"Monetary Authority of Singapore (Amendment) Bill" - Second Reading Speech by Mr Lawrence Wong, Minister for Culture, Community and Youth on behalf of Mr Tharman Shanmugaratnam, Deputy Prime Minister and Minister in Charge of MAS on 11 May 2015
Mdm Speaker, I beg to move, “That the Bill be now read a second time”.
2 Singapore’s financial centre has contributed significantly to our economic growth and development. However, the size and international reach of our financial sector also expose Singapore to money laundering and terrorism financing risks. To mitigate these risks, the Monetary Authority of Singapore (MAS) has in place a robust preventive regime that combines stringent admission and licensing requirements, rigorous supervision, and strong enforcement measures.
3 MAS reviews this regime regularly to keep pace with the constantly evolving threats, as well as with developments in international standards and best practices.
4 The proposed amendments will strengthen MAS’ supervisory powers in relation to anti-money laundering (AML) and countering the financing of terrorism (CFT). They will also enhance MAS’ ability to cooperate with its foreign supervisory counterparts. These changes will align our regime with the international standards set by the Financial Action Task Force (FATF) and the Basel Committee on Banking Supervision.
5 MAS had sought public consultation on these changes. The feedback received has been carefully considered and incorporated into the Bill.
6 Mdm Speaker, I will now go through the main amendments of the Bill.
KEY PROVISIONS IN THE MAS (AMENDMENT) BILL
I. Set out AML/CFT Requirements
7 Customer due diligence and record keeping requirements are fundamental to an effective AML/CFT regime. In its revised standards, the FATF has recommended that these requirements be set out in primary legislation to demonstrate a country’s commitment to combat money laundering and terrorism financing. Consequently, countries like the United States, Australia and New Zealand have similarly done so.
8 Financial institutions here are already required to carry out due diligence measures to know their customers well and to monitor their transactions for suspicious activity. Financial institutions are also required to maintain proper records to facilitate AML/CFT supervision and investigation into any possible criminal activity.
9 The amendments will now embed in the MAS Act, the general requirements to conduct customer due diligence and to maintain records.
10 The detailed requirements for customer due diligence and record keeping are currently applied through Notices issued by MAS, and this will continue to be the case.
II. Set out powers to conduct AML/CFT inspections and to authorise such inspections by home AML/CFT supervisors
11 The power to conduct inspections is essential to checking that Financial Institutions comply with the AML/CFT rules. Currently, MAS’ power to carry out inspections is found in sector-specific legislation such as the Banking Act, Insurance Act and the Securities and Futures Act. For greater efficiency and consistency, these powers will now be centralised in the MAS Act. The new provisions will:
a. vest MAS with the power to inspect Financial Institutions for compliance with directions or regulations relating to Singapore’s international obligations, such as United Nations Security Council Resolutions on sanctions and the prevention of money laundering and terrorism financing; and
b. enable MAS to appoint a third party (e.g. an auditor) to inspect an Financial Institution on MAS’ behalf.
12 MAS may currently approve an inspection of a foreign Financial Institution in Singapore by its “home prudential supervisor” to facilitate effective consolidated group supervision. However, in certain jurisdictions, such as Australia, the responsibility for AML/CFT supervision resides in an authority that does not have prudential supervision responsibilities.
13 Therefore, the amendments seek to empower MAS to approve inspections in Singapore by the home AML/CFT supervisor, whether or not it is also the FI’s prudential supervisor. MAS’ written approval must be obtained for this purpose.
III. Powers to share information subject to strong safeguards
14 To enhance cooperation between MAS and its foreign AML/CFT counterparts, the Bill will introduce powers to allow MAS to share information to facilitate the AML/CFT supervision of financial institutions originating from its counterpart jurisdiction. MAS will also be able to make AML/CFT supervisory enquiries on the counterpart’s behalf.
15 Any information shared with MAS’ counterpart may be used by them only for AML/CFT supervisory purposes. Nonetheless, MAS may give its consent, upon the request of an AML/CFT supervisor, to allow information that has been shared for AML/CFT supervisory purposes to be shared by the AML/CFT supervisor with a third party, in appropriate circumstances. Such onward-sharing of information will be subject to confidentiality safeguards set by MAS.
16 Legislative safeguards have been included to prevent “fishing expeditions” and other forms of abuse. For example, assistance will only be rendered in relation to bona fide requests, and the foreign AML/CFT supervisor has to undertake to use the information only for the purpose that is specified in the request and to protect the confidentiality of any information obtained.
17 On the domestic front, the amendments will enhance MAS’ ability to share information with relevant Singapore authorities for the purposes of taking AML/CFT supervisory, investigation or enforcement actions in a timely manner.
18 Mdm Speaker, in conclusion, all governments have to play their part in the fight against the ever-present threat of money laundering and terrorism financing, and more so for international financial centres such as Singapore. In its recent assessment of Singapore’s compliance with the Basel Core Principles for Effective Banking Supervision, the IMF recognised that MAS has in place a strict AML/CFT regime. Even so, in light of the constantly evolving threat, it is important that we continually review and enhance our regime to align it with international standards and best practices. The introduction of the MAS (Amendment) Bill represents Singapore’s resolve to maintain the high standards of integrity and trust in our financial system.
19 Mdm, I beg to move.