Singapore FIs Must Strengthen CFT Controls, Warns Regulator
The Monetary Authority of Singapore (MAS) has issued a circular to raise industry awareness about the risks associated with entities that have dealt or deal with digital payment tokens (DPTs) and other virtual assets.
Raising Awareness and Strengthening Controls
In its bid to curb financial misconduct and ensure the effective implementation of anti-money laundering (AML) and combating the financing of terrorism (CFT) controls, the MAS has shifted its focus from raising awareness of TF (and ML) risk to strengthening controls. The regulator will continue to monitor how DPT service providers implement their CFT controls, considering the risks associated with their activities.
Supervisory Actions
When weaknesses in CFT controls are identified, supervisors will take appropriate supervisory actions and follow up with regulated entities to ensure timely remediation measures are implemented. Supervisors will not hesitate to take firm actions against non-compliant entities, including imposing a range of sanctions and penalties.
Industry Guidance and Outreach
Sector supervisors will continue conducting regular engagement sessions aimed at augmenting the industry’s understanding of sector-specific TF risks. They will also issue guidance notes on CFT requirements and best practices to further support industry efforts.
Data Analytics and Technological Tools
The MAS enhances its supervision of FIs by utilizing data analytics to identify and target higher-risk activities among FIs, thereby strengthening supervisory effectiveness. The regulator is also exploring the use of new technologies to draw insights from data sources, bolstering its supervisory activities.
Industry Developments
Recent reports published by the Association of Cryptocurrency Enterprises and Startups (ACES) include:
- “Industry Perspectives on Best Practices – Management of ML, TF, and Sanctions Risks from Customer Relationships with a Nexus to Digital Assets”
- “Best Practices for FIs to Manage ML/TF/PF Risks Associated with Receiving Referrals from Corporate Service Providers”
Looking Ahead
Sector supervisors will continuously assess and reinforce the private sectors’ awareness of TF risks and CFT controls through outreach, industry guidance, and risk-focused supervision. As the financial landscape continues to evolve, it is crucial that FIs prioritize AML/CFT compliance to maintain public trust and prevent financial crimes.