Published Date: 20 January 2022
MAS Penalises Vistra Trust $1.1 Million for Failures in Anti-Money Laundering Controls
Singapore, 20 January 2022 … The Monetary Authority of Singapore (MAS) has imposed a composition penalty of S$1.1 million on Vistra Trust (Singapore) Pte. Limited (VTSPL) for its failures to comply with MAS’ Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) requirements. VTSPL is a trust company, licensed under the Trust Companies Act, whose business activities include the creation of trusts and provision of trustee services.
2 An MAS inspection carried out from April 2019 to June 2019 uncovered serious breaches of MAS’ AML/CFT requirements for trust companies by VTSPL, placing it at a higher risk of being used as a conduit for illicit activities. The failures were particularly in relation to higher risk trust relevant parties, such as the settlor, the beneficiary, the trustee, and any person who has power over the disposition of a trust property. Trusts are fiduciary arrangements that allow third parties, or trustees, to hold assets for the benefit of beneficiaries.
3 VTSPL did not implement adequate procedures to determine if trust relevant parties presented a higher risk for money laundering (ML) or terrorism financing (TF). This resulted in VTSPL failing to identify certain higher risk accounts and subjecting these accounts to enhanced customer due diligence (CDD) measures, both during account acquisition as well as on an ongoing basis.
4 VTSPL also failed to perform adequate enhanced CDD for some accounts that had been identified as being of higher risk. Specifically, VTSPL did not establish the settlors’ source of wealth and source of funds, and failed to obtain VTSPL’s senior management’s approval to establish or continue business contact with these higher risk accounts.
5 MAS has directed VTSPL to appoint an independent party to validate the adequacy and effectiveness of its remediation measures and report its findings to MAS. VTSPL has paid the penalty and taken remedial actions to address the risk management deficiencies that led to the breaches.
6 Ms Loo Siew Yee, Assistant Managing Director (Policy, Payments & Financial Crime), MAS, said “Financial institutions play a critical role in guarding against the risk of illicit financing activities in Singapore. A specific area of risk relates to trust structures being abused by criminals to conceal illicit proceeds. Boards and Senior Management of trust companies must ensure that higher risk trust accounts are identified and subject to robust ML/TF controls. MAS will take strong actions against any financial institution that fails to meet our regulatory standards for anti-money laundering.”
***Composition of AML/CFT offences
MAS’ AML/CFT requirements for trust companies are set out in MAS Notice TCA-N03 on Prevention of Money Laundering and Countering the Financing of Terrorism – Trust Companies. Each breach of Notice TCA-N03 is an offence punishable under section 27B(2) of the MAS Act, where the maximum prescribed fine is S$1,000,000 per offence. The breach is compoundable under section 176 of the MAS Act.