Purpose and Importance

Singapore is a major financial centerattracting high-net-worth individuals. As such, FIs play a crucial role in ensuring that fund flows into Singapore are legitimate, given the higher risks of money laundering and terrorism financing (ML/TF) in wealth management.

Establishing SOW

FIs should use appropriate and reasonable means to establish and independently corroborate the SOW of customers using documentary evidence or public information. This helps FIs understand the legitimacy of customers’ assets and informs ongoing monitoring of transactions to guard against ML/TF and reputation risks.

Risk-Proportionate Approach

FIs should ensure that their policies and procedures are risk-proportionate and reasonable, considering each customer’s unique circumstances and profile. A variety of measures can be used to establish SOW, minimizing delays for legitimate customers. For example, for customers with prominent public profiles, FIs may corroborate their SOW against reliable public information sources.

Risk Principles

1. Materiality

Focus on corroborating more material or higher-risk SOW. While understanding customers’ total wealth is important, FIs should prioritize corroborating the most significant or higher-risk portions.

2. Prudence

Use reliable corroborative information, such as audited accounts or documents from independent third parties. Benchmarks and assumptions should be reasonable and documented.

3. Relevance

Obtain pertinent, fit-for-purpose corroborative evidence. Use independent and reliable documents where possible, and exercise judgment in determining which documents are critical.

Senior Management Oversight

1. Higher Risk Accounts

Senior management should closely oversee higher-risk accounts. If a significant portion of a customer’s wealth cannot be corroborated, the case should be escalated for approval before establishing business relations.

2. Ongoing Monitoring

Monitoring controls should consider the customer’s risk profile and information from SOW establishment to ensure account activities align with the customer’s profile.

MAS Ongoing Engagement

MAS will continue to engage with the industry and supports ongoing work by the AML/CFT Industry Partnership (ACIP) on best practices in SOW establishment.