Search Ocorian

Anti-money laundering under the microscope in Singapore's wealth management industry

Anti-money laundering under the microscope in Singapore's wealth management industry

21 January, 2020

Ocorian highlights how the Monetary Authority of Singapore (MAS) is reinforcing the importance of sound anti-money laundering (AML) practice.

As global money laundering and terrorism financing (ML/TF) schemes become increasingly sophisticated, Managing Director of our Singapore office, John Tan discusses the issue and ways to avoid it.

In just over two decades, Asia has grown to become one of the prime drivers of the global economy. Savvy entrepreneurs on the continent have capitalised on the growing opportunities across the finance, manufacturing and technology industries to become members of the global ultra-wealthy community (net worth of +$30 million).

With over 200,000 millionaires of its own, Singapore is an example of this dramatic economic growth and the Lion City is now sixth in the world in terms of household wealth per adult. This abundance of capital has catalysed the development of Singapore's wealth management industry. It is now an internationally recognised financial centre for the establishment of trusts, with around 60 licensed trust companies providing services there.

With a robust and thriving wealth industry, the need for dedicated vigilance against evolving ML/TF risks is of paramount importance. Singapore's financial institutions, including licensed trust companies, have pertinent roles to play in detecting, disrupting and deterring attempts to abuse the financial system for illicit purposes.

Increased oversight of Singapore trusts

The preferred vehicle for managing wealth and succession planning, Singapore trusts offer an effective solution for asset protection, confidentiality and family arrangements. As the number of ultra-high-net-worth individuals continues to increase - global wealth is expected to rise by 27% over the next five years - there has been increased scrutiny of Singapore's trust industry and its regulation, particularly surrounding AML.

Clearly an industry that is front of mind, each of MAS' main focus areas all bare relevance to the trust industry:

  • Transaction monitoring controls
  • Board and senior management (BSM) oversight
  • Enterprise wide risk assessment

Notably, in order to minimise the abuse of trust structures to conceal assets for money laundering, terrorism financing and tax evasion purposes, MAS has increased the emphasis on the responsibilities of the BSM to instil strong ML/TF risk awareness, fostering a sound risk management culture. BSM is expected to develop and implement a robust AML/CFT risk management framework that effectively mitigates those risks. This will promote strong AML/CFT practices and behaviours, providing guidance and training and promoting clear accountability through staff performance evaluation and incentives. However, mindful of becoming obstructive in their oversight and thus stifling Singapore's attractiveness as a trust jurisdiction, MAS continue to engage the trust companies and trustee associations in dialogue to ensure practical implementations of regulatory guidelines and policies.

Through our trustee and private client services, and as the first trust company in Singapore to be licensed under the Trust Companies Act (2006), we strive to provide the highest quality service to meet your fiduciary needs under the regulation of the Monetary Authority of Singapore. Learn more about our AML service offering.