MAS Consults on Proposed Amendments to AML/CFT Notices for FIs and VCCs – to Mandate PF Assessments, Align Trust Regime and Streamline STR Filing Regime

Introduction

On 8 April 2025, the Monetary Authority of Singapore (“MAS“) issued its “Consultation Paper on Proposed Amendments to AML/CFT Notices and Guidelines” (“Consultation“) to seek feedback on its proposed amendments to the anti-money laundering and countering the financing of terrorism (“AML/CFT“) regime for financial institutions (“FIs“) and variable capital companies (“VCCs“).

1. Purpose: The proposed amendments will ensure that the AML/CFT regime takes in developments in money laundering (“ML“), terrorism financing (“TF“) and proliferation financing (“PF“), including the latest revised Financial Action Task Force (“FATF“) Standards.

2. Affected institutions: The amendments will apply across the financial sector, including banks, merchant banks, finance companies, payment service providers, direct life insurers, capital markets intermediaries, financial advisers, central depository, approved exchange and recognised market operators, approved trustees, trust companies, non-bank credit and charge card licensees and digital token service providers, as well as VCCs.

3. Timelines: The Consultation closes on 8 May 2025. The amendments will be set out in various AML/CFT Notices and Guidelines which are intended to take effect from 30 June 2025.

4. Coverage: The amendments will:

• • Mandate PF risk assessments: Clarify that ML includes PF and that ML risks include PF risks, such that the requirement for FIs and VCCs to carry out ML/TF risk assessments includes PF risk assessments.
  • Align trust regime to include trust relevant parties and legal arrangements: Effectively ensure that the requirements in MAS Notice TCA-N03 (e.g. on collecting information and identifying effective controllers) will more broadly apply to: (i) trust relevant parties (i.e. not only limited to settlors, trustees and beneficiaries, etc, but also including protectors, classes of beneficiaries and objects of powers, and persons with specific powers or exercising effective control under the trust, etc); and (ii) legal arrangements (i.e. not only limited to trusts).
  • Streamline STR filing regime: Clarify the timelines for filing suspicious transaction reports (“STRs“), to improve the timeliness and promptness of the provision of information to the Suspicious Transaction Reporting Office (“STRO“) for analysis and follow-up. This represents a significant enhancement to the STR reporting timeline.
  • Clarify screening requirements and SOW/SOF establishment: Clarify the: (i) applicable screening requirements; and (ii) establishment of source of wealth (“SOW“) and source of funds (“SOF“), for customers and beneficial owners of FIs and VCCs.

This Update covers the significant changes being proposed and their impact on FIs and VCCs.

Mandate PF Risk Assessments

Currently, the AML/CFT Notices do not expressly refer to PF. It is noted that offences under MAS’ sanctions and freezing of assets of persons regulations (which give effect to the relevant United Nations Security Council Resolutions regarding PF) are already ML-predicate offences under the Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act 1992 (CDSA). Thus, FIs would in practice already be covering PF risks as part of their existing AML/CFT and/or sanctions compliance controls.

Proposed Amendments

MAS seeks comments on its proposed amendments to the AML/CFT Notices, to clarify that ML includes PF and that ML risks include PF risks, such that the legal requirement for FIs and VCCs to carry out ML/TF risk assessments includes PF risk assessments.

Align Trust Regime to Include Trust Relevant Parties and Legal Arrangements

Currently, MAS Notice TCA-N03 defines a “trust relevant party” to include the settlor, trustee, beneficiaries, and any person who has any power over the disposition of any property that is subject to trust. Protectors are included within this definition to the extent that they have the power over the disposition of trust property. In practice, trust companies are currently already obtaining and verifying information and identifiers relating to all parties to the legal arrangement, including protectors, whether or not the persons performing the function of a protector have the power over the disposition of trust property.

Proposed Amendments

To better align with recent legislative changes to the Trustees Act 1967 giving effect to the revised FATF Recommendation 25, MAS seeks comments on its proposed amendments to MAS Notice TCA-N03 as follows:

1. Expand definition of “trust relevant party”: Expand the definition of “trust relevant party” to include a “protector”, a “class of beneficiaries”, an “object of a power”, and “any other persons with the power under the legal arrangement instrument or by law” to e.g. deal with the property under the legal arrangement, vary or terminate the legal arrangement, or add or remove a person as a beneficiary or object of a power or from a class of beneficiaries under the legal arrangement. In this regard, MAS Notice TCA-03 will be amended to define an “object of a power” as a person who:

• • Is a member of a class of possible beneficiaries under the trust; and
  • Is reasonably expected to benefit from the trust, whether or not because: (i) the person is referred to as a potential beneficiary by the settlor in a document relating to the trust (such as a letter of wishes); or (ii) the class of possible beneficiaries has narrowed for any reason.

2. Obtain information on trust relevant parties of legal arrangement: Specify the following additional information in respect of the trust relevant parties of a legal arrangement, which trust companies are required to obtain and hold: (i) information on the identity of the protector; (ii) information on the identity of the class of beneficiaries and object of a power; and (iii) information on the identity of any other natural persons exercising ultimate effective control over the trust relevant party. 

