Guidelines to Notice SFA 13-N01 on Prevention of Money Laundering and Countering the Financing of Terrorism - Approved Trustees — MAS — SG

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Monetary Authority of Singapore
GUIDELINES TO
MAS NOTICE SFA13-N01
ON PREVENTION OF
MONEY LAUNDERING
AND COUNTERING THE
FINANCING OF
TERRORISM
24 APRIL 2015

GUIDELINES TO MAS NOTICE SFA13-N01 ON PREVENTION OF MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM
TABLE OF CONTENTS
1 Introduction...................................................................................................... 1
2 Notice Paragraph 2 – Definitions, Clarifications and Examples ....................... 5
4 Notice Paragraph 4 – Assessing Risks and Applying a Risk-Based Approach 6
5 Notice Paragraph 5 – New Products, Practices and Technologies................ 11
6 Notice Paragraph 6 – Customer Due Diligence (“CDD”)................................ 12
7 Notice Paragraph 7 – Simplified Customer Due Diligence............................. 24
8 Notice Paragraph 8 – Enhanced Customer Due Diligence............................ 26
9 Notice Paragraph 9 –Reliance on Third Parties............................................. 32
12 Notice Paragraph 12 – Suspicious Transactions Reporting........................... 34
13 Notice Paragraph 13 – Internal Policies, Compliance, Audit and Training..... 36
I Other Key Topics - Guidance to Approved Trustees on Proliferation Financing
........................................................................................................ 40
II Useful Links ................................................................................................... 43
APPENDIX A – Examples of CDD Information for Customers ................................. 44
APPENDIX B – Examples of Suspicious Transactions ............................................ 45
For ease of reference, the chapter numbers in these Guidelines mirror the corresponding paragraph numbers in the Notice [MAS Notice SFA13-N01 on Prevention of Money Laundering and Countering the Financing of Terrorism – Approved Trustees] (e.g. Chapter 2 of the Guidelines provides guidance in relation to paragraph 2 of the Notice). Not every paragraph in the Notice has a corresponding paragraph in these Guidelines and this explains why not all chapter numbers are utilised in these Guidelines.

GUIDELINES TO MAS NOTICE SFA13-N01 ON PREVENTION OF MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM 1 Introduction 1-1 These Guidelines provide guidance to all trustees for collective investment schemes approved under the Securities and Futures Act (Cap. 289) (“approved trustees”) on the requirements in MAS Notice SFA13-N01 on Prevention of Money Laundering and Countering the Financing of Terrorism – Approved Trustees (“the Notice”). These Guidelines should be read in conjunction with the Notice. 1-2 The expressions used in these Guidelines have the same meanings as those found in the Notice, except where expressly defined in these Guidelines or where the context otherwise requires. For the purposes of these Guidelines, a reference to “CDD measures” shall mean the measures as required by paragraphs 6, 7 and 8 of the Notice. 1-3 The degree of observance with these Guidelines by an approved trustee may have an impact on the Authority’s overall risk assessment of the approved trustee, including the quality of its board and senior management oversight, governance, internal controls and risk management. 1-4 Key Concepts Money Laundering 1-4-1 Money laundering (“ML”) is a process intended to mask the benefits derived from criminal conduct so that they appear to have originated from a legitimate source. Singapore’s primary legislation to combat ML is the Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act (Cap. 65A). An approved trustee should refer to the Commercial Affairs Department’s (“CAD”) website for more information. 1-4-2 Generally, the process of ML comprises three stages, namely ― (a) Placement – The physical or financial disposal of the benefits derived from criminal conduct. (b) Layering – The separation of these benefits from their original source by creating layers of financial transactions designed to disguise the ultimate source and transfer of these benefits. (c) Integration – The provision of apparent legitimacy to the benefits derived from criminal conduct. If the layering process succeeds, the integration schemes place the laundered funds back into the economy so that they re-enter the financial system appearing to be legitimate funds.

GUIDELINES TO MAS NOTICE SFA13-N01 ON PREVENTION OF MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM Terrorism Financing 1-4-3 Acts of terrorism seek to influence or compel governments into a particular course of action or to intimidate the public or a section of the public. Approved trustees are reminded of the definitions of terrorism set out in the Terrorism (Suppression of Financing) Act (Cap. 325) (“TSOFA”) and the United Nations (Anti-terrorism Measures) Regulations (Rg. 1). 1-4-4 Terrorists require funds to carry out acts of terrorism, and terrorism financing (“TF”) is the act of providing these funds. Such funds may be derived from criminal activities such as robbery, drug-trafficking, kidnapping, extortion, fraud or hacking of online accounts. In such cases, there may be an element of ML involved to disguise the source of funds. 1-4-5 However, terrorist acts and organisations may also be financed from legitimate sources such as donations from charities, legitimate business operations, self-funding by individuals etc. Coupled with the fact that TF need not always involve large sums of money, TF can be hard to detect and approved trustees should remain vigilant. 1-4-6 Singapore’s primary legislation to combat TF is the TSOFA. Approved trustees may refer to the Inter-Ministry Committee on Terrorist Designation’s (“IMC-TD”) website for more information. The Three Lines of Defence 1-4-7 Each approved trustee is reminded that the ultimate responsibility and accountability for ensuring compliance with anti-money laundering and countering the financing of terrorism (“AML/CFT”) laws, regulations and notices rests with its board of directors and senior management. 1-4-8 An approved trustee’s board of directors and senior management are responsible for ensuring strong governance and sound AML/CFT risk management and controls at the approved trustee. While certain responsibilities can be delegated to senior AML/CFT employees, final accountability rests with the approved trustee’s board of directors and senior management. An approved trustee should ensure a strong compliance culture throughout its organisation, where the board of directors and senior management set the right tone. The board of directors and senior management should set a clear risk appetite and ensure a compliance culture where financial crime is not acceptable. 1-4-9 Business units (e.g. front office, customer-facing functions) constitute the first line of defence in charge of identifying, assessing and controlling the ML/TF risks of their business. The second line of defence includes the AML/CFT compliance function, as well as other support functions such as operations, human resource or technology, which work together with the AML/CFT compliance function to identify ML/TF risks when they process transactions or applications or deploy systems or technology. The third line of defence is the approved trustee’s internal audit function.

