INDIVIDUALS who hold prominent public function roles, including heads of state and senior political party officials, may come under closer financial scrutiny as Singapore's central bank looks to tighten rules to tackle money laundering and terrorism financing.
Monetary Authority of Singapore (MAS) deputy managing director Ong Chong Tee said: "Singapore is fully committed to keeping our financial centre clean and supporting global efforts to combat financial crime."
Since the Sept 11, 2001 attacks on New York and Washington, DC, the authorities around the world have worked to crack down on illegal movements of money.
The MAS yesterday released a consultation paper on the proposed amendments to its notices to financial institutions.
The proposed changes include a requirement for financial institutions to "cater for a risk-based approach for certain categories of politically exposed persons", said the MAS in a statement.
A "politically exposed person" is defined as a person entrusted with prominent public functions, which include the roles held by a head of state, government ministers, senior civil or public servants, or senior political party officials.
Other than conducting normal customer due diligence measures, financial institutions have to go one step further for such politically exposed people by, for example, checking their source of wealth.
Financial institutions must also carry out enhanced monitoring of the business relations with such clients as well as with their family members and close associates under the proposed amendments. Another rule being proposed is that financial institutions must put in place additional requirements for cross-border wire transfers exceeding $1,500. These would include performing customer due diligence on occasional transactions and minimum information fields in the message or payment instructions.
Not all cross-border transactions above $1,500 would be affected as financial institutions would normally already have the relevant information as part of their customer due diligence, such as when they establish business relations with their customers.
For the first time, card network providers such as American Express or Diners Club will also be issued with a new notice on the prevention of money laundering and terrorism financing.
MAS said in the consultation paper that such non-bank credit or charge card issuers are already subject to existing regulations and have established internal controls against money laundering and terrorism financing.
They have not been regulated for anti-money laundering and counter-terrorism financing as MAS said they are less exposed to these risks compared with other financial sub-sectors here.
But MAS said they will now come under such regulations as "the card-issuing sub-sector as a whole is considered by international bodies to warrant closer scrutiny".
Other proposed amendments would see financial institutions perform money-laundering or terrorism- financing risk assessments at the wider institutional level.
This is on top of assessing such risks over individual customers. Financial institutions will also have to formalise the need to screen customers and their connected parties.
Many of the proposals are already being done by financial institutions, according to MAS, which said "the proposed changes formalise existing supervisory expectations and practices of the financial institutions".
MAS said the new measures will further safeguard Singapore's financial system from being used to launder money or finance terrorism. In an evaluation exercise conducted by the Financial Action Task Force (FATF) in 2008, Singapore was assessed to have a rigorous regime against money laundering and the financing of terrorism, Mr Ong said.
The FATF will conduct another evaluation of Singapore next year and Mr Ong said MAS aims to do as well in that exercise. The FATF is the global standard-setter for measures to combat money laundering, terrorist financing, and the financing of proliferation.
Dr Lim Wee Kiak, a member of the Government Parliamentary Committee for Finance and Trade and Industry, said: "If there are more checks and balances, it is always better."
Among the prosed changes:
- Financial institutions need to cater for a risk-based approach for certain categories of politically exposed people.
- Financial institutions must put in place additional requirements for cross-border wire transfers exceeding $1,500.
- Financial institutions need to perform money-laundering or terrorism-financing risk assessment at the wider institutional level.
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