Parliamentary Replies
Published Date: 15 August 2016

Reply to Parliamentary Question on standardised internal process for financial institutions in monitoring and handling potential anti-money laundering cases




Date: For Parliament Sitting on 15 August 2016

Name and Constituency of Member of Parliament

Ms Sylvia Lim, MP, Aljunied GRC


To ask the Prime Minister (a) whether the recently-announced dedicated Anti-Money Laundering (AML) department within MAS will standardise internal processes in all financial institutions with regard to monitoring and handling potential AML cases; and (b) in what ways will the enforcement functions of the new Enforcement Department be strengthened and how will these differ from past practice.

Answer by Mr Tharman Shanmugaratnam, Deputy Prime Minister and Minister in charge of MAS:

1   The Monetary Authority of Singapore (MAS) has in place strict anti-money laundering and countering the financing of terrorism (AML/CFT) rules for the financial sector. They are closely aligned with international standards.

2   The rules require financial institutions to conduct robust “know-your-customer” (KYC) checks, monitor customers’ transactions on an ongoing basis, and file suspicious transaction reports with the Commercial Affairs Department when suspicious activities are detected. The task at hand is therefore not about imposing more or stricter rules, but strengthening the financial sector’s implementation of existing regulatory requirements.

3   The recently established AML Department within MAS will consolidate and enhance our AML/CFT supervisory resources. It will provide a dedicated supervisory focus with regard to financial institutions’ compliance with MAS’ AML/CFT rules and raising industry standards. This consolidated function will engage actively with the industry to share perspectives on emerging money laundering and terrorism financing risks and typologies, as well as best practices in AML/CFT controls. It will also conduct more frequent, focused inspections of financial institutions identified as facing higher risks in this area. MAS will take regulatory actions against those financial institutions whose AML/CFT practices fall short of the expected standards. MAS will also make public its sanctions against persistently or egregiously errant financial institutions.

4   While certain responsibilities such as robust KYC checks are common to all financial institutions, it is not possible to standardise AML/CFT frameworks, systems and processes. This is because different financial activities and institutions vary with regard to the nature of the business and their customer bases, and consequently face different money laundering and terrorism financing risks. The risk management systems and controls adopted by a financial institution should therefore be suited to its business and commensurate with its risk profile.

5   With a financial centre that comprises more than 1,500 financial institutions, it is not possible to prevent regulatory breaches and misconduct, even with intrusive supervision. A strong enforcement capability is hence necessary to investigate and take swift action where there are breaches of the law. Enforcement helps shape the behaviour of market participants, by deterring unethical behaviour and complacency.

6   The new Enforcement Department consolidates the current resources and expertise within MAS that is devoted to the investigation of breaches in the rules and regulations administered by MAS. The Department will expand its ambit beyond capital markets misconduct offences, to include the banking and insurance sectors. It will co-ordinate efforts with MAS supervisors in various sectors within the financial industry, to detect and investigate serious lapses or instances of misconduct.

7   The Enforcement Department will also aggregate and review different pools of information from across different financial sectors to anticipate risks, identify patterns, and investigate potential misconduct and market abuses. The Department is stepping up the use of data analytics to enhance market surveillance, to help identify potential market misconduct and investigate specific offences.

8   Together, the new departments will enhance MAS’ ability to anticipate, detect and investigate serious regulatory breaches, as well as tackle money laundering and terrorist financing risks as they continue to evolve.