CONSULTATION PAPER P007-2014 June 2014 Proposed Amendments To The Monetary Authority Of Singapore Act And Trust Companies Act
PREFACE To strengthen the regulatory framework for combating money laundering and terrorism financing (ML/TF), the Monetary Authority of Singapore (MAS) intends to amend the MAS Act and Trust Companies Act (TCA) to enhance Singapore s supervisory cooperation regime and to extend the regime for countering ML/TF to financial holding companies. 2 MAS invites interested parties to submit their views and comments on the proposals made in this consultation paper. Electronic submissions are encouraged (email: amlcft@mas.gov.sg). Written comments should be submitted to: Financial Services Cooperation Division International Department Monetary Authority of Singapore 10 Shenton Way, MAS Building Singapore 079117 All comments should be submitted to MAS by 7 July 2014. Please note that any submission received may be made public unless confidentiality is specifically requested for the whole or part of the submission. 1
1 INTRODUCTION 1.1 Singapore s 2013 National Money Laundering and Terrorist Financing Risk Assessment Report noted that the financial sector is exposed to ML/TF risks, due to various factors such as the size of the sector and its international reach. MAS currently has in place a robust preventive regime that combines strong licensing requirements, stringent AML/CFT regulations and rigorous supervision to mitigate these risks. 1.2 The proposed changes in this consultation paper will enhance the effectiveness of Singapore s AML/CFT regime, especially with regard to international cooperation. These enhancements will also align our regime with the revised Financial Action Task Force (FATF) Recommendations and other international standards such as the Core Principles for Effective Banking Supervision issued by the Basel Committee on Banking Supervision. MAS welcomes views and comments on the draft MAS Act (Amendment) Bill in Annex 1 and the Trust Companies Act (Amendment) Bill in Annex 2. 2 BRINGING FINANCIAL HOLDING COMPANIES INTO SCOPE 2.1 The Financial Holding Companies Act was enacted in April 2013 to extend MAS regulatory powers to designated non-operating holding companies that hold as subsidiaries, banks or insurance companies in Singapore. MAS is currently developing subsidiary legislation to bring this new Act into operation. The definition of financial institutions in the MAS Act will be amended to include designated financial holding companies so that they will be subject to appropriate AML/CFT regulation. 3 CUSTOMER DUE DILIGENCE AND RECORD KEEPING REQUIREMENTS 3.1 The MAS Act will be amended to set out the need to perform customer due diligence (CDD) and keep proper records in primary legislation. The inclusion of these provisions in the MAS Act will demonstrate Singapore s commitment to adhere to international standards. Countries like the United States, Australia and New Zealand have adopted a similar approach. The detailed CDD measures and record keeping requirements will continue to be reflected in the respective MAS AML/CFT Notices. MAS will also be proposing amendments to these Notices in the near future, and will be consulting the industry separately on these amendments. 4 ENHANCEMENTS TO MAS SUPERVISORY COOPERATION REGIME 4.1 Given that ML/TF can be transnational, effective international cooperation is essential to combat and deter such crime. In this regard, international standards for information sharing and cooperation to detect and recover illicit proceeds have recently 2
been raised to better facilitate the consolidated supervision of international financial institutions. 4.2 MAS already has powers to obtain and exchange supervisory information with foreign supervisors in respect of regulated financial institutions. It is proposed that these powers be broadened to enhance the level of cooperation, so that MAS will be able to share information, including protected information 1, with: i. Foreign counterpart authorities 2 for AML/CFT supervisory purposes; and ii. Singapore authorities for AML/CFT supervisory, investigation and law enforcement purposes. 4.3 Similar to the regimes in other developed markets, Singapore s laws provide for safeguards to protect customers rights to privacy of their personal financial information. However, such confidentiality is not intended to shield criminal activities. 4.4 FATF requires financial supervisors to be able to exchange protected information, such as information obtained from the performance of CDD measures, with their foreign counterparts for AML/CFT supervisory purposes. Such information could allow the relevant supervisors to assess the robustness of the financial institution s AML/CFT controls and procedures, as well as facilitate effective group supervision. It is proposed that MAS be empowered to exchange protected information with foreign supervisors for AML/CFT purposes. 4.5 In addition to enhancing cooperation with foreign supervisors, MAS will also be allowed to share protected information with relevant Singapore authorities for AML/CFT supervision, investigation and law enforcement purposes. 4.6 Cooperation with foreign supervisors and domestic authorities will be subject to strong safeguards to prevent abuse and to protect the confidentiality of the information shared. Among others, the following safeguards will be put in place to prevent fishing expeditions and other forms of abuse: (a) Assistance will be rendered only in bona fide cases; 1 This refers to information protected from unauthorised disclosure under any prescribed written law, including information protected under Section 47 of the Banking Act and Section 49 of the Trust Companies Act. 2 This would include authorities such as the Australian Transaction Reports and Analysis Centre that have an AML/CFT supervisory role, but do not have broader supervisory responsibilities over financial institutions. 3
(b) (c) (d) Information shared should be proportionate to its specified purpose; The recipient will protect the confidentiality of the information shared and use the information only for the specific purposes specified in the request; and Where customer information is shared, the recipient will provide a letter of undertaking to ensure confidentiality and render reciprocal assistance. 5 INSPECTIONS BY FOREIGN SUPERVISORY AUTHORITIES 5.1 To facilitate the consolidated supervision of financial institutions by their home supervisory authorities, MAS routinely facilitates the conduct of on-site inspections by foreign supervisory authorities of financial institutions operations in Singapore. While the affected financial institutions are typically those regulated under the Banking Act, Insurance Act and Securities and Futures Act, financial institutions regulated under the Trust Companies Act (TCA) may also be subject to consolidated supervision by their foreign parent supervisory authorities. 5.2 In this regard, the TCA currently only expressly allows MAS to authorise on-site examinations by foreign supervisory authorities of licensed trust companies (LTCs) that are incorporated outside Singapore, i.e. branches. It is proposed that the powers in the TCA be aligned with the existing powers under the Banking Act to facilitate the inspection of Singapore-incorporated LTCs that are subsidiaries of foreign financial groups by their foreign parent supervisory authorities. 5.3 MAS will also review other legislation that it administers, such as the Financial Advisers Act and the Money-changing and Remittance Businesses Act, to consider if similar powers to authorise on-site examinations by home supervisory authorities would be relevant. 4