MAS Revises AML/CFT Notices for FIs and VCCs – to Mandate PF Assessments, Align Trust Regime and Streamline STR Filing Regime

11 July 2025

Introduction

The Monetary Authority of Singapore (“MAS“) recently revised various anti-money laundering and countering the financing of terrorism (“AML/CFT“) Notices and Guidelines applicable to financial institutions (“FIs“) and variable capital companies (“VCCs“). The revisions took effect from 1 July 2025 and seek to mandate proliferation financing (“PF“) assessments, align the trust regime, and streamline the Suspicious Transaction Report (“STR“) filing regime for FIs and VCCs.

This development follows from MAS’ earlier consultation (held from 8 April 2025 to 8 May 2025) proposing to amend these AML/CFT Notices and Guidelines. MAS has since issued its response to the consultation. For more information on the consultation, please refer to our April 2025 Legal Update titled “MAS Consults on Proposed Amendments to AML/CFT Notices for FIs and VCCs – to Mandate PF Assessments, Align Trust Regime and Streamline STR Filing Regime”.

This Update sets out the key implications for FIs and VCCs arising from the amended AML/CFT Notices and Guidelines and the response to the consultation.

Mandate PF Risk Assessments

Prior to the amendments, the AML/CFT Notices did not expressly refer to PF, but PF risks are a feature of Singapore’s AML/CFT sanctions and compliance control regulatory framework.

In the consultation, MAS proposed to amend the AML/CFT Notices – to clarify that money laundering (“ML“) includes PF, and ML risks include PF risks, such that the legal requirement for FIs and VCCs to carry out ML and terrorism financing (“TF“) risk assessments includes PF risk assessments as well.

In the response to the consultation, MAS clarified that PF risk assessments should generally be performed as soon as possible (if not already being carried out) and can be carried out either on a standalone basis or as part of ML/TF risk assessments already being conducted.

Align Trust Regime – Regarding Trust Relevant Parties (“TRPs”) and Legal Arrangements

Expanding TRP Definition and Clarifying Obligations for Higher Risk TRPs

Prior to the amendments, MAS Notice TCA-N03 defined a “trust relevant party” to include the settlor, trustee, beneficiaries, and any person who had any power over the disposition of any property that is subject to trust. Protectors were included within this definition to the extent that they had such dispositive powers.

In practice, trust companies were already obtaining and verifying information and identifiers relating to all parties to the legal arrangement, including protectors, whether or not the persons performing the function of a protector had such dispositive powers.

In the consultation, MAS proposed to expand the definition of TRP – to include a “protector”, a “class of beneficiaries”, an “object of a power”, and “any other persons with the power under the legal arrangement instrument or by law” to expand the scope of persons having the powers to in any way deal with the property under the legal arrangement, vary or terminate the legal arrangement, or add or remove a person as a beneficiary or an object of a power or from a class of beneficiaries under the legal arrangement.

In the response to the consultation, MAS further clarified the relevant obligations for trust companies concerning higher risk TRPs in particular (i.e. any TRP determined by the trust company, or notified by MAS or other relevant authorities, to present a higher ML/TF risk), including: (i) performing the appropriate enhanced customer due diligence measures for business contact with higher risk TRPs; and (ii) conducting source of wealth (“SOW”) due diligence on higher risk TRPs who are contributors of assets to the legal arrangement (e.g. the settlor).

Identifying and Verifying Beneficiaries and Objects

In the consultation, amendments were proposed to MAS Notice TCA-N03 to include a new definition of an “object of a power”, as a person who: (i) is a member of a class of possible beneficiaries under the trust; and (ii) is reasonably expected to benefit from the trust, whether or not because the settlor refers to the person as a potential beneficiary in a document relating to the trust such as a letter of wishes (“LOW“), or the class of possible beneficiaries has narrowed for any reason.

In the response, MAS clarified that:

LOW identifies beneficiaries / objects: MAS will maintain the inclusion of the LOW in the definition of an “object of a power”. This is because, while an LOW is not binding, according to the Financial Action Task Force (FATF), such LOW: (i) provides guidance to the trustee on how the settlor would like the trust to be administered and is given significant weight in practice; and (ii) may clearly indicate a person as being a beneficiary or an object of a power, and include their identification details.

Timing to identify and verify beneficiaries / objects: The identification and verification of the identities of beneficiaries and objects of a power should be done as soon as reasonably practicable after such person becomes identifiable (e.g. where the conditions stipulated in the LOW for the beneficiaries’ entitlement to materialise are met) and, in any case: (i) before making a distribution to them; or (ii) when such person intends to exercise their vested rights.

Identifying and Verifying Beneficial Owners (“BOs”)

In the consultation, amendments were also proposed to various AML/CFT Notices to include requirements on the identification and verification of the identities of BOs.

