MAS issues guidelines to Notice VCC-N01 on prevention of money laundering and countering the financing of terrorism for variable capital companies
17 December 2020
On 4 December 2020, the Monetary Authority of Singapore (“MAS”) published guidelines to Notice VCC-N01 on “Prevention of Money Laundering and Countering the Financing of Terrorism - Variable Capital Companies” (“Guidelines”). The Guidelines set out MAS’ supervisory expectations and address the relationship and responsibilities of the variable capital company (“VCC”) and its eligible financial institution (“EFI”).
MAS’ anti-money laundering and countering the financing of terrorism (“AML/CFT”) requirements on VCCs are, in principle, largely the same as those for other financial institutions regulated by MAS. Among other things, VCCs must conduct money laundering/terrorism financing (“ML/TF”) risk assessments, and ensure that customer due diligence (CDD) and ongoing monitoring are performed.
In addition, by virtue of the VCC’s business model, there are aspects of Notice VCC-N01 that are unique, such as:
- the requirement for the VCC to appoint an EFI (regulated by MAS for AML/CFT) to perform the necessary checks and measures to comply with Notice VCC-N01;
- the fact that a VCC’s members are also its customers, as defined in Notice VCC-N01; and
- the requirement for the VCC to maintain a register of its beneficial owners and nominee directors.
The VCC remains ultimately responsible for compliance with Notice VCC-N01. Therefore, a VCC’s board of directors should ensure that the VCC’s AML/CFT processes are robust and properly executed by the EFI, and that the EFI has a good understanding of the ML/TF risks inherent in the VCC’s business. The VCC and its board must continue to ensure that the VCC is complying with the requirements in Notice VCC-N01, including:
- approval of the VCC’s ML/TF risk assessments and policies and procedures;
- appointment of an AML/CFT compliance officer to carry out the AML/CFT function for the VCC;
- oversight of the EFI’s arrangements for outsourcing and reliance on third parties;
- senior management approval for establishing or continuing of business relations with customers who present higher ML/TF risk.
The VCC’s board may decide to appoint one or more staff of the EFI to serve as its senior management to make such decisions. Where the VCC’s board has not appointed senior management positions, the board shall take on the role of senior management. In any case, the VCC’s board remains ultimately responsible for the VCC’s compliance with the Notice.
The following materials are available on the MAS website www.mas.gov.sg:
- MAS issues guidelines to Notice VCC-N01 on Prevention of Money Laundering and Countering the Financing of Terrorism - Variable Capital Companies