MAS issues Circular on Audit of AML/CFT Policies, Procedures and Controls

28 November 2024

On 21 October 2024, the Monetary Authority of Singapore (“MAS”) issued Circular No. AMLD 12/2024, addressed to chief executive officers of all financial institutions (“FIs”), on Audit of AML/CFT Policies, Procedures and Controls (“Circular”).

The Circular is intended to set out additional guidance and highlight the good practices observed by MAS during its engagements with the industry. The guidance includes the following:

  • The board and senior management (“BSM”) should ensure that the audit function is adequately resourced with sufficient anti-money laundering/countering the financing of terrorism (“AML/CFT”) expertise. The extent of AML/CFT expertise in the audit function should be commensurate with the size and nature of the FI’s business.
  • In determining the scope of their periodic AML/CFT audit, an FI’s audit function should:
  • conduct regular AML/CFT risk assessments to identify changes in the FI’s inherent money laundering/‌terrorism financing (“ML/TF”) risk profile (including considerations for material changes in the FI’s business strategy and customer profiles), as well as changes in regulatory requirements; and
  • ensure that the frequency and intensity of AML/CFT audits are commensurate with identified ML/TF risks, identifying and prioritising in particular higher risk areas for audit, and establishing a minimum baseline audit cycle for other areas to ensure adequate attention is accorded on an ongoing basis.
  • FIs should consider the use of data analytics in the conduct of AML/CFT audits, to more effectively identify key risk areas for audit as well as to identify accounts and transactions for closer scrutiny.

The Circular also notes that the Anti-Money Laundering Audit Peer Group recently published a best practice paper (“Best Practice Paper”) setting out baseline standards and best practices for auditors to consider when determining the appropriate scope and extent of testing in the conduct of AML/CFT audits for banks. FIs should conduct a gap analysis of their existing audit practices against the practices set out in this circular, as well as the Best Practice Paper.

Reference materials

The following materials are available on the MAS website www.mas.gov.sg and the website of The Association of Banks (“ABS”) in Singapore www.abs.org.sg: