Guidelines to Notice VCC-N01 on Prevention of Money Laundering and Countering the Financing of Terrorism – Variable Capital Companies
Pursuant to the Variable Capital Companies Act (Act 44 of 2018) (“VCC Act”) and (“Notice VCC-N01”), MAS is introducing Guidelines to Notice VCC-N01 (“the Guidelines”). The Guidelines set out MAS’ supervisory expectations and addresses the relationship and responsibilities of the VCC and its Eligible Financial Institution (“EFI”).
2 MAS’ anti-money laundering and countering the financing of terrorism ("AML/CFT") requirements on VCCs are in principle, largely the same as those for other financial institutions regulated by MAS. Inter alia, VCCs must conduct money laundering/terrorism financing ("ML/TF") risk assessments, and ensure that customer due diligence (“CDD”) and ongoing monitoring are performed. In addition, it should be noted that there are aspects of Notice VCC-N01 that are unique, to account for the VCC’s business model:
a VCC must appoint an EFI (regulated by MAS for AML/CFT) to perform the necessary checks and measures to comply with Notice VCC-N01;
a VCC’s members are also its customers, as defined in Notice VCC-N01; and
a VCC must maintain a register of its beneficial owners and nominee directors.
3 The responsibility for compliance with Notice VCC-N01 ultimately lies with the VCC. Therefore, a VCC’s board of directors should ensure that the VCC’s AML/CFT processes are robust and properly executed by the EFI, and that the EFI has a good understanding of the ML/TF risks inherent in the VCC’s business. The VCC and its Board must continue to ensure that the VCC is complying with the requirements in Notice VCC-N01, including:
Approval of the VCC’s ML/TF risk assessments and policies and procedures;
Appointment of an AML/CFT compliance officer to carry out the AML/CFT function for the VCC;
Oversight of the EFI’s arrangements for outsourcing and reliance on third parties;
Senior management approval for establishing or continuing of business relations with customers who present higher ML/TF risk.
4 The VCC’s Board may decide to appoint one or more staff of the EFI to serve as its senior management to make such decisions. Where the VCC’s board has not appointed senior management positions, the Board shall take on the role of senior management. In any case, the VCC’s Board remain ultimately responsible for them.
5 Details are set out in the Guidelines and the Notice VCC-N01, for VCCs and EFIs to implement.