Notices and Guidelines

Ingenia Consultants
May 5, 2025

On 8 April 2025, the Monetary Authority of Singapore (“MAS”) published a Consultation Paper on the Proposed Amendments to Anti-Money Laundering and Countering the Financing of Terrorism Notices for Financial Institutions and Variable Capital Companies. In this consultation, the MAS proposes streamlined amendments across all financial institutions that predominantly implement best practices that were communicated previously. Clearly, the amendments result in higher requirements for the financial institutions’ anti-money laundering (“AML”) and countering the financing of terrorism (“CFT”) measures. The consultation period ends on 8 May 2025. The MAS expects the amendments to take effect from 30 June 2025.

In this article, we outline the proposed amendments.

Inclusion of Proliferation Financing

To better align AML/CFT regulations in Singapore with the revised FATF standards, the MAS proposes to explicitly state that money laundering (“ML”) includes proliferation financing (“PF”). Therefore, financial institutions must identify, assess, understand and mitigate their PF risks and, thus,include adequate measures to counter PFin their AML/CFT frameworks. Most financial institutions are expected to already include PF in their AML/CFT frameworks. The existing AML guidelines already include information, including red flags, regarding PF.

Expansion of Trust Relevant Parties

The MAS proposes to amend the definition of trust relevant parties in its Notice on Prevention of Money Laundering and Countering the Financing of Terrorism – Trust Companies (“TCA-N03”) and to reference this definition in its AML/CFT notices applicable to other types of financial institutions, for example, the Notice on Prevention of Money Laundering and Countering the Financing of Terrorism – Capital Markets Intermediaries (“SFA04-N02”).

[1] An “object of power” is proposed to mean “a person who

- Is a member of a class of possible beneficiaries under the trust; and
- Is reasonably expected to benefit from the trust, whether or not because
  - The person is referred to as a potential beneficiary by the settlor of the trust in a document relating to the trust such as the letter of wishes; or
  - The class of possible beneficiaries has narrowed for any reason.”

The MAS proposes that a financial institution must, in addition to the information prescribed for the existing trust relevant parties, obtain information on the identity of the protector, the identity of the class of beneficiaries and object of power, and of any other natural person(s) exercising ultimate effective control over a trust related party. This included information on beneficial owners of a legal person or a legal arrangement that is a trust relevant party.

Clarification of Timelines for Filing of Suspicious Transaction Reports

The MAS proposes to reduce the number of days to submit a suspicious transaction report (“STR”) from 15 business days of the case being referred by the relevant employee of the financial institution to 5 business days after suspicion was first established, in the case of sanctions, 1 business day after suspicion was first established.

In addition, in the proposed amendments to the AML Guidelines, the MAS is promoting a risk-based monitoring to identify and prioritise the review of concerns of higher ML/TF risk. These concerns should be promptly reviewed and escalated for mitigating measures where required.

Amendments to the Notices and Guidelines

In this section, we highlight pertinent proposed changes to the notices and guidelines on AML/CFT, in particular the Notice on Prevention of Money Laundering and Countering the Financing of Terrorism – Capital Markets Intermediaries (“SFA04-N02”) and the Guidelines to MAS Notice SFA04-N02 on Prevention of Money Laundering and the Financing of Terrorism (“Guidelines to SFA04-N02”). Please note that we do not list all proposed amendments to the notices and guidelines.

Identification of Beneficial Owners

Instead of requiring financial institutions to take reasonable measures to verify the identities of the beneficial owners, the MAS proposes that financial institutions must obtain specified information on the beneficial owners that is similar to the information required from the customers.²

[2] You may note that the MAS is also proposing a list of information required from beneficial owners that are a legal person or legal arrangement.

Guidance to Identify Fraudulent or Tampered Data, Documents or Information

The MAS proposes that financial institutions must provide their staff with adequate guidance on how to identify indicators of fraudulent or tampered data, documents or information. Indicators include

significant discrepancies in a customer’s representations that are found when these representations are checked against independent sources of information, such as corporate data reports;

accounting errors, or anomalies in financial statements that are not in line with the financial institution’s understanding of the customer’s profile; and

lack of sign-off by relevant certifying parties such as an auditor or notary public.