GUIDELINES TO MAS NOTICE SFA13-N01 ON PREVENTION OF MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM 1-4-10 As part of the first line of defence, business units require robust controls to detect illicit activities. They should be allocated sufficient resources to perform this function effectively. The approved trustee’s policies, procedures and controls on AML/CFT should be clearly specified in writing, and communicated to all relevant employees and officers in the business units. The approved trustee should adequately train employees and officers to be aware of their obligations, and provide instructions as well as guidance on how to ensure the approved trustee’s compliance with prevailing AML/CFT laws, regulations and notices. 1-4-11 As the core of the second line of defence, the AML/CFT compliance function is responsible for ongoing monitoring of the approved trustee’s fulfilment of all AML/CFT duties by the approved trustee. This implies sample testing and the review of exception reports. The AML/CFT compliance function should alert the approved trustee’s senior management or the board of directors if it believes that the employees or officers in the line departments are failing or have failed to adequately address ML/TF risks and concerns. Other support functions such as operations, human resource or technology also play a role to help mitigate the ML/TF risks that the approved trustee faces. The AML/CFT compliance function is typically the contact point regarding all AML/CFT issues for domestic and foreign authorities, including supervisory authorities, law enforcement authorities and financial intelligence units. 1-4-12 As the third line of defence, the approved trustee’s internal audit function or an equivalent function plays an important role in independently evaluating the AML/CFT risk management framework and controls for purposes of reporting to the audit committee of the approved trustee’s board of directors, or a similar oversight body. This independent evaluation is achieved through the internal audit or equivalent function’s periodic evaluations of the effectiveness of the approved trustee’s compliance with prevailing AML/CFT policies, procedures and controls. An approved trustee should establish policies for periodic AML/CFT internal audits covering areas such as ― (a) the adequacy of the approved trustee’s AML/CFT policies, procedures and controls in identifying ML/TF risks, addressing the identified risks and complying with laws, regulations and notices; (b) the effectiveness of the approved trustee’s employees and officers in implementing the approved trustee’s policies, procedures and controls; (c) the effectiveness of the compliance oversight and quality control including parameters and criteria for transaction alerts; and (d) the effectiveness of the approved trustee’s training of relevant employees and officers.

GUIDELINES TO MAS NOTICE SFA13-N01 ON PREVENTION OF MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM Governance 1-4-13 Strong board and senior management leadership is indispensable in the oversight of the development and implementation of a sound AML/CFT risk management framework across the approved trustee. The board of directors and senior management should ensure that the approved trustee’s processes are robust and there are adequate risk mitigating measures in place. The successful implementation and effective operation of a risk-based approach to AML/CFT depends on the approved trustee’s employees and officers having a good understanding of the ML/TF risks inherent in the approved trustee’s business. 1-4-14 An approved trustee’s board of directors and senior management should understand the ML/TF risks the approved trustee is exposed to and how the approved trustee’s AML/CFT control framework operates to mitigate those risks. This should involve the board and senior management ― (a) receiving sufficient, frequent and objective information to form an accurate picture of the ML/TF risks including emerging or new ML/TF risks, which the approved trustee is exposed to through its activities and individual business relations; (b) receiving sufficient and objective information to assess whether the approved trustee’s AML/CFT controls are adequate and effective; (c) receiving information on legal and regulatory developments and the impact these have on the approved trustee’s AML/CFT framework; and (d) ensuring that processes are in place to escalate important decisions that directly impact the ability of the approved trustee to address and control ML/TF risks, especially where AML/CFT controls are assessed to be inadequate or ineffective.

GUIDELINES TO MAS NOTICE SFA13-N01 ON PREVENTION OF MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM 2 Notice Paragraph 2 – Definitions, Clarifications and Examples Connected Party 2-1 Examples of natural persons with executive authority in a company include the Chairman and Chief Executive Officer. Legal Arrangements 2-2 In relation to the definition of “legal arrangement” in the Notice, examples of legal arrangements are trust, fiducie, treuhand and fideicomiso. Legal Persons 2-3 In relation to the definition of “legal person” in the Notice, examples of legal persons are companies, bodies corporate, foundations, anstalt, partnerships, joint ventures or associations. Officer 2-4 A reference to “officer” refers to an approved trustee’s board of directors and senior management.

GUIDELINES TO MAS NOTICE SFA13-N01 ON PREVENTION OF MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM 4 Notice Paragraph 4 – Assessing Risks and Applying a Risk-Based Approach Countries or Jurisdictions of its Customers 4-1 This refers to both the country or jurisdiction of incorporation or registration, and, if different, the country or jurisdiction of operations as well, of the customer. Other Relevant Authorities in Singapore 4-2 Examples include law enforcement authorities (e.g. Singapore Police Force, Commercial Affairs Department, Corrupt Practices Investigation Bureau) and other government authorities (e.g. Attorney General’s Chambers, Ministry of Home Affairs, Ministry of Finance, Ministry of Law). Risk Assessment 4-3 In addition to assessing the ML/TF risks presented by an individual customer, an approved trustee shall identify and assess ML/TF risks on an enterprise-wide level. This shall include a consolidated assessment of the approved trustee’s ML/TF risks that exist across all its business units, product lines and delivery channels. The enterprise-wide ML/TF risk assessment relates to an approved trustee in Singapore in the following ways:
(a) An approved trustee incorporated in Singapore shall take into account the ML/TF risks of its branches and subsidiaries, including those outside Singapore, as part of its consolidated assessment of its enterprise-wide ML/TF risks. (b) The approved trustee may refer to an enterprise-wide ML/TF risk assessment performed by its head office, group or regional AML/CFT function, provided that the assessment adequately reflects the ML/TF risks faced in the context of its operations in Singapore. 4-4 The enterprise-wide ML/TF risk assessment is intended to enable the approved trustee to better understand its overall vulnerability to ML/TF risks and forms the basis for the approved trustee’s overall risk-based approach. 4-5 An approved trustee’s senior management shall approve its enterprisewide ML/TF risk assessment and relevant business units should give their full support and active co-operation to the enterprise-wide ML/TF risk assessment. 4-6 In conducting an enterprise-wide risk assessment, the broad ML/TF risk factors that the approved trustee should consider include ― (a) in relation to its customers ― (i) target customer markets and segments;

