MAS issues AML/CFT Guidelines and FAQs for insurers

29 May 2019

On 13 May 2019, the Monetary Authority of Singapore (“MAS”) issued the “Guidelines on Prevention of Money Laundering and Countering the Financing of Terrorism - Direct General Insurance Business, Reinsurance Business, and Direct Life Insurance Business (Accident & Health Policies)” (“AML/CFT Guidelines”). On 13 May 2019, MAS has also issued the FAQs on the AML/CFT Guidelines.

The AML/CFT Guidelines apply to all insurers licensed under section 8 of the Insurance Act and to all foreign insurers operating in Singapore under a foreign insurer scheme established under Part IIA of the Insurance Act (collectively, “Insurers”). The AML/CFT Guidelines do not apply to direct life insurers writing life policies as they are subject to the MAS Notice 314 on “Prevention of Money Laundering and Countering the Financing of Terrorism - Direct Life Insurers” and the accompanying guidelines in relation to direct life insurance business.

The primary Singapore legislation to combat money laundering (“ML”) and terrorism financing (“TF”) are the Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act (“CDSA”) and the Terrorism (Suppressing of Financing) Act (“TSOFA”) respectively. The AML/CFT Guidelines provide that the ultimate responsibility and accountability for ensuring compliance with AML/CFT-related laws and regulations rest with an Insurer’s board of directors and senior management.

The AML/CFT Guidelines require an Insurer to have a clear and detailed set of documented AML/CFT policies and procedures in place that incorporate, at a minimum, the following elements:

  • Customer due diligence and screening procedures; 
  • Documentation of screening results; 
  • Assessment, escalation and reporting of suspicious transactions; and 
  • Frequency and recipients of AML/CFT-related training.

Among other things, an Insurer is required to carry out screening of customers against relevant ML/TF information sources, which include designated names of individuals and/or entities set out in Paragraph 5.1 of the AML/CFT Guidelines. These include designated names of individuals and/or entities set out in the lists and information provided by MAS or other relevant authorities in Singapore in relation to ML/TF risks, or designated individuals and/or entities who/which are subject to targeted financial sanctions as prescribed in the TSOFA or under United Nations Security Council Resolutions.

In the context of direct insurance business, the screening of customers should include the screening of policy owners, insureds and claimants. In cases where an Insurer has assessed the policy owner or insured to be of a higher ML/TF risk, the insurer should also screen the substantial shareholders (direct and indirect), beneficial owners, natural persons appointed to act on behalf of the customer and directors, if any, of the policy owner or insured.

In the context of reinsurance business, the screening of customers should include the screening of cedants and claimants. Underlying insureds should also be screened in cases where they are made known to the reinsurers. In cases where a reinsurer has assessed the cedant or underlying insured to be of a higher ML/TF risk, the reinsurer should also screen the substantial shareholders (direct and indirect), beneficial owners and directors, if any, of the cedant or underlying insured.

Reference materials

The following materials are available on the MAS website www.mas.gov.sg:

 

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