The Monetary Authority of Singapore (MAS) has imposed a composition penalty of $400,000 on TMF Trustees Singapore Limited (TTSL) for failure to comply with MAS’ Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) requirements.

Trusts are fiduciary arrangements that allow third parties, or trustees like TTSL, to hold assets for the benefit of beneficiaries. MAS has assessed that TTSL did not exercise sufficient oversight to ensure effective AML/CFT controls and procedures. This placed TTSL at risk of being used as a conduit for ML/TF activities.

MAS identified these failures following an inspection. Between June 2011 to April 2018, MAS found that TTSL had failed to comply with MAS’ AML/CFT requirements for trust companies. In particular:

(a)     TTSL failed to verify the source of wealth of settlors [1]  of trusts who presented higher risks of money laundering and terrorism financing (ML/TF). Instead, TTSL had relied on the settlors’ representations regarding their source of wealth or bank reference letters which only confirmed the banking relationship between the banks and the settlors, without obtaining  information to adequately corroborate those claims;
(b)     TTSL also failed to monitor, on an ongoing basis, the transactions of trust relevant parties (TRPs) [2]   . In particular, TTSL did not scrutinise such transactions to ensure that these were consistent with its knowledge of the TRPs’ business and risk profile as well as the source of funds.

TTSL identified and sought to address the root cause of the failures with the assistance of an independent consultant. It took prompt remedial measures to address all the deficiencies identified by MAS and strengthened its AML/CFT governance and controls to prevent future lapses. In order to focus on its remediation efforts, the company also voluntarily refrained from accepting new trust customers for three months. TTSL has paid the composition penalty in full.

Date: 20 Mar 2020

Argus Global specializes in regulatory compliance. We can help you determine if your company is up to date with the latest regulations with compliance reviews, and we offer as well ongoing support for all your compliance needs.

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