- POSTED: 16 Jul 2014 21:44
- UPDATED: 16 Jul 2014 23:13
However, industry experts caution that banks may still face challenges in implementing the tighter rules proposed by the Monetary Authority of Singapore (MAS).
SINGAPORE: The Monetary Authority of Singapore (MAS) has proposed tighter rules to combat money laundering and terrorist financing.
Industry experts say the changes, set out in a consultation paper released on Tuesday (July 15), did not come as a surprise.
They note that Singapore has been redoubling efforts in recent years to keep its financial sector clean -- establishing exchange of information agreements with other jurisdictions to fight tax evasion.
MAS, Singapore's banking regulator, wants to formalise the need for banks and other financial institutions to screen customers and their connected parties, and impose additional requirements for cross-border wire transfers exceeding S$1,500.
According to the Wealth Management Institute, established by Temasek and GIC, the industry has been expecting the changes for a while now.
"In Singapore, the government is heavily focused on making sure that we bring in business that is safe, that is good, in the long haul,” said Cynthia Teong, CEO of Wealth Management Institute.
“Therefore, the implementation of this (the proposed measures) is actually consistent with a lot of regulatory measures that have been implemented so far. It is our view that the financial community is fully committed to carrying this out."
Ms Teong added: "As a training provider, it is also our responsibility to ensure that all this new regulatory developments get updated into our programmes, and we continue to upgrade and keep things current for our professionals in the wealth management industry."
MAS says the proposed changes take reference from the latest recommendations of the Financial Action Task Force (FATF) which is the global authority on counter terrorist financing and anti-money laundering measures.
"In an evaluation exercise conducted by the FATF in 2008, Singapore was assessed to have a rigorous AML/CFT regime. We will undergo another evaluation by the FATF in 2015 and aim to do as well," said MAS deputy managing director Ong Chong Tee.
The new rules will affect politically-exposed persons, such as heads of state and leaders of political parties. Industry experts say this will send a clear signal to despots of the world that Singapore is no haven for them.
"The concern here is that with their political influence, they can accept bribery, or make illicit money transfers that pertain to money laundering risk. So for banks, for this type of customers -- they will be deemed as high risk. And expectations under the current regulation is to have more, enhanced due dilligence and to have control over their activities," said Thng Teck Soon, director of financial services industry at Deloitte Singapore.
In addition, MAS is also seeking greater oversight on steps to be taken by financial institutions to identify and verify beneficial ownership of non-individual customers, such as companies and trusts.
Although MAS says many of the proposed changes formalise existing practices in the industry, experts caution that banks here may still face challenges in implementation.
Mr Thng, a regulatory veteran with close to twenty years of experience working for MAS, said that for example, locally incorporated banks with operations overseas may have to adapt to two sets of standards -- a set of Singapore rules and another set of rules in the jurisdiction its operating in.
In addition, banks will also have to make sure they tighten background checks on customers without compromising new data privacy laws.