3. Identify effective controllers of trust relevant parties (not just settlors or trustees): Require identification and verification of the identity of the effective controllers of all trust relevant parties of a trust or other similar arrangement (not just the effective controllers of settlors or trustees only, as is currently the case) (see paragraphs 6.14-6.16 of MAS Notice TCA-N03). 

4. Collect information on legal arrangement: Require the collection of specific information regarding the legal arrangement, e.g.: (i) full name; (ii) unique identifier such as a tax identification number or its equivalent; (iii) a copy of the trust deed or its equivalent; (iv) purpose for which the legal arrangement was set up; and (v) place where the legal arrangement is administered.

Effectively, these amendments will ensure that the requirements in MAS Notice TCA-N03 (e.g. on collecting information and identifying effective controllers) will more broadly apply to: (i) trust relevant parties (i.e. not just limited to settlors, trustees and beneficiaries, etc, but also including protectors, classes of beneficiaries and objects of powers, and persons with specific powers or exercising effective control under the trust, etc); and (ii) legal arrangements (i.e. not just limited to trusts).

Streamline STR Filing Timelines 

Currently, FIs and VCCs are required under the AML/CFT Notices to ensure that STRs are filed with STRO promptly. Further, the AML/CFT Guidelines set out supervisory expectations for FIs and VCCs, to ensure that their internal process for evaluating whether a matter should be referred, is completed without delay and should not exceed 15 business days (of the case being referred by the relevant employee or officer) save in exceptional or extraordinary circumstances.

Proposed Amendments

1. Clarify STR filing timelines: MAS seeks comments on its proposed amendments to clarify in the AML/CFT Guidelines that:

• • Five business days: The filing of an STR should not exceed five business days after suspicion was first established, save in exceptional or extraordinary circumstances; and
  • One business day: In cases involving sanctioned parties and parties acting on their behalf or under their direction, FIs and VCCs should file the STRs as soon as possible, and no later than one business day after suspicion was first established.

2. Require identification, prompt review and escalation of concerns: MAS also proposes to stipulate in the AML/CFT Guidelines that FIs and VCCs should:

• • Identify and prioritise the review of concerns of higher ML/TF risks;
  • Ensure that such concerns are reviewed promptly; and
  • Require any such concerns that cannot be reviewed promptly to be escalated to senior management or a similar oversight body, for the application of appropriate ML/TF risk mitigation measures.

3. Require extension of STR to MAS only upon request: MAS further proposes to:

• • Remove the requirement for FIs and VCCs to extend a copy of STRs filed with STRO to MAS for information (as MAS can already access the same directly); and
  • Replace this with a requirement to extend a copy of STRs filed with STRO to MAS upon request, to cover situations when this separate access route might be necessary.

Clarify Screening Requirements and SOW/SOF Establishment

MAS’ last set of proposed amendments serve to clarify the: (i) applicable screening requirements; and (ii) establishment of SOW and SOF, for customers and beneficial owners of FIs and VCCs.

1. Native search engines and languages: Clarify that: (i) where necessary, ML/TF information sources used for screening should include pertinent search engines used in countries or jurisdictions closely associated with the person screened; and (ii) screening should be conducted in the native language(s) of the person screened.

2. Sharing information across business units: Clarify that there should be processes to share information on customers and related accounts across business units. Information to be shared should minimally include customer due diligence and SOW information collected under the AML/CFT Notices.

3. Identifying fraudulent / tampered data: Clarify that: (i) staff should be provided with adequate guidance on how to identify indicators of fraudulent or tampered data, documents or information; and (ii) processes should also be in place to ensure that observed indicators are escalated, and that appropriate ML/TF risk mitigation measures are applied in a timely manner.

4. SOW/SOF clarifications: Various clarifications relating to SOW and SOF, including:

• • Include seed money: SOW includes seed money that has generated subsequent wealth and gifts or other assets (if any) received by the customer and beneficial owner;

• • Indicate wealth composition and acquisition: SOW information should give an indication, to the extent practicable, about the entire body of wealth that the customer and beneficial owner would be expected to have, and how the customer and beneficial owner acquired the wealth;

• • Corroborate material, higher-risk SOW/SOF: Information regarding SOW and SOF should be corroborated. A risk-based approach should be taken, where corroboration is focused on SOW and SOF that are more material and/or present a higher risk for ML/TF;

• • Prioritise independent verification: Measures should be taken to ensure that SOW and SOF that are more material and/or present a higher risk for ML/TF are established through appropriate and reasonable means: (i) to the extent practicable, using reliable and independent sources of information; and (ii) in cases where independent sources of information are not available, then prudence should be exercised in the use of non-independent sources of information;

• • Mitigate risks of uncorroborated SOW/SOF: Where SOW or SOF that is more material and/or presents a higher risk for ML/TF cannot be corroborated, there should be an assessment of: (i) whether the residual risks associated with not corroborating such SOW or SOF are acceptable; and (ii) whether additional risk mitigation measures should be applied in the absence of corroboration;