GUIDELINES TO MAS NOTICE SFA13-N01 ON PREVENTION OF MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM (ii) profile and number of customers identified as higher risk; (iii) volumes and sizes of its customers’ transactions and funds transfers, considering the usual activities and the risk profiles of its customers; (b) in relation to the countries or jurisdictions its customers are from or in, or where the approved trustee has operations in ― (i) countries or jurisdictions the approved trustee is exposed to, either through its own activities (including where its branches and subsidiaries operate in) or the activities of its customers, especially countries or jurisdictions with relatively higher levels of corruption, organised crime or inadequate AML/CFT measures, as identified by the Financial Action Task Force (“FATF”); (ii) when assessing ML/TF risks of countries and jurisdictions, the following criteria may be considered:

evidence of adverse news or relevant public criticism of a
country or jurisdiction, including FATF public documents on High Risk and Non-cooperative jurisdictions;
independent and public assessment of the country’s or
jurisdiction’s overall AML/CFT regime such as FATF or FATFStyled Regional Bodies’ (“FSRBs”) Mutual Evaluation reports and the IMF / World Bank Financial Sector Assessment Programme Reports or Reports on the Observance of Standards and Codes for guidance on the country’s or jurisdiction’s AML/CFT measures;
the AML/CFT laws, regulations and standards of the country or
jurisdiction;
implementation standards (including quality and effectiveness
of supervision) of the AML/CFT regime;
whether the country or jurisdiction is a member of international
groups that only admit countries or jurisdictions which meet certain AML/CFT benchmarks;
contextual factors, such as political stability, maturity and
sophistication of the regulatory and supervisory regime, level of corruption, financial inclusion etc; (c) in relation to the products, services, transactions and delivery channels of the approved trustee ―

GUIDELINES TO MAS NOTICE SFA13-N01 ON PREVENTION OF MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM (i) the nature, scale, diversity and complexity of the approved trustee’s business activities; (ii) the nature of products and services offered by the approved trustee; and (iii) the delivery channels, including the extent to which the approved trustee deals directly with the customer, relies on third parties to perform customer due diligence measures or uses technology. 4-7 The scale and scope of the enterprise-wide ML/TF risk assessment should be commensurate with the nature and complexity of the approved trustee’s business. 4-8 As far as possible, an approved trustee’s enterprise-wide ML/TF risk assessment should entail both qualitative and quantitative analyses to ensure that the approved trustee accurately understands its exposure to ML/TF risks. A quantitative analysis of the approved trustee’s exposure to ML/TF risks should involve evaluating data on the approved trustee’s activities using the applicable broad risk factors set out in paragraph 4-6. 4-9 As required by paragraph 4.1(d) of the Notice, an approved trustee shall take into account all its existing products, services, transactions and delivery channels offered as part of its enterprise-wide ML/TF risk assessment. 4-10 In assessing its overall ML/TF risks, an approved trustee should make its own determination as to the risk weights to be given to the individual factor or combination of factors. Singapore’s National ML/TF Risk Assessment (“NRA”) Report 4-11 An approved trustee should incorporate the results of Singapore’s NRA Report into its enterprise-wide ML/TF risk assessment process. When performing the enterprise-wide risk assessment, an approved trustee should take into account any financial or non-financial sector that has been identified as presenting higher ML/TF risks. An approved trustee should consider the NRA results and enterprise-wide ML/TF risk assessment results when assessing the ML/TF risks presented by customers from specific sectors. 4-12 The NRA also identifies certain prevailing crime types as presenting higher ML/TF risks. An approved trustee should consider these results when assessing its enterprise-wide ML/TF risks of products, services, transactions and delivery channels and whether it is more susceptible to the higher risk prevailing crime types. Where appropriate, an approved trustee should also take these results into account as part of the approved trustee’s ongoing monitoring of business relations and the approved trustee’s scrutiny of transactions.

GUIDELINES TO MAS NOTICE SFA13-N01 ON PREVENTION OF MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM Risk Mitigation 4-13 The nature and extent of AML/CFT risk management systems and controls implemented should be commensurate with the ML/TF risks identified via the enterprise-wide ML/TF risk assessment. An approved trustee shall put in place adequate policies, procedures and controls to mitigate the ML/TF risks. 4-14 An approved trustee’s enterprise-wide ML/TF risk assessment serves to guide the allocation of AML/CFT resources within the approved trustee. 4-15 An approved trustee should assess the effectiveness of its risk mitigation procedures and controls by monitoring the following:
(a) the ability to identify changes in a customer profile and transactional behaviour observed in the course of its business; (b) the potential for abuse of new business initiatives, products, practices and services for ML/TF purposes; (c) the compliance arrangements (through its internal audit or quality assurance processes or external review); (d) the balance between the use of technology-based or automated solutions with that of manual or people-based processes, for AML/CFT risk management purposes; (e) the coordination between AML/CFT compliance and other functions of the approved trustee; (f) the adequacy of training provided to employees and officers and awareness of the employees and officers on AML/CFT matters; (g) the process of management reporting and escalation of pertinent AML/CFT issues to the approved trustee’s senior management; (h) the coordination between the approved trustee and regulatory or law enforcement agencies; and (i) the performance of third parties relied upon by the approved trustee to carry out customer due diligence measures. Documentation 4-16 The documentation should include ― (a) the enterprise-wide ML/TF risk assessment by the approved trustee; (b) details of the implementation of the AML/CFT risk management systems and controls as guided by the enterprise-wide ML/TF risk assessment;

GUIDELINES TO MAS NOTICE SFA13-N01 ON PREVENTION OF MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM (c) the reports to senior management on the results of the enterprise-wide ML/TF risk assessment and the implementation of the AML/CFT risk management systems and controls; and (d) details of the frequency of review of the enterprise-wide ML/TF risk assessment. 4-17 An approved trustee should ensure that the enterprise-wide ML/TF risk assessment and the risk assessment information are made available to the Authority upon request. Frequency of Review 4-18 To keep its enterprise-wide risk assessments up-to-date, an approved trustee should review its risk assessment at least once every two years or when material trigger events occur, whichever is earlier. Such material trigger events include, but are not limited to, the acquisition of new customer segments or delivery channels, or the launch of new products and services by the approved trustee. The results of these reviews should be documented and approved by senior management even if there are no significant changes to the approved trustee’s enterprise-wide risk assessment.

