Published Date: 25 June 2019

Effective Practices to Detect and Mitigate the Risk from Misuse of Legal Persons

Sets out MAS’ supervisory expectations of financial institutions’ ("FIs") controls to address the misuse of legal persons risks and typologies observed.

Applies to: Credit/Charge Card Issuer , Finance Company , Full Bank (Branch) , Full Bank (Locally Incorporated) , Merchant Bank (Branch) , Merchant Bank (Locally Incorporated) , Wholesale Bank (Branch) , Wholesale Bank (Locally Incorporated) , Financial Holding Company (Banking) , Exempt Trust Company , Licensed Trust Company , Exempt Person Providing Trust Services , Approved CIS Trustee , Benchmark Administrator/Submitter , Central Securities Depository , Clearing House , Corporate Finance Advisory , Credit Rating Agency , Dealing in Capital Markets Products , Exempt Capital Markets Services Entity , Exempt Corporate Finance Adviser Serving Accredited Investors , Exempt Futures Broker , Exempt OTC Derivatives Broker , Foreign Fund Manager , Holding Company of Exchange or Clearing House , Licensed Fund Management Company , Members of Public , Markets and Exchanges , OTC Counterparties , Money Broker , Product Financing , Providing Custodial Services , Registered Business Trust , Registered Fund Management Company , REIT Management , Securities Crowdfunding , Venture Capital Fund Management Company , Trade Repository , Exempt Financial Adviser , Exempt Financial Adviser Serving up to 30 Accredited Investors , Licensed Financial Adviser , Credit and Charge Card Licensee , Designated Payment System Operator , Designated Payment System Settlement Institution , Standard Payment Institution , Major Payment Institution , Money-changing Licensee , Direct Insurer (Life) , Direct Insurer (General) , General Insurance Agents , Direct Insurer (Composite) , Reinsurer (Life) , Reinsurer (General) , Reinsurer (Composite) , Captive Insurer , Lloyd's Asia Scheme , Authorised Reinsurer , Representative Office (Insurance) , Approved MAT Insurer , Financial Holding Company (Insurance) , Registered Insurance Broker , Exempt Insurance Broker , Approved Insurance Broker , Lloyd's Broker , Technology
MAS conducted a series of thematic AML/CFT inspections targeted at assessing the effectiveness of banks’ controls in mitigating risks from the misuse of legal persons. This guidance paper summarises the key findings from the inspections, and sets out MAS’ supervisory expectations of sound practices, for effective AML/CFT frameworks and controls to address misuse of legal persons risks and typologies. In addition, illustrative case examples and best practices observed from the inspections can be found within the paper, which other FIs could consider emulating. 


While this guidance paper is derived from MAS’ banking inspection findings, the key findings would be relevant and applicable to other FIs with the appropriate modifications. FIs should therefore study and incorporate learning points from this guidance in a risk-based and proportionate manner, giving proper regard to the profile of their business activities and customers. FIs should also note that the takeaways in this paper are non-exhaustive, and they should continue to strengthen their AML/CFT controls in detecting and mitigating shell company risks as typologies and risks evolve over time.