Compliance / Financial Services Singapore Client Alert June 2015 Legislative Amendments to Strengthen the Monetary Authority of Singapore's Anti-Money Laundering Efforts and Counter the Financing of Terrorism The Monetary Authority of Singapore ("MAS") (Amendment) Bill, passed in Parliament on 11 May 2015, provides MAS with greater supervisory powers over financial institutions and more extensive cooperation between MAS and its foreign supervisory counterparts. This amendment was accepted from the proposed revisions in MAS' Consultation Paper P009-2014, as referred to in our previous update (link). There are three main aspects to the MAS (Amendment) Bill. First, the Bill consolidates, at the level of primary legislation, MAS' authority to require financial institutions to conduct customer due diligence and record all findings. While these requirements are already in place through notices issued by MAS, the amendment is in line with the Financial Action Task Force's ("FATF") recommendation that the requirements be set out in primary legislation to demonstrate commitment to combat money laundering ("AML") and counter the financing of terrorism ("CFT"). This has similarly been implemented in other countries such as the USA, Australia and New Zealand. Second, the Bill consolidates provisions on MAS' power to conduct inspections to check that financial institutions comply with AML/CFT Rules, which are currently found in sector-specific legislation such as the Banking Act, the Insurance Act, and the Securities and Futures Act. Having them centralised in the MAS Act will provide for greater efficiency and consistency. The Bill also vests MAS with the power to inspect financial institutions for compliance with directions or regulations relating to Singapore's international obligations, such as the United Nations Security Council Resolutions on sanctions and the prevention of money laundering and terrorism financing. Additionally, the Bill allows MAS to appoint a third party, such as an auditor, to inspect a financial institution on MAS' behalf. Third, and perhaps most significantly, the Bill enhances MAS' capability to cooperate with its foreign counterparts regarding AML and CFT operations. It grants MAS the power to share information to facilitate AML and CFT operations and supervision from the financial institution's home jurisdiction. MAS will be able to make supervisory enquiries on behalf of its foreign counterpart. Strong safeguards will be set in place to protect the confidentiality of the financial institutions' clients. Any information shared by MAS with its foreign counterparts may only be used for the purpose of facilitating AML or CFT supervision. However, MAS is empowered to allow information that has been For further information please contact Celeste Ang +65 6434 2753 firstname.lastname@example.org Stephanie Magnus +65 6434 2672 email@example.com Weiyi Tan +65 6434 2689 firstname.lastname@example.org Baker & McKenzie.Wong & Leow 8 Marina Boulevard #05-01 Marina Bay Financial Centre Tower 1 Singapore 018981 www.bakermckenzie.com 2 Client Alert May 2015 shared for AML or CFT supervisory purposes to be shared by its foreign counterpart with a third party in appropriate circumstances, subject to confidentiality safeguards. Information deemed relevant to such purposes would generally relate more to the financial institution itself, including its policies and procedures, management or control structure, or control lapses. Additionally, only requests for information that are proportionate and of sufficient importance to the supervisory issues raised may be considered. The matters to which the request relates should be of sufficient gravity. MAS will consider and take into account the specific facts of each request. Implementation of the amendments is scheduled for mid-2015, with no transition period. Comments MAS will have greater authority to share information with the relevant domestic and foreign authorities to facilitate AML or CFT supervision. However, it should be noted that there are still limits to the sharing of information to safeguard against spurious international requests and protect bona fide client confidentiality. It has been clarified that the information shared must be relevant for the foreign AML/CFT supervisor to assess the financial institution's compliance with relevant AML/CFT laws and regulations, and are not meant to be used for investigations into specific clients of the financial institution. Further, information will only be shared with foreign AML/CFT supervisors involved in the supervision of the given financial institution. No information will be shared with AML/CFT supervisors from jurisdictions in which the financial institution does not have a presence. ©2015 Baker & McKenzie. All rights reserved. Baker & McKenzie International is a Swiss Verein with member law firms around the world. In accordance with the common terminology used in professional service organizations, reference to a “partner” means a person who is a partner, or equivalent, in such a law firm. Similarly, reference to an “office” means an office of any such law firm. 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