1    The Deputy Prime Minister and Chairman of the Monetary Authority of Singapore (“MAS”), Mr Tharman Shanmugaratnam, today moved the Monetary Authority of Singapore Bill (“MAS Bill”) for First Reading in Parliament.

BACKGROUND

2    The large size of the financial sector, high volume of transactions and wide international reach inevitably exposes Singapore to its share of money laundering and terrorism financing (“ML/TF”) risks. MAS has put in place a robust preventive regime that combines strong licensing requirements, stringent anti-money laundering and countering the financing of terrorism (“AML/CFT”)  regulations and rigorous supervision to mitigate these risks.

3    The proposed amendments to the Monetary Authority of Singapore Act (“MAS Act”) will clarify MAS’ powers in relation to AML/CFT supervision and enhance the effectiveness of Singapore’s AML/CFT regime, particularly in relation to international cooperation. These enhancements will also align our regime with the international AML/CFT standards set by the Financial Action Task Force (“FATF”)¹ and the Core Principles for Effective Banking Supervision issued by the Basel Committee on Banking Supervision. The MAS Bill will achieve the following:

a) set out requirements for financial institutions (“FIs”) to conduct customer due diligence (“CDD”) and retain such records;  

b) set out MAS’ powers to conduct AML/CFT inspections on FIs and to approve such inspections by home AML/CFT supervisors²; 

c) subject to strong safeguards, enable MAS to provide information³ to:
i. foreign AML/CFT supervisors, in connection with the AML/CFT supervision of foreign FIs carrying on financial activities in that country; and 
ii. domestic authorities, in connection with the investigation or enforcement action of an offence, or any supervisory action taken against a person regulated by that authority for the contravention of AML/CFT requirements. 

d) clarify that the scope of the AML/CFT regime extends to designated financial holding companies (“FHCs”) and non-bank credit card or charge card issuers.

4    MAS conducted a public consultation in June 2014 on the proposed enhancements. The consultation paper and MAS’ responses to comments received are published on MAS’ website.

KEY PROVISIONS IN THE MAS BILL

Set out AML/CFT Requirements in the MAS Act

5    The FATF’s expectation and international best practice is for CDD and record keeping requirements to be set out in primary legislation to demonstrate the country’s political commitment to combat ML/TF. Jurisdictions like the United States, Australia and New Zealand adopt such an approach. CDD and record keeping requirements are fundamental to an effective AML/CFT regime⁴ and are currently imposed on FIs in Singapore through AML/CFT Notices that are not primary legislation. The MAS Bill will set out the following requirements in the MAS Act:

a) conduct CDD; and

b) maintain records on transactions and information obtained through their CDD measures.

6    The details of such CDD measures and record keeping requirements will continue to be reflected in the respective AML/CFT Notices.

Powers in the MAS Act for MAS to conduct AML/CFT inspections and to authorise such inspections by home AML/CFT supervisors

7    To align MAS’ powers to conduct AML/CFT inspections of relevant classes of FIs in Singapore, such powers will be set out in the MAS Act⁵. The MAS Act will be amended to allow MAS to inspect FIs for compliance with the directions issued or regulations made pursuant to sections 27A and 27B of the MAS Act. With these amendments, MAS will also be able to inspect an expanded scope of FIs for AML/CFT purposes, including holders of stored valued facilities and non-bank credit card or charge card issuers.

8    Where information obtained from an inspection is relevant to the supervision of an FI’s parent, MAS may share that information with the home financial supervisor, as well as the home AML/CFT supervisor.

9    The amended MAS Act will also allow MAS to appoint a third party (e.g. an audit firm) to inspect an FI on MAS’ behalf, as is currently allowed for certain classes of FIs. In general, MAS will bear the costs for such appointment. However, if a third party inspection is carried out on the basis that MAS has reason to believe that the FI has contravened or is contravening any direction issued or regulation made under section 27A or 27B of the MAS Act, MAS may direct the FI to bear the cost of such inspection.

10    To facilitate effective group supervision in relation to AML/CFT controls, MAS currently may approve home AML/CFT supervisors with prudential regulatory oversight of the FIs in Singapore to conduct on-site inspections of the FIs’ branches or subsidiaries in Singapore. These are authorities that would exercise consolidated supervision of the FIs as part of a financial group. 

11    However, in certain jurisdictions, responsibility for AML/CFT supervision resides in an authority that does not also have prudential supervision responsibilities.

12    Amendments are made for MAS to approve inspections⁶ in Singapore by the relevant home AML/CFT supervisor, whether or not it is also the FI’s prudential supervisor. The scope of such inspections will be limited to those for AML/CFT supervisory purposes⁷. Home AML/CFT supervisors may also appoint a third party to perform the inspection on their behalf.

Powers to share information subject to strong safeguards

13    To enhance cooperation between MAS and foreign AML/CFT supervisors in line with international standards, the MAS Bill will introduce a new Part on “Assistance to Foreign Authorities and Domestic Authorities for their Supervisory and other Actions in respect of Money Laundering, Financing of Terrorism, and other Offences” to allow MAS to :

a) share information with foreign AML/CFT supervisors for supervising their FIs on AML/CFT issues; and

b) make AML/CFT supervision-related enquiries on behalf of foreign AML/CFT supervisors. 

14    For domestic cooperation, the new Part will allow MAS to share information with relevant Singapore authorities for the purposes of taking AML/CFT supervisory actions, investigation or enforcement of any applicable offence. This would enable MAS to assist relevant domestic authorities to take appropriate actions in relation to illicit activities in a timely manner.

15    The following legislative safeguards, amongst others, have been included to prevent “fishing expeditions” and other forms of abuse in connection with a foreign AML/CFT supervisor’s request:

a) assistance to be rendered in relation to bona fide requests⁸ only;

b) information shared is to be proportionate to the specified purpose; and

c) the foreign AML/CFT supervisor has to undertake not to use the information for any purpose other than a purpose that is specified in the request and to protect the confidentiality of any information obtained. 

Clarification that the scope of the AML/CFT regime under the MAS Act extends to designated FHCs and non-bank credit card or charge card issuers

16    To support consolidated group supervision, the FHC Act was enacted in April 2013 to extend MAS’ regulatory powers to non-operating holding companies that hold as subsidiaries, banks or insurance companies in Singapore.

17    Whereas MAS has powers to regulate non-bank credit card or charge card issuers (“non-bank issuers”)⁹ under the MAS Act, we have hitherto not regulated them for AML/CFT. As there are emerging money laundering cases involving the abuse of such cards internationally, non-bank issuers are increasingly considered by international bodies to warrant closer scrutiny. MAS intends to regulate non-bank issuers for AML/CFT going forward.

18    Currently, designated FHCs¹⁰ and non-bank issuers are not explicitly listed as classes of financial institution under section 27A(6) of the MAS Act. The MAS Bill amends the definition of “financial institution” to explicitly list designated FHCs and non-bank issuers.