On 15th July 2020, Monetary Authority of Singapore (MAS) released a guidance paper which sets out MAS’ expectations of Capital Market Intermediaries (CMI) in relation to Anti-Money Laundering/ Countering Financing of Terrorism (AML/CFT) control functions being outsourced.

The guidance paper is based on series of thematic inspections conducted by the MAS on several financial institutions (FIs) and seeing the level of controls and oversight the FIs have placed on their AML/CFT service providers (ASPs).

The guidance paper is consistent with MAS’ guidelines on outsourcing which was published in 2018. It is the Financial Intuition’s (FIs’) responsibility to ensure they meet the MAS AML/CFT requirements. In the event FIs engage service providers to assist in meeting the AML/CFT requirements, that arrangement needs to be considered as an outsourcing arrangement and would be deemed as a material outsourcing arrangement.

Summary of points to note from the guidance paper.

  1. FIs remains ultimately responsible and accountable for the AML/CFT risks and need to ensure appropriate compliance arrangements are in place.
  2. ASPs are to be classified as material outsourced service providers and need to ensure there is a robust assessment conducted on the ASPs, establish mechanism to monitor and control the arrangement on an ongoing basis.
  3. FIs to review contractual terms before engaging with ASPs to ensure agreements can meet MAS Outsourcing Guidelines
  4. FIs to determine if ASPs are doing periodic due diligence checks on existing customers as part of their services, understand their process and ensure they meet MAS requirements. 
  5. FIs to determine if ASPs are assisting to conduct enhanced due diligence checks on existing or prospective high risk customers, understand their process and ensure they meet MAS requirements.
  6. FIs to determine the process in which ASP escalates high risk issues and the follow up action to be undertaken.

Next steps for Financial Institutions

MAS expects FIs to conduct a gap analysis against the best practices outlined in the guidance as well as the MAS’ Guidelines on Outsourcing (Oct 2018), and take appropriate measures to enhance their practices. In summary the following actions should be undertaken by all FIs:

  • Ensure there is a robust outsourcing policy and procedure in place which describes the processes undertaken by FI to adhere to the MAS Guidelines on Outsourcing
  • Ensure there is a robust due diligence evaluation process in place which describes the parameters FI will consider when reviewing the suitability of the ASPs
  • Review contractual terms to be signed or already signed with ASP and ensure they meet the MAS Guidelines on Outsourcing
  • Ensure initial and annual due diligence checks are conducted on ASPs and that they are documented
  • Conduct a gap analysis on the current policies and procedures adopted by the ASP in conducting AML/CFT checks and identify gaps that requires immediate rectifications.


How can Argus Assist?

We, at Argus Global, are a team of consultants who specialize in Regulatory Compliance for FIs in Singapore that are regulated by MAS. We have worked with several FIs on their various compliance requirements and obligations and have assisted to remediate various gaps we have identified.  

We assist to do the following:

  • Prepare and implement a comprehensive Outsourcing Policy and Procedure which includes due diligence and evaluation forms to be used to complete assessment on ASPs
  • Review your current Outsourcing Policy and Procedures to ensure adequacy
  • Review contracts signed with ASPs and highlight deficiencies noted against the MAS Guidelines on Outsourcing
  • Conduct gap analysis against FI and their ASP’s current processes in relation to conducting AML/CFT checks on their customers, identify the gaps and provide recommendations to rectify gaps as soon as possible.

Please reach out to us for an initial discussion at info@argusglobal.co.

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