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Singapore - Financial institutions must ensure offshore vehicles not used for illicit purposes: MAS

Financial institutions here must ascertain the purpose of offshore vehicles set up by businesses and individuals, and satisfy themselves that they are not meant to be used for unlawful ends, the Monetary Authority of Singapore (MAS) says.

SINGAPORE: While the use of offshore vehicles, in and of itself, is not illegal, all financial institutions in Singapore must ensure that these vehicles are not used for illicit fund flows, the Monetary Authority of Singapore (MAS) said on Monday, 11 April 2016.

"Businesses and individuals may set up offshore vehicles for a variety of legitimate commercial or other reasons. However, it is important that offshore vehicles are not used for illicit purposes," it said.

"All financial institutions in Singapore - including banks, fund managers and trust companies - are required to know their customers well, including any persons that their customers may be acting on behalf of," MAS said, adding that financial institutions are required to scrutinise their customers' source of funds and wealth, and check for any adverse information about them.

"If offshore vehicles are being set up, financial institutions must ascertain their purpose and satisfy themselves that such vehicles are not meant to be used for unlawful ends. Financial institutions must also monitor their customers' accounts for suspicious transactions on an ongoing basis and report any they come across."

Singapore's central bank issued the statement in response to media queries after 11.5 million documents were leaked from law firm Mossack Fonseca, which specialises in creating offshore shell companies in the tax haven of Panama.

The leak, dubbed Panama Papers, has implicated some of the world's most powerful people, including close associates of Russian President Vladimir Putin, relatives of Chinese President Xi Jinping, the late father of British Prime Minister David Cameron, Argentine footballer Lionel Messi and former Iceland Prime Minister Sigmundur David Gunnlaugsson, who resigned after documents showed his wife owned an offshore firm with big claims on the country's collapsed banks.

Last week, the Ministry of Finance and MAS said authorities are reviewing the information in the leak and are doing the "necessary checks".

REGULAR ON-SITE INSPECTIONS CONDUCTED BY MAS

The central bank said it conducts regular on-site inspections to ensure that financial institutions comply with laws and regulations against money laundering and terrorism financing.
 

If a financial institution is found in breach, enforcement action will be taken, which may include financial penalties or business restrictions, depending on the severity of the breaches.

With the cross-border nature of money laundering and terrorism financing, Singapore authorities - including MAS, the Commercial Affairs Department, the Attorney-General's Chambers and the Inland Revenue Authority of Singapore - have set up channels to exchange information, MAS said.

Requests are also made to foreign enforcement agencies for information to assist in investigations and Singapore also provides them with assistance to facilitate their investigations, it added.

"Singapore's anti money laundering and counter terrorism financing regime has been well-rated by independent assessors. It meets the standards of the Financial Action Task Force, the global standard setting body for AML/CFT (Anti-Money Laundering and Countering Financing of Terrorism). The International Monetary Fund has assessed MAS' regulation and supervision of the financial sector to be ‘among the best globally'," an MAS spokesperson said.

"Singapore is firmly committed to being a clean and trusted financial centre and does not tolerate the abuse of its financial system as a refuge or conduit for illicit fund flows. Our tough stance on financial crime is critical to our reputation and development as an international financial centre," he said.

- CAN 11 April 2016
Updated 10 Oct 2016