In the response, MAS clarified that:

Identifying chain of ownership or control: MAS will make further amendments to set out, for the purposes of identifying the BO: (i) the persons to be identified and the information to be obtained in respect of such persons; and (ii) where there is a chain of ownership or control, that the legal persons or legal arrangements along such chain must be identified, with prescribed information to be obtained in respect of each of them.

Taking reasonable steps to verify: MAS will reinstate the requirement for FIs and VCCs to take reasonable steps to verify the identities of BOs using relevant information obtained from reliable and independent sources.

Obtaining business addresses permissible: MAS will include a new paragraph in the AML/CFT Notices to reflect that the BO’s business address may be obtained in lieu of the BO’s residential address (given the challenges in obtaining the latter) in certain prescribed circumstances, i.e. where: (i) the ML/TF risks are not assessed to be high; and (ii) the residential address is unable to be obtained after taking reasonable measures. The results of such assessments and measures must be documented.

Collecting Information on Legal Arrangement

In the consultation, MAS proposed to require the collection of specific information regarding legal arrangements, e.g.: (i) the legal arrangement’s full name; (ii) its unique identifier such as a tax identification number or its equivalent; (iii) a copy of the trust deed or its equivalent; (iv) the purpose for which the legal arrangement was set up; and (v) the place from where the legal arrangement is administered .

In the response, MAS clarified that:

Place of administration: Regarding the place of administration, FIs should consider:

- For a legal person: The registered or business address, or principal place of operations, of the legal person or their corporate service provider; and
- For a legal arrangement that is a trust: The place where: (i) the trust activity is conducted (e.g. keeping of records, custody and management of trust assets, and the exercise of the trustee’s powers); or (ii) the licensed trust company is located (if one is used).

Trust deed or equivalent: Regarding the copy of the trust deed or its equivalent, if the trust deed is not available (e.g. due to confidentiality reasons), FIs and VCCs may take reasonable measures and avail themselves of other equivalent documents which set out relevant identification information and support the establishment of the trust, e.g. reliable extracts of the trust deed, deed of appointment, etc.

Streamline STR Filing Timelines

In the consultation, MAS proposed to amend the AML/CFT Guidelines to clarify the STR filing timelines for FIs and VCCs as follows:

Five business days: The filing of an STR should not exceed five business days after suspicion was first established, save in exceptional or extraordinary circumstances.

One business day: In cases involving sanctioned parties and parties acting on behalf or under the direction of sanctioned parties, FIs and VCCs should file their STRs as soon as possible, and no later than one business day after suspicion was first established.

In the response, MAS clarified that:

Clarifying establishment of suspicion: MAS will further amend the AML/CFT Guidelines to provide greater clarity on what constitutes the point of establishment of suspicion, i.e. this being the point when an FI or VCC concludes that STR filing is warranted based on available information, the circumstances and its investigations.

Conducting fact-finding and investigations: The establishment of suspicion is not intended to impact the timelines for the FI’s or VCC’s fact-finding and investigations. MAS has not prescribed specific timelines for how long such fact-finding and investigations should take in order for suspicion to be established, as it would be impractical to do so for various reasons. However, MAS expects that:

- FIs and VCCs will establish appropriate frameworks to ensure that their investigations are completed in a timely manner and that cases involving higher ML/TF risk concerns are prioritised; and
- Senior management will provide close oversight on the FI’s and VCC’s ongoing ability to review concerns of higher ML/TF risks promptly (e.g. understanding the root cause behind persistent backlogs in the review of ML/TF cases, putting in place specific action plans to manage these backlogs, and proactively considering whether additional mitigating measures are required).

Clarifying exceptional or extraordinary circumstances: MAS expects FIs and VCCs to establish processes to track and document the reasons for any exceptional or extraordinary circumstances which may justify STR filing past the stipulated timelines.

Clarifying follow-up STRs: MAS expects FIs and VCCs to ensure that all available relevant information is included in the STR submission at the point of filing to enable proper analysis. Where additional information surfaces or develops after the filing of the initial STR, FIs and VCCs can provide such information via the filing of a follow-up STR.

Clarify Screening Requirements and SOW and Source of Funds (“SOF”) Establishment

Screening Using Native Search Engines (Not Native Languages)

In the consultation, MAS proposed to clarify in the AML/CFT Guidelines that: (i) where necessary, ML/TF information sources used for screening should include pertinent search engines used in countries closely associated with the person screened; and (ii) screening should be conducted in the native languages of the person screened.

