MAS urges vigilance on new risk areas such as variable capital companies and virtual assets
THE Monetary Authority of Singapore (MAS) is paying attention to new ways that dirty money is channelling into the financial system - singling out the new breed of fund companies known as variable capital companies (VCCs), and virtual assets or digital payment tokens.
Speaking at the Association of Certified Anti-Money Laundering Specialists' annual conference on financial crime, MAS assistant managing director for policy, payments and financial crime Loo Siew Yee pointed that VCCs have "grown significantly" since the framework was introduced in January last year.
"As fund vehicles with a separate legal personality can potentially be misused as a conduit for illicit purposes, MAS is assessing the higher risk segments in this space for more intensive supervisory follow-up," she said on Tuesday.
More than 260 VCCs have been set up in Singapore since the launch of the VCC framework in January last year, which was designed to attract the assets of fund managers and family offices.
Created as a flexible corporate entity to encourage investment funds to domicile in Singapore, a VCC can be open-ended or closed-end, and used by both traditional and alternative fund managers for various strategies such as private equity. It can also use accounting standards different from Singapore's in financial statement preparation.
MAS separately on Tuesday said it has set up an industry group, partnering the private sector in identifying emerging industry trends strategies to develop the asset management ecosystem.
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On digital payment tokens, Ms Loo said they pose higher risks given the speed, anonymity and cross-border nature of the transactions they facilitate.
MAS has stepped up its efforts to set clear supervisory expectations of AML/CFT (anti-money laundering and combating the financing of terrorism) controls, while its in-house surveillance efforts are now able to detect suspicious networks and unlicensed activities for further enforcement actions.
Ms Loo also highlighted that collaborations between MAS, the police and various banks since 2019 using data analytics have led to successful interceptions of S$69 million worth of suspicious flows so far. More than S$19 million of these incoming funds were blocked through the banks' proactive identification of suspicious accounts.
This was primarily done through a private-public partnership set up in April 2017, known as the AML/CFT Industry Partnership, or ACIP.
Ms Loo encouraged financial institutions that have already integrated data analytics tools into their AML/CFT processes to develop and strengthen their data governance frameworks as well as identify clear objectives and desired outcomes for each analytics tool.
Financial institutions that are just starting out on their journey in data analytics should focus on making less complex changes that could lead to "bigger wins", she urged, such as tools that enhance the prioritisation of resources and those that can improve risk detection.
MAS is also working with a number of banks on possible sharing of key risk information, she said, noting that the United States and United Kingdom already have legal frameworks in place to permit such sharing.
The authority hopes to outline its approach for Singapore in the coming months.
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