• • Assess third party gifts: Where a material SOW of the customer or beneficial owner is a gift or other asset received from third parties: (i) information should be obtained to establish the legitimacy and plausibility of such gift or other asset and an assessment should be conducted on the plausibility of the third party’s SOW; and (ii) when unable to do so, an assessment should be conducted on the residual risks presented by the third party’s SOW, taking into consideration whether additional risk mitigation measures should be applied on the business relationship with the customer;

• • Assess termination and STR filing: There should be an assessment of whether the customer and beneficial owner’s SOW and SOF are plausible and legitimate, considering all the information and documents obtained. Where this cannot be ascertained, there should be consideration of whether there are grounds for terminating business relations with the customer and whether an STR should be filed;

• • Assess and corroborate key changes: Attention should be paid to changes in the customer’s risk profile, information and/or transactions that would warrant corroboration of the customer’s and any beneficial owner’s SOW and SOF. Such corroboration should be conducted in a timely manner; and

• • Corroborate HNWIs SOW/SOF: Private banking business and similar business with high-net-worth customers or individuals (“HNWIs”) in respect of which corroboration of customer’s and beneficial owner’s SOW and SOF should be conducted, includes, but is not limited to, the offering of personalised wealth management services, financial advisory services and financial products to HNWIs.

5. Characteristics of higher-risk shell companies: Include the characteristics of higher-risk shell companies that FIs and VCCs should consider – as examples of potential categories posing higher ML/TF risks requiring enhanced customer due diligence measures (under paragraph 8.7 of MAS Notice 626 and the equivalent in other AML/CFT Notices).

6. Participation in tax amnesty programme: Include participation in a tax amnesty programme – as an example of a suspicious transaction requiring rejection or discontinuance of a relationship with the customer (under MAS Notice 626’s Appendix B “Examples of Suspicious Transactions” at “Tax Crimes Related Transactions”, and the equivalent in other AML/CFT Notices).

7. Consider risk assessment reports: Clarify that the risk assessment reports that FIs and VCCs should consider as part of their enterprise-wide ML/TF risk assessment process include: (i) the Money Laundering National Risk Assessment Report; (ii) the Terrorism Financing National Risk Assessment Report; (iii) the Proliferation Financing National Risk Assessment Report; and (iv) other risk assessment reports.

8. Further/supplementary STR filing: Clarify that after reporting suspicion in relation to a customer or a transaction for that customer, where further suspicion is raised in relation to the customer or any transaction for that customer, an assessment should be conducted on whether the filing of a further or supplementary STR to report the further suspicion is warranted.

9. Expanded trust-related definitions: In the AML/CFT Guidelines: (i) replace references to “settlors” and “protectors”, with “trust relevant parties”, to reflect the expanded definition of the latter; and (ii) replace the term “trust” with “legal arrangement”.

Conclusion

Depending on the FI or VCC involved, these proposed changes could potentially have significant ramifications on their present AML/CFT policies, processes and operations, including in relation to critical areas such as risk assessments and compliance controls, collection of trust-related information and identification of the effective controllers of the trust, filing of STRs, and conduct of screening and establishment of SOW and SOF for their customers and beneficial owners.

As the intended effective date for the proposed changes of 30 June 2025 approaches, it is imperative that FIs and VCCs alike consider early implementation of these changes in a consistent, comprehensive and compliant manner.

Our team stands ready to assist if you have any questions or clarifications regarding the contents of these changes and/or how best to implement and operationalise the same.

For more information, please click on the following links:

• • Proposed amended drafts of the AML/CFT Notices (available at the MAS website at www.mas.gov.sg):
    • “MAS Notice 314” 
    • “MAS Notice 626”
    • “MAS Notice 626A”
    • “MAS Notice 824”
    • “MAS Notice 1014”
    • “MAS Notice FAA-N06”
    • “MAS Notice PSN01”
    • “MAS Notice PSN02”
    • “MAS Notice SFA02-N05”
    • “MAS Notice SFA03AA-N01”
    • “MAS Notice SFA04-N02”
    • “MAS Notice SFA13-N01”
    • “MAS Notice TCA-N03”
    • “MAS Notice VCC-N01”
    • “MAS Notice PSM-N01” 
    • “MAS Notice FSM-N27” 

• • Proposed amended drafts of the AML/CFT Guidelines (available at the MAS website at www.mas.gov.sg):
    • “Guidelines to MAS Notice 314”
    • “Guidelines to MAS Notice 626”
    • “Guidelines to MAS Notice 626A”
    • “Guidelines to MAS Notice 824”
    • “Guidelines to MAS Notice 1014”
    • “Guidelines to MAS Notice FAA-N06”
    • “Guidelines to MAS Notice PSN01”
    • “Guidelines to MAS Notice PSN02”
    • “Guidelines to MAS Notice SFA02-N05”
    • “Guidelines to MAS Notice SFA03AA-N01”
    • “Guidelines to MAS Notice SFA04-N02”
    • “Guidelines to MAS Notice SFA13-N01”
    • “Guidelines to MAS Notice TCA-N03” 
    • “Guidelines to MAS Notice VCC-N01”