18 September, 2016
The boards and senior management of Singapore's financial institutions have to take responsibility for compliance with the law, the head of the Monetary Authority of Singapore (MAS) has said.
Speaking at a Foreign Correspondents Association dinner, MAS managing director Ravi Menon spoke of the organisation's efforts to fight money laundering (AML) and terrorism financing (CFT).
MAS set up a dedicated AML department in August, along with a separate department to strengthen the enforcement of its regulations.
"But MAS cannot inspect every bank every year. Nor can we go through all transactions. And we certainly do not set out to detect fraud – which would take months of intense scrutiny," Menon said.
Responsibility rests with the board and senior management of financial institutions, who must put in place robust monitoring mechanisms to detect suspicious activities, promote strong risk awareness and constant vigilance among all staff, and empower their compliance and risk management people, he said.
"My advice to senior managers in our financial institutions is this: keep your risk and compliance people close to you. They are often seen as hindering opportunities and profits, but when things go wrong you'll wish you had heeded them," Menon said.
"When they say 'I think something's not right here', listen to them," he said.
"Ultimately, trust and conduct boil down to culture more than any externally imposed rules. By culture, I mean the shared values, attitudes and norms that guide behaviour. Financial institutions must get the culture right," Menon said.
MAS's dedicated AML department will look after all policies on money laundering and other illicit financing risks. It will monitor risks and carry out on-site supervision of how financial institutions manage these risks.
The new enforcement department will also bring together functions that have previously been managed by a range of departments, MAS said at the time.
The department is needed because "with a financial sector that comprises more than 1,500 financial institutions of varying sizes and systemic importance, it is not possible to prevent regulatory breaches and misconduct even with intrusive supervision", MAS said.
MAS ordered a bank to close earlier this year for failing to meet its obligations to combat money laundering. It was the first time the regulator has closed a bank since 1984.
For further information, please contact:
Mohan Pillay, Partner, Pinsent Masons
mohan.pillay@pinsentmasons.com