GUIDELINES TO MAS NOTICE SFA13-N01 ON PREVENTION OF MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM 5 Notice Paragraph 5 – New Products, Practices and Technologies 5-1 International developments of new technologies to provide financial services are fast-changing and growing at an accelerated pace. An approved trustee shall keep abreast of such new developments and the ML/TF risks associated with them. 5-2 An approved trustee’s assessment of ML/TF risks in relation to new products, practices and technologies is separate from, and in addition to, the approved trustee’s assessment of other risks such as credit risks, operational risks or market risks. For example, in the assessment of ML/TF risks, an approved trustee should pay attention to new products, practices and technologies that deal with the movement of funds managed by its customers. These assessments should be approved by senior management and heads of business, risk and compliance.

GUIDELINES TO MAS NOTICE SFA13-N01 ON PREVENTION OF MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM 6 Notice Paragraph 6 – Customer Due Diligence (“CDD”) Notice Paragraph 6.2 6-1 Where There Are Reasonable Grounds for Suspicion prior to the Establishment of Business Relations 6-1-1 In arriving at its decision for each case, an approved trustee should take into account the relevant facts, including information that may be made available by the authorities and conduct a proper risk assessment. Notice Paragraphs 6.4 to 6.17 6-2 CDD Measures Under Paragraphs 6.4 to 6.17 6-2-1 When relying on documents, an approved trustee should be aware that the best documents to use to verify the identity of the customer are those most difficult to obtain illicitly or to counterfeit. These may include governmentissued identity cards or passports, reports from independent company registries, published or audited annual reports and other reliable sources of information. The rigour of the verification process should be commensurate with the customer’s risk profile. 6-2-2 An approved trustee should exercise greater caution when dealing with an unfamiliar or a new customer. Apart from obtaining the identification information required by paragraph 6.5 of the Notice, an approved trustee should (if not already obtained as part of its establishment of business relations) also obtain additional information on the customer’s background such as nature of business, and other related accounts with the same approved trustee. Such additional identification information enables an approved trustee to obtain better knowledge of its customer’s risk profile, as well as the purpose and intended nature of the business relations. Notice Paragraph 6.5 6-3 Identification of Customer 6-3-1 With respect to paragraph 6.5(c) of the Notice, a P.O. box address should only be used for jurisdictions where the residential address (e.g. street name or house number) is not applicable or available in the local context. 6-3-2 An approved trustee should obtain a customer’s contact details such as office or work telephone numbers. 6-3-3 Under paragraph 6 and paragraph 8 of the Notice, an approved trustee is required to identify and screen all the connected parties of a customer. However, an approved trustee may verify their identities using a risk-based

GUIDELINES TO MAS NOTICE SFA13-N01 ON PREVENTION OF MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM approach1 . An approved trustee is reminded of its obligations under the Notice to identify connected parties and remain apprised of any changes to connected parties. 6-3-4 Identification of connected parties may be done using publicly available sources or databases such as company registries, annual reports or based on substantiated information provided by the customers. Notice Paragraph 6.8 6-4 Verification of Identity of Customer 6-4-1 In verifying the identity of a customer, an approved trustee may obtain the following documents:
(a) name, legal form, proof of existence and constitution based on certificate of incorporation, certificate of good standing, trust deed, constitutional document, certificate of registration or any other documentation from a reliable independent source; and (b) powers that regulate and bind the legal person based on memorandum and articles of association, and board resolution authorising the establishment of business relations and appointment of authorised signatories. 6-4-2 Further guidance on verification of different types of customers is set out in
Appendix A.
6-4-3 In exceptional circumstances where the approved trustee is unable to retain a copy of the documentation used to verify the customer’s identity, the approved trustee should record the following:
(a) information that the original documentation had served to verify; (b) title and description of the original documentation produced to the approved trustee’s employee or officer for verification, including any particular or unique features or condition of that documentation (e.g. whether it is worn out, or damaged); (c) reasons why a copy of that documentation could not be made; and (d) name of the approved trustee’s employee or officer who carried out the verification, a statement by that employee or officer certifying 1 For the guidance on simplified CDD (“SCDD”) measures in relation to the identification and verification of the identities of connected parties of a customer, approved trustees are to refer to paragraph 7-3 of these Guidelines.

GUIDELINES TO MAS NOTICE SFA13-N01 ON PREVENTION OF MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM verification of the information against the documentation and the date of the verification. Reliability of Information and Documentation 6-4-4 Where an approved trustee obtains data, documents or information from the customer or a third party, it should ensure that such data, documents or information is current at the time they are provided to the approved trustee. 6-4-5 Where the customer is unable to produce an original document, an approved trustee may consider accepting a copy of the document ― (a) that is certified to be a true copy by a suitably qualified person (e.g. a notary public, a lawyer or certified public or professional accountant); or (b) if an approved trustee staff independent of the customer relationship has confirmed that he has sighted the original document. 6-4-6 Where a document is in a foreign language, appropriate steps should be taken by an approved trustee to be reasonably satisfied that the document does in fact provide evidence of the customer’s identity. The approved trustee should ensure that any document that is critical for performance of any measures required under the Notice is translated into English by a suitably qualified translator. Alternatively, the approved trustee may rely on a translation of such document by an approved trustee staff independent of the customer relationship who is conversant in that foreign language. This is to allow all employees and officers of the approved trustee involved in the performance of any measures required under the Notice to understand the contents of the documents, for effective determination and evaluation of ML/TF risks associated with the customer. 6-4-7 The approved trustee should ensure that documents obtained for performing any measures required under the Notice are clear and legible. Notice Paragraphs 6.9 to 6.11 6-5 Identification and Verification of Identity of Natural Person Appointed to Act on a Customer’s Behalf 6-5-1 Appropriate documentary evidence of a customer’s appointment of a natural person to act on its behalf includes a board resolution or similar authorisation documents. 6-5-2 Where there is a long list of natural persons appointed to act on behalf of the customer (e.g. a list comprising more than 10 authorised signatories),