In the response, MAS clarified that:

Screening using native search engines – required:

- The proposed amendments are intended to provide guidance: (i) on the conduct of additional screening to address potential limitations in existing screening tools; and (ii) which should be applied on a risk-based approach where appropriate. For example, if there is an apparent match in relation to material ML/TF concerns on the person screened, but further information is necessary to determine whether the apparent match is a true hit, screening against pertinent search engines predominantly used in the countries closely associated with the person screened may be useful; and
- The proposed amendments are not intended to pose a significant additional screening burden on FIs or VCCs, nor to require them to obtain additional staff or vendor solutions. MAS expects FIs and VCCs: (i) not to over-rely on vendor solutions for screening to identify ML/TF risk concerns associated with their customers; and (ii) to assess whether the vendor solutions relied upon are adequate and enable them to be alert to material ML/TF risk concerns and developments in key markets where they operate.

Screening using native languages – not required: MAS will be removing the expectation from the AML/CFT Guidelines for screening to be conducted in the native languages of the person screened (given the challenges involved for this).

Corroborating Customer’s Entire Body of Wealth

In the consultation, MAS proposed to clarify in the AML/CFT Guidelines that SOW information should give an indication, to the extent practicable, about: (i) the entire body of wealth that the customer and BO would be expected to have; and (ii) how the customer and BO acquired the wealth.

In the response, MAS clarified that FIs and VCCs: (i) may adopt a risk-based approach to corroboration, based on their assessment of the risks posed by the customers, with reference to industry guidance on the tiered approach to risk identification and corroboration; and (ii) should have appropriate ongoing monitoring tools and controls in place to identify when a customer’s profile or assets would trigger a need for additional SOW due diligence.

Corroborating Material, Higher-Risk SOW/SOF

In the consultation, MAS proposed to clarify in the AML/CFT Guidelines that SOW/SOF information should be corroborated.

In the response, MAS clarified that, given the practical challenges in establishing customers’ SOW, e.g. in obtaining dated documentary evidence for corroboration:

Materiality: FIs and VCCs may take a risk-proportionate and reasonable approach to establishing the SOW of their customers, with a focus on corroborating sources of wealth that are more material or of higher ML/TF risk.

Relevance: FIs and VCCs are not required to obtain documents from many years ago which may no longer be easily available and are not of high relevance to the generation of the customer’s wealth.

Plausibility assessment: FIs and VCCs should review information and documents obtained to corroborate a customer’s SOW for plausibility and, on a best-efforts basis, be vigilant to apparent discrepancies and irregularities that may require further checks and/or customer clarifications.

Assessing Plausibility of Third-Party Gifts

In the consultation, MAS proposed to clarify that where a material SOW of the customer or BO is a gift or other asset received from third parties: (i) information should be obtained to establish the legitimacy and plausibility of such gift or other asset; (ii) an assessment should be conducted on the plausibility of the third party’s SOW; and (iii) when unable to assess as such, an assessment should be conducted on the residual risks presented by the third party’s SOW, taking into consideration whether additional risk mitigation measures should be applied on the business relationship with the customer.

In the response, MAS clarified that establishing the legitimacy and plausibility of such third-party gifts or assets forming material SOW would entail obtaining information to understand: (i) the third party’s SOW, so as to form an understanding of whether the third party could have plausibly been able to provide the gift or assets; and (ii) the relationship between the customer and third party, to assess whether there was reasonable basis for the third party to give the gift or assets to the customer.

Concluding Words

FIs and VCCs should take note of the updated requirements in the amended AML/CFT Notices and Guidelines and revise their applicable policies, processes, operations and controls accordingly.

If you have any queries or require assistance on the above matters, please reach out to our Team members set out on this page.

Please click on the following links for the amended AML/CFT Notices and Guidelines (available on the MAS website at www.mas.gov.sg):

MAS Notices

MAS Guidelines

Disclaimer

Rajah & Tann Asia is a network of member firms with local legal practices in Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam. Our Asian network also includes our regional office in China as well as regional desks focused on Brunei, Japan and South Asia. Member firms are independently constituted and regulated in accordance with relevant local requirements.

The contents of this publication are owned by Rajah & Tann Asia together with each of its member firms and are subject to all relevant protection (including but not limited to copyright protection) under the laws of each of the countries where the member firm operates and, through international treaties, other countries. No part of this publication may be reproduced, licensed, sold, published, transmitted, modified, adapted, publicly displayed, broadcast (including storage in any medium by electronic means whether or not transiently for any purpose save as permitted herein) without the prior written permission of Rajah & Tann Asia or its respective member firms.

Please note also that whilst the information in this publication is correct to the best of our knowledge and belief at the time of writing, it is only intended to provide a general guide to the subject matter and should not be treated as legal advice or a substitute for specific professional advice for any particular course of action as such information may not suit your specific business and operational requirements. You should seek legal advice for your specific situation. In addition, the information in this publication does not create any relationship, whether legally binding or otherwise. Rajah & Tann Asia and its member firms do not accept, and fully disclaim, responsibility for any loss or damage which may result from accessing or relying on the information in this publication.