On 16 January 2018, the Monetary Authority of Singapore (“MAS“) issued a consultation paper inviting comments on its proposal to amend anti-money laundering and countering the financing of terrorism (“AML/CFT“) requirements imposed on licensed money-changers and remittance businesses.
MAS intends to implement these measures by issuing a new notice that would prohibit issuance of bearer instruments and restrict pay-outs in cash, as well as amending the existing MAS Notice 3001 (Prevention of Money Laundering and Countering the Financing of Terrorism) (“MAS Notice 3001“), which imposes customer due diligence (“CDD“) requirements.
New Notice on Prohibition of Issuance of Bearer Instruments and Restriction in Cash Pay-Outs
MAS proposes to prohibit licensed money-changers and remittance businesses from issuing bearer instruments (such as cash cheques) in any currency to their customers. Additionally, licensed money-changers (when they carry out inward remittance transactions) and licensed remittance businesses will be required to use non-cash settlement methods when making pay-outs of S$20,000 and above (or such equivalent amounts in foreign currency) to persons in Singapore. These proposals are to mitigate money-laundering or terrorism financing (“ML/TF“) risks that may arise from the use of cash and bearer instruments, which, due to their anonymous nature, are open to abuse.
Amendments to MAS Notice 3001
Currently, paragraph 6.33 of MAS Notice 3001 imposes an additional layer of control when licensed money-changers and remittance businesses carry on non-face-to-face business – they are required to get written approval from MAS before doing so. Recognising the need to facilitate innovation and taking into account new technology solutions now available in the market, MAS will remove this requirement.
Nonetheless, MAS has reiterated that licensed money-changers and remittance businesses must still develop and implement effective policies and procedures to address the specific ML/TF risks associated with non-face-to-face account relationships, or with relevant non-face-to-face business transactions.
In addition to the above, licensed money-changers and remittance businesses will also be required to appoint an external auditor or qualified independent consultant to assess the effectiveness of their policies and procedures put in place to mitigate the risk of non-face-to-face business. This assessment should be done no less than a year after the commencement of such business. MAS has also reiterated that the CDD measures that are undertaken must be at least as robust as those undertaken when there is face-to-face contact.
Foreign Exchange Transactions
MAS has also proposed to insert new paragraphs 8A.1 to 8A.4 to MAS Notice 3001 that would require licensed remittance businesses to perform CDD on foreign exchange counterparties when they buy or sell foreign currencies. This is to address the risks that may arise when the foreign exchange transactions are effected without using physical foreign currency notes.
The consultation period closes on 12 February 2018.
A copy of the Consultation Paper can be assessed here.
Have a question on the AML/CFT requirements?
If you have any question on theAML/CFT requirements, you can request a quote from Eric Chan. Alternatively, you can also get a Quick Consult and expect a call back within 1-2 days on the phone to get legal advice and have your questions answered.
This article does not constitute legal advice or a legal opinion on any matter discussed and, accordingly, it should not be relied upon. It should not be regarded as a comprehensive statement of the law and practice in this area. If you require any advice or information, please speak to practicing lawyer in your jurisdiction. No individual who is a member, partner, shareholder or consultant of, in or to any constituent part of Interstellar Group Pte. Ltd. accepts or assumes responsibility, or has any liability, to any person in respect of this article.