GUIDELINES TO MAS NOTICE SFA13-N01 ON PREVENTION OF MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM the approved trustee should verify at a minimum those natural persons who will deal directly with the approved trustee. Notice Paragraphs 6.12 to 6.16 6-6 Identification and Verification of Identity of Beneficial Owner 6-6-1 An approved trustee should note that measures listed under paragraph 6.13(i), (ii) and (iii) of the Notice are not alternative measures but are cascading measures with each to be used where the immediately preceding measure has been applied but has not resulted in the identification of a beneficial owner. 6-6-2 In relation to paragraph 6.13(i) of the Notice, when identifying the natural person who ultimately owns the legal person, the shareholdings within the ownership structure of the legal person should be considered. It may be based on a threshold (e.g. any person owning more than 25% of the legal person, taking into account any aggregated ownership for companies with cross-shareholdings). 6-6-3 A natural person who does not meet the shareholding threshold referred to in paragraph 6-6-2 above but who controls the customer (e.g. through exercising significant influence), is a beneficial owner under the Notice. 6-6-4 An approved trustee may also consider obtaining an undertaking or declaration from the customer on the identity of, and the information relating to, the beneficial owner. Notwithstanding the obtaining of such an undertaking or declaration, the approved trustee remains responsible for complying with its obligations under the Notice to take reasonable measures to verify the identity of the beneficial owner by, for example, researching publicly available information on the beneficial owner or arranging a face-to-face meeting with the beneficial owner, to corroborate the undertaking or declaration provided by the customer. 6-6-5 Where the customer has a complex ownership or control structure, an approved trustee should obtain enough information to sufficiently understand if there are legitimate reasons for such ownership or control structure. 6-6-6 An approved trustee should take particular care when dealing with companies with bearer shares, since the beneficial ownership is difficult to establish. For such companies, an approved trustee should adopt procedures to establish the identities of the beneficial owners of such shares and ensure that the approved trustee is notified whenever there is a change of beneficial owner of such shares. At a minimum, these procedures should require the approved trustee to obtain an undertaking in writing from the beneficial owner of such bearer shares stating that the approved trustee shall be immediately notified if the shares are transferred

GUIDELINES TO MAS NOTICE SFA13-N01 ON PREVENTION OF MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM to another natural person, legal person or legal arrangement. Depending on its risk assessment of the customer, the approved trustee may require that the bearer shares be held by a named custodian, with an undertaking from the custodian that the approved trustee will be notified of any changes to ownership of these shares or the named custodian. 6-6-7 For the purposes of paragraph 6.15 of the Notice, where the customer is a legal person publicly listed on a stock exchange and subject to regulatory disclosure requirements relating to adequate transparency in respect of its beneficial owners (imposed through stock exchange rules, law or other enforceable means), it is not necessary to identify and verify the identities of the beneficial owners of the customer. 6-6-8 In determining if the foreign stock exchange imposes regulatory disclosure and adequate transparency requirements, the approved trustee should put in place an internal assessment process with clear criteria, taking into account, amongst others, the country risk and the level of the country’s compliance with the FATF standards. 6-6-9 Where the customer is a majority-owned subsidiary of a publicly listed legal person, it is not necessary to identify and verify the identities of beneficial owners of the customer. However, for such a customer, if there are other non-publicly listed legal persons who own more than 25% of the customer or who otherwise control the customer, the beneficial owners of such non-publicly listed legal persons should be identified and verified. 6-6-10 Deleted with effect from 30 November 2015. 6-6-11 Deleted with effect from 30 November 2015. 6-6-12 Where a customer is one which falls within paragraph 6.15 of the Notice, this does not in itself constitute an adequate analysis of low ML/TF risks for the purpose of performing SCDD measures under paragraph 7 of the Notice. Notice Paragraph 6.17 6-7 Information on Purpose and Intended Nature of Business Relations 6-7-1 The measures taken by an approved trustee to understand the purpose and intended nature of business relations should be commensurate with the complexity of the customer’s business and risk profile. For higher risk customers, an approved trustee should seek to understand upfront the expected business relations (e.g. types of transactions likely to pass through, expected amount for each transaction, names of counterparties) and consider, as part of ongoing monitoring, whether the activity corresponds with the stated purpose of the business relations. This will

GUIDELINES TO MAS NOTICE SFA13-N01 ON PREVENTION OF MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM enable a more effective ongoing monitoring of the customer’s business relations and transactions. Notice Paragraphs 6.18 to 6.25 6-8 Ongoing Monitoring 6-8-1 Ongoing monitoring of business relations is a fundamental feature of an effective AML/CFT risk management system. Ongoing monitoring should be conducted in relation to all business relations, but the approved trustee may adjust the extent and depth of monitoring of a customer according to the customer’s ML/TF risk profile. The adequacy of monitoring systems and the factors leading the approved trustee to adjust the level of monitoring should be reviewed regularly for effectiveness in mitigating the approved trustee’s ML/TF risks. 6-8-2 An approved trustee should make further enquiries when a customer performs frequent and cumulatively large transactions without any apparent or visible economic or lawful purpose. 6-8-3 Where there are indications that the risks associated with an existing business relations may have increased, the approved trustee should request additional information and conduct a review of the customer’s risk profile in order to determine if additional measures are necessary. 6-8-4 A key part of ongoing monitoring includes maintaining relevant and up-todate CDD data, documents and information so that the approved trustee can identify changes to the customer’s risk profile ― (a) for higher risk categories of customers, an approved trustee should obtain updated CDD information, as part of its periodic CDD review, or upon the occurrence of a trigger event as deemed necessary by the approved trustee, whichever is earlier; and (b) for all other risk categories of customers, an approved trustee should obtain updated CDD information upon the occurrence of a trigger event. 6-8-5 Examples of trigger events are when (i) a significant transaction takes place, (ii) a material change occurs in the way the customer’s business relations are conducted, (iii) the approved trustee’s policies, procedures or standards relating to the documentation of CDD information change substantially, and (iv) the approved trustee becomes aware that it lacks sufficient information about the customer concerned. 6-8-6 The frequency of CDD review may vary depending on each customer’s risk profile. Higher risk customers should be subject to more frequent periodic review (e.g. on an annual basis) to ensure that CDD information such as nationality, passport details, certificate of incumbency, ownership