If any indicators are detected, the matter should be escalated and appropriate ML/TF risk mitigation measures applied.

Sharing of Information on Customers

To ensure the holistic monitoring of customer accounts, the MAS proposes that financial institutions have processes to share information on customers and their related accounts within and across business units. The information shared should minimally include the information to identify the customer and the source of wealth.

Enhancements in Screening

The MAS proposes that financial institutions screen against pertinent search engines, in addition to commercial databases. Financial institutions should conduct screening in the native language(s) of the person screened and on pertinent search engines used in countries or jurisdictions closely associated with the person screened.

Higher-risk Shell Companies

The MAS provides examples of characteristics displayed by higher-risk shell companies. These include:

Unclear economic purpose for requiring an account relationship in Singapore;

Unclear economic purpose for linking a common individual/address to multiple companies;

Unrelated third parties are added to operate an account after the account opening;

Unusual change of corporate structure/beneficial owner after the account opening;

Suspicious transactions which are not in line with the financial institution’s understanding of the customer; or

Superficial corporate websites that are inconsistent with the scale of the business.

Examples are provided for most cases.

Clarification on the Establishment and Corroboration of the Source of Wealth

The MAS proposes changes to reflect its latest guidance on the establishment and corroboration of the source of wealth, including a risk-based approach.

Reflecting a risk-based approach, the MAS indicates that financial institutions should obtain source of wealth information to the extent practicable about the entire body of wealth that the customer and beneficial owner would be expected to have, and how the customer and beneficial owner acquired the wealth. Accordingly, the MAS expects financial institutions to establish the seed moneythat generated subsequent wealth. Where a material source of wealth of the customer or beneficial owner is a gift or other asset received from third parties, financial institutions should obtain information to establish the legitimacy and plausibility of the gift or other asset. This should include establishing the relationship between the third party and the customer or beneficial owner, verifying the transaction(s) effecting such gift or other asset against reliable and independent sources of information, and assessing the plausibility of the third party’s source of wealth.

Financial institutions should take a risk-based approach and focus on corroboration of sources of wealth and sources of funds that are more material or present a higher risk for ML/TF.

Financial institutions should ensure that sources of wealth and sources of funds are established through appropriate and reasonable means, to the extent practicable, using reliable and independent sources of information. Examples of appropriate and reasonable means include credible public sources. Where independent sources of information are not available, financial institutions should exercise prudence in the use of non-independent sources of information, such as customer representations, assumptions and benchmarks, to ensure adequate rigour of assessment. This should include the performance of additional checks against alternative information sources. Moreover, the financial institution’s basis for using such information should be documented and reviewed periodically.

Where a financial institution is unable to corroborate any more material source of wealth or source of funds that presents a higher risk for ML/TF, it should assess whether the residual risks associated with not corroborating this source of wealth or source of funds is acceptable and whether additional risk mitigation measures should be applied in the absence of corroboration.

Finally, the MAS proposes to classify all offering of personalised wealth management services, financial advisory services and financial products to high-net-worth individuals as higher-risk business. As a result, financial institutions are expected to independently corroborate these customers’ sources of wealth and screen operating companies and individual benefactors contributing to the customer’s and beneficial owner’s wealth.

Participation in Tax Amnesty as Indicator of Higher Risk

The MAS proposes adding participation in a tax amnesty programme to its list of examples of suspicious transactions (situations) in the section on tax crime-related transactions and requests financial institutions to file an STR when a customer has indicated that it has participated in a tax amnesty programme.

How We Can Help

Ingenia Consultants Pte. Ltd. provides regulatory support services for financial institutions, including compliance and internal audit. We assist in the review and enhancement of AML/CFT frameworks, carry out customer due diligence, and review such efforts by financial institutions to provide their senior management and board of directors assurance through our internal audits.

For more information on our compliance and internal audit services and capabilities, please contact:

Rolf Haudenschild

Co-founder

Ingenia Consultants Pte. Ltd.

rolf.haudenschild@ingenia-consultants.com