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MAS revokes capital markets services licence of Apical Asset Management on anti-money laundering breaches
THE Monetary Authority of Singapore (MAS) on Tuesday revoked the Capital Markets Services (CMS) licence of Apical Asset Management for breaching the authority’s Anti-Money Laundering/ Countering Financing of Terrorism (AML/CFT) requirements.
MAS confirmed that it is the only entity to have had its CMS licence revoked for AML/CFT offences in the past five years.
Apical Asset Management’s chief executive Yeh Yin Yee and its director Bernard Kan Cheok Yin were also reprimanded by MAS for failing to discharge their duties and functions of ensuring that the asset manager complied with all laws and regulations governing its operations.
With the licence revoked, Apical Asset Management will have to fully discharge all customer obligations and ensure all customer assets are accounted for or returned to customers when ceasing business, said MAS.
MAS said in a statement that an inspection of Apical Asset Management uncovered “severe deficiencies” in its AML/CFT controls from 2013-2018, and that it did not have in place basic AML/CFT policies and procedures, which exposed it to the risk of receiving and laundering the proceeds of crime.
This risk was heightened in view of the complex ownership structures, comprising multiple layers and investment entities, used by some of Apical’s customers, said MAS.
Among its failings was that the asset manager did not conduct any enterprise-wide money-laundering and terrorism-financing risk assessment, which is crucial to enable a better understanding of its overall vulnerability to such risks in order to develop measures to address them.
According to MAS guidelines, financial institutions (FIs) are expected to perform this assessment at least every two years, or when there are material trigger events, such as the acquisition of new customer segments, or introduction of new products and services.
Apical also did not properly assess its customers to determine whether they presented higher money-laundering and terrorism-financing risks. Its ongoing monitoring controls and procedures were also deficient, resulting in its failure to conduct enhanced monitoring of a fund related to a politically exposed person for a significant length of time.
Finally, the asset manager also did not subject its AML/CFT controls to independent audits to assess their effectiveness, said MAS.
MAS reprimanded Mr Yeh and Mr Kan as the pair were the only directors on the board and thus principally responsible for the management and conduct of Apical’s affairs.
A reprimand is a formal regulatory action under the Securities and Futures Act. MAS may take a reprimand into account when considering actions to be taken against recipients for any future contravention of applicable laws and regulatory requirements, or in the assessment of any future applications for licences or registrations.
Loo Siew Yee, Assistant Managing Director in charge of Policy, Payments and Financial Crime in MAS, said that the asset manager’s lack of basic AML/CFT controls - despite the risks posed by its clients’ use of complex investment structures - was “an unacceptable failing warranting licence revocation”.
“MAS will not hesitate to take appropriate action against FIs whose policies and controls clearly fail to address the ML/TF risks in their business activities,” she said in a statement. “Board and senior management who fall short in their duties will also be taken to task.”