GUIDELINES TO MAS NOTICE SFA13-N01 ON PREVENTION OF MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM and control information that the approved trustee has previously obtained remain relevant and up-to-date. 6-8-7 In determining what would constitute suspicious, complex, unusually large or unusual pattern of transactions, an approved trustee should consider, amongst others, international typologies and information obtained from law enforcement and other authorities that may point to jurisdiction-specific considerations. As part of ongoing monitoring, an approved trustee should pay attention to transaction characteristics, such as ― (a) the nature of a transaction (e.g. abnormal size or frequency for that customer or peer group); (b) the geographic destination or origin of a payment (e.g. to or from a higher risk country); and (c) the parties concerned (e.g. a request to make a payment to or from a person on a sanctions list). 6-8-8 An approved trustee’s transaction monitoring processes or systems may vary in scope or sophistication (e.g. using manual spreadsheets to automated and complex systems). The degree of automation or sophistication of processes and systems depends on the size and complexity of the approved trustee’s operations. 6-8-9 Nevertheless, the processes and systems used by the approved trustee should provide its business units (e.g. front office and relationship managers) and compliance officers (including employees and officers who are tasked with conducting investigations) with timely information needed to identify, analyse and effectively monitor business relations for ML/TF. 6-8-10 The transaction monitoring processes and systems should enable the approved trustee to monitor multiple accounts of a customer holistically within a business unit and across business units to identify any suspicious transactions. In the event that a business unit discovers suspicious transactions in a customer’s account, such information should be shared across other business units to facilitate a holistic assessment of the ML/TF risks presented by the customer. Therefore, approved trustees should have processes in place to share such information across business units. In addition, approved trustees should perform trend analyses of transactions to identify unusual or suspicious transactions. Approved trustees should also monitor transactions with parties in high risk countries or jurisdictions. 6-8-11 In addition, approved trustees should have processes in place to monitor related customer accounts holistically within and across business units, so as to better understand the risks associated with such customer groups, identify potential ML/TF risks and report suspicious transactions.

GUIDELINES TO MAS NOTICE SFA13-N01 ON PREVENTION OF MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM 6-8-12 The parameters and thresholds used by an approved trustee to identify suspicious transactions should be properly documented and independently validated to ensure that they are appropriate to its operations and context. An approved trustee should periodically review the appropriateness of the parameters and thresholds used in the monitoring process. Notice Paragraphs 6.27 to 6.29 6-9 CDD Measures for Non-Face-to-Face Business Relations 6-9-1 A reference to “specific risks” in paragraph 6.27 of the Notice includes risks arising from establishing business relations and undertaking transactions according to instructions conveyed by customers over the internet, post, fax or telephone. An approved trustee should note that applications and transactions undertaken across the internet may pose greater risks than other non-face-to-face business due to the following factors:
(a) the ease of unauthorised access to the facility, across time zones and location; (b) the ease of making multiple fictitious applications without incurring extra cost or the risk of detection; (c) the absence of physical documents; and (d) the speed of electronic transactions, that may, taken together, aggravate the ML/TF risks. 6-9-2 The measures taken by an approved trustee for verification of an identity in respect of non-face-to-face business relations with or transactions for the customer will depend on the nature and characteristics of the product or service provided and the customer’s risk profile. 6-9-3 Where verification of identity is performed without face-to-face contact (e.g. electronically), an approved trustee should apply additional checks to manage the risk of impersonation. The additional checks may consist of robust anti-fraud checks that the approved trustee routinely undertakes as
part of its existing procedures, which may include ―
(a) telephone contact with the customer at a business number that can be verified independently; (b) confirmation of the customer’s address through an exchange of correspondence or other appropriate method; or (c) provision of certified identification documents by lawyers or notaries public.

GUIDELINES TO MAS NOTICE SFA13-N01 ON PREVENTION OF MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM Notice Paragraph 6.30 6-10 Reliance by Acquiring Approved Trustee on Measures Already Performed 6-10-1 When an approved trustee acquires the business of another financial institution (“FI”), either in whole or in part, it is not necessary for the identity of all existing customers to be verified again, provided that the requirements of paragraph 6.30 of the Notice are met. An approved trustee shall maintain proper records of its due diligence review performed on the acquired business. 6-10-2 Notwithstanding the reliance on identification and verification that has already been performed, an acquiring approved trustee is responsible for its obligations under the Notice. 6-10-3 When an approved trustee acquires the business of another FI, either in whole or in part, the approved trustee is reminded that in addition to complying with paragraph 6.30 of the Notice, it is also required to comply with ongoing monitoring requirements set out in paragraphs 6.18 to 6.25 of the Notice. Notice Paragraph 6.33 6-11 Existing Customers 6-11-1 In relation to business relations which pre-date the coming into force of the current Notice, the approved trustee should prioritise the remediation of higher risk customers. 6-11-2 In taking into account any previous measures as referred to in paragraph
6.33 of the Notice, an approved trustee should consider whether ―
(a) there has been any significant transaction undertaken, since the measures were last performed, having regard to the manner in which the business relations with the customer are ordinarily conducted; (b) there is a material change, since the measures were last performed, in the way that business relations with the customer are conducted; (c) it lacks adequate identification information on a customer; and (d) there is a change in the ownership or control of the customer, or the persons authorised to act on behalf of the customer in its business relations with the approved trustee.

