The Financial Action Task Force (FATF) published in June 2019 a “Guidance for a Risk-Based Approach for Trust and Company Services Providers” (FATF Guidance).  The FATF Guidance can be found at the FATF website: https://www.fatf-gafi.org/media/fatf/documents/reports/RBA-Trust-Company-Service-Providers.pdf .

2         The FATF Guidance supports the implementation of a risk-based approach  and provides specific guidance for the trust and company service providers (TCSP)TCSPs include licensed trust companies which are regulated by MAS and their supervisors to consider risk criteria and implement mitigation measures commensurate with the nature, size and complexity of the TCSP business. This approach enables them to focus their resources where risks are higher. The FATF Guidance was developed in partnership with the private sector and reflects expertise and good practices from within the industry. Licenced trust companies regulated by MAS are advised to take reference from the FATF Guidance, where appropriate for them, when reviewing the effectiveness of their AML/CFT framework.

3          The FATF Guidance outlines the key elements involved in applying the RBA, including the need for TCSPs to have sound ML/TF risk assessment, examples of risk factors, the design of policies and procedures to ensure that due diligence measures effectively address ML/TF risk exposures at onboarding and ongoing monitoring, and the extent to which TCSPs should identify and verify beneficial owners of their customers.  Given the wide range of TCSP customers with different trust and corporate structures, the FATF Guidance also provides examples of standard, simplified and enhanced CDD measures based on the ML/TF risk of the TCSP customers and structures.