MAS’ Proposed Changes to AML/CFT Requirements Applicable to Money-Changing and Remittance Businesses
Introduction
The MAS recently proposed changes to the AML/CFT requirements applicable to the inherently cash intensive business such as money-changing and remittance businesses to mitigate the associated risks in the sector. The proposals include issuing a new notice on prohibition of issuance of bearer instruments and restriction in cash pay-outs and amendments to MAS Notice 3001 with respect to non-face-to-face business. Below is a recap of the highlights:
Prohibition of Issuance of Bearer Instruments and Restriction in Cash Pay-outs
Holders of money-changer’s licence and remittance licence (“licensees”) cannot issue bearer instruments such as cash cheques etc, in any currency to their customers.
Licensees engaging in inward remittance transactions and FX transactions must use non-cash settlement methods for pay-outs of SGD 20,000 and above (or equivalent amount in foreign currency) to persons in Singapore.
When two or more inward remittance transactions/ FX transactions come from another country to Singapore and the licensee suspects the same as deliberate restructuring of an otherwise single transaction into smaller transactions to evade the above limit, the licensee must treat that transactions as single transaction.
For cash pay-outs of S$20,000 or its equivalent in foreign currency, by cheques, licensees must ensure that the cheque is crossed and payable to a customer who is having a bank account in Singapore. The licensee must also maintain a register of all crossed cheques issued with the corresponding transaction reference numbers.
Removing the requirement for a licensee to seek MAS’ prior approval to conduct non-face-to-face business
For non-face-to-face business, MAS’s prior approval is no more required but, licensees must develop policies and procedures to address the specific ML/TF risks associated with non-face-to-face account relationships with a customer or non-face-to-face relevant business transactions undertaken without opening an account.
MAS expects CDD measures to be at least as robust as those that would be required to be performed if there was face-to-face contact.
A new set of CDD measures such as real-time video conferencing, biometric technologies, digital signatures etc are admissible.
Appointment of an auditor to assess the effectiveness of policies and procedures put in place to mitigate the risk of non-face-to-face business
Licensees must, at its own expense, appoint an independent auditor/ or a qualified, independent consultant to assess annually the effectiveness of policies and procedures put in place to mitigate the risk of non-face-to-face business.
The auditor/consultant must be a competent person with proven track record, knowledge of new technology solutions and regulatory requirements.
The licensee must submit the auditor’s assessment to MAS within one year after commencement of the licensee’s non-face-to-face business relations.
Foreign Exchange (“FX”) Transactions
In FX transactions, licensees must do a simplified CDD measures on FX counterparties such as Singapore licensed banks, merchant banks and foreign licensed banks.
Licensees must properly document the background and purpose of every FX transaction and must submit it to MAS upon request.
Though the consultation relieves the licensees of the requirement of getting prior approval of MAS to conduct non-face-to-face business, it brings additional burden of robust CDD measures and appointment of an external auditor/consultant. The interested parties can submit their comments until 12 February 2018.