GUIDELINES TO MAS NOTICE SFA13-N01 ON PREVENTION OF MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM Notice Paragraphs 6.34 to 6.36 6-12 Screening 6-12-1 Screening is intended to be a preventive measure. An approved trustee is reminded that all parties identified pursuant to the Notice are required to be screened, irrespective of the risk profile of the customer. 6-12-2 Where screening results in a positive hit against sanctions lists, an approved trustee is reminded of its obligations to freeze without delay and without prior notice, the funds or other assets of designated persons and entities that it has control over, so as to comply with applicable laws and regulations in Singapore, including the TSOFA and MAS Regulations issued under section 27A of the Monetary Authority of Singapore Act (Cap.
186) (“MAS Act”) relating to sanctions and freezing of assets of persons.
Any such assets should be reported promptly to the relevant authorities and a Suspicious Transaction Report (“STR”) should be filed. 6-12-3 An approved trustee should put in place policies, procedures and controls that clearly set out ― (a) the ML/TF information sources used by the approved trustee for screening (including commercial databases used to identify adverse information on individuals and entities, individuals and entities covered under MAS Regulations issued pursuant to section 27A of the MAS Act, individuals and entities identified by other sources such as the approved trustee’s head office or parent supervisory authority, lists and information provided by the Authority and relevant authorities in Singapore); (b) the roles and responsibilities of the approved trustee’s employees involved in the screening, reviewing and dismissing of alerts, maintaining and updating of the various screening databases and escalating hits; (c) the frequency of review of such policies, procedures and controls; (d) the frequency of periodic screening; (e) how apparent matches from screening are to be resolved by the approved trustee’s employees, including the process for determining that an apparent match is a positive hit and for dismissing an apparent match as a false hit; and (f) the steps to be taken by the approved trustee’s employees for reporting positive hits to the approved trustee’s senior management and to the relevant authorities. 6-12-4 The level of automation used in the screening process should take into account the nature, size and risk profile of an approved trustee’s business.

GUIDELINES TO MAS NOTICE SFA13-N01 ON PREVENTION OF MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM An approved trustee should be aware of any shortcomings in its automated screening systems. In particular, it is important to consider “fuzzy matching” to identify non-exact matches. The approved trustee should ensure that the fuzzy matching process is calibrated to the risk profile of its business. As application of the fuzzy matching process is likely to result in the generation of an increased number of apparent matches which have to be checked, the approved trustee’s employees will need to have access to CDD information to enable them to exercise their judgment in identifying true hits. 6-12-5 An approved trustee should be aware that performing screening after business relations have been established could lead to a breach of relevant laws and regulations in Singapore relating to sanctioned parties. When the approved trustee becomes aware of such breaches, it should immediately take the necessary actions and inform the relevant authorities. 6-12-6 In screening periodically as required by paragraph 6.35(b) of the Notice, an approved trustee should pay particular attention to changes in customer status (e.g. whether the customer has over time become subject to prohibitions and sanctions) or customer risks (e.g. a connected party of a customer, a beneficial owner of the customer or a natural person appointed to act on behalf of the customer subsequently becomes a Politically Exposed Person or presents higher ML/TF risks, or a customer presents higher ML/TF risks) and assess whether to subject the customer to the appropriate ML/TF risk mitigation measures (e.g. enhanced CDD measures). 6-12-7 An approved trustee should ensure that the identification information of a customer, a connected party of the customer, a natural person appointed to act on behalf of the customer and a beneficial owner of the customer is entered into the approved trustee’s customer database for periodic name screening purposes. This will help the approved trustee to promptly identify any existing customers who have subsequently become higher risk parties. 6-12-8 In determining the frequency of periodic name screening, an approved trustee should consider its customers’ risk profile. 6-12-9 The approved trustee should ensure that it has adequate arrangements to perform screening of the approved trustee’s customer database when there are changes to the lists of sanctioned individuals and entities, covered by the TSOFA, MAS Regulations issued under section 27A of the MAS Act 2 and MAS Notice MA-N-EXT 1/2012 (“Prohibition on 2 Please refer to the following link for the relevant MAS ML/TF Regulations - http://www.mas.gov.sg/Regulations-and-Financial-Stability/Anti-Money-Laundering-Countering-The-FinancingOf-Terrorism-And-Targeted-Financial-Sanctions/Targeted-Financial-Sanctions/MAS-Regulations.aspx

GUIDELINES TO MAS NOTICE SFA13-N01 ON PREVENTION OF MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM Transactions with the Iranian Government and with Iranian Financial Institutions”). An approved trustee should implement “four-eye checks” on alerts from sanctions reviews before closing an alert, or conduct quality assurance checks on the closure of such alerts on a sample basis.

GUIDELINES TO MAS NOTICE SFA13-N01 ON PREVENTION OF MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM 7 Notice Paragraph 7 – Simplified Customer Due Diligence 7-1 Paragraph 7.1 of the Notice permits an approved trustee to adopt a riskbased approach in assessing the necessary measures to be performed, and to perform appropriate SCDD measures in cases where the approved trustee is satisfied, upon analysis of risks, that the ML/TF risks are low. 7-2 Where an approved trustee applies SCDD measures, it is still required to perform ongoing monitoring of business relations under the Notice. 7-3 Under SCDD, an approved trustee may adopt a risk-based approach in assessing whether any measures should be performed for connected parties of the customers. 7-4 Where an approved trustee is satisfied that the risks of money laundering and terrorism financing are low, an approved trustee may perform SCDD measures. Examples of possible SCDD measures include ― (a) reducing the frequency of updates of customer identification information; (b) reducing the degree of ongoing monitoring and scrutiny of transactions, based on a reasonable monetary threshold; or (c) choosing another method to understand the purpose and intended nature of business relations by inferring this from the type of transactions or business relations to be established, instead of collecting information as to the purpose and intended nature of business relations. 7-5 Subject to the requirement that an approved trustee’s assessment of low ML/TF risks is supported by an adequate analysis of risks, examples of potentially lower ML/TF risk situations include ― (a) Customer risk (i) a Singapore Government entity; and (ii) entities listed on a stock exchange and subject to regulatory disclosure requirements relating to adequate transparency in respect of beneficial owners (imposed through stock exchange rules, law or other enforceable means). (b) Product, service, transaction or delivery channel risk (i) a pension, superannuation or similar scheme that provides retirement benefits to employees, where contributions are made by way of deduction from wages, and the scheme rules do not

GUIDELINES TO MAS NOTICE SFA13-N01 ON PREVENTION OF MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM permit the assignment of a member’s interest under the scheme; and (ii) financial products or services that provide appropriately defined and limited services to certain types of customers (e.g. to increase customer access for financial inclusion purposes).

GUIDELINES TO MAS NOTICE SFA13-N01 ON PREVENTION OF MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM 8 Notice Paragraph 8 – Enhanced Customer Due Diligence 8-1 Where the ML/TF risks are identified to be higher, an approved trustee shall take enhanced CDD (“ECDD”) measures to mitigate and manage those risks. 8-2 Examples of potentially higher risk categories under paragraph 8.7 of the Notice include ― (a) Customer risk (i) customers from higher risk businesses / activities / sectors identified in Singapore’s NRA, as well as other higher risk businesses / activities / sectors identified by the approved trustee; (ii) the ownership structure of the legal person appears unusual or excessively complex given the nature of the legal person’s business; (iii) legal persons that are personal asset holding vehicles; (iv) the business relations is conducted under unusual circumstances (e.g. significant unexplained geographic distance between the approved trustee and the customer); (v) companies that have nominee shareholders or shares in bearer form; and (vi) cash-intensive businesses. (b) Country or geographic risk (i) countries or jurisdictions the approved trustee is exposed to, either through its own activities (including where its branches and subsidiaries operate in) or the activities of its customers which have relatively higher levels of corruption, organised crime or inadequate AML/CFT measures, as identified by the FATF; and (ii) countries identified by credible bodies (e.g. reputable international bodies such as Transparency International) as having significant levels of corruption, terrorism financing or other criminal activity. (c) Product, service, transaction or delivery channel risk (i) anonymous transactions (which may involve cash); and (ii) frequent payments received from unknown or unassociated third parties.

GUIDELINES TO MAS NOTICE SFA13-N01 ON PREVENTION OF MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM 8-3 When considering the ML/TF risks presented by a country or jurisdiction, an approved trustee should take into account, where appropriate, variations in ML/TF risks across different regions or areas within a country. Notice Paragraph 8.1 8-4 Politically Exposed Persons (“PEPs”) Definitions 8-4-1 The definitions in paragraph 8.1 of the Notice are drawn from the FATF Recommendations. The definition of PEPs is not intended to cover middleranking or more junior individuals in the categories listed. 8-4-2 In the context of Singapore, domestic PEPs should include at least all Government Ministers, Members of Parliament, Nominated Members of Parliament and Non-Constituency Members of Parliament. 8-4-3 When determining whether a person is a “close associate” of a PEP, the approved trustee may consider factors such as the level of influence the PEP has on such a person or the extent of his exposure to the PEP. The approved trustee may rely on information available from public sources and information obtained through customer interaction. 8-4-4 With reference to paragraph 8.1 of the Notice, examples of an “international organisation” include the United Nations and affiliated agencies such as the International Maritime Organisation and the International Monetary Fund; regional international organisations such as the Asian Development Bank, Association of Southeast Asian Nations Secretariat, institutions of the European Union, the Organisation for Security and Cooperation in Europe; military international organisations such as the North Atlantic Treaty Organisation; and economic organisations such as the World Trade Organisation or the Asia-Pacific Economic Cooperation Secretariat. 8-4-5 Examples of persons who are or have been entrusted with prominent functions by an international organisation are members of senior management such as directors, deputy directors and members of the board or equivalent functions. Other than relying on information from a customer, the approved trustee may consider information from public sources in determining whether a person has been or is entrusted with prominent functions by an international organisation. Notice Paragraphs 8.2 to 8.4 8-5 PEPs 8-5-1 If an approved trustee determines that any natural person appointed to act on behalf of a customer or any connected party of a customer is a PEP, the approved trustee should assess the ML/TF risks presented and

GUIDELINES TO MAS NOTICE SFA13-N01 ON PREVENTION OF MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM consider factors such as the level of influence that the PEP has on the customer. Approved trustees should consider factors such as whether the PEP is able to exercise substantial influence over the customer, to determine the overall ML/TF risks presented by the customer. Where the customer presents higher ML/TF risks, the approved trustee should apply ECDD measures on the customer accordingly. 8-5-2 It is generally acceptable for an approved trustee to refer to commercially available databases to identify PEPs. In addition, an approved trustee should consider other non-public information that the approved trustee is aware of. An approved trustee shall exercise sound judgment in identifying any PEP, having regard to the risks and the circumstances. 8-5-3 In relation to paragraph 8.3(a) of the Notice, the approval shall be obtained from senior management. Inputs should also be obtained from the approved trustee’s AML/CFT compliance function. 8-5-4 In relation to paragraph 8.3(b) of the Notice, an approved trustee may refer to information sources such as asset and income declarations, which some jurisdictions expect certain senior public officials to file and which often include information about an official’s source of wealth and current business interests. An approved trustee should note that not all declarations are publicly available. An approved trustee should also be aware that certain jurisdictions impose restrictions on their PEPs’ ability to hold foreign bank accounts, to hold other office or paid employment. 8-5-5 Source of wealth generally refers to the origin of the customer’s and beneficial owner’s entire body of wealth (i.e. total assets). This relates to how the customer and beneficial owner have acquired the wealth which is distinct from identifying the assets that they own. Source of wealth information should give an indication about the size of wealth the customer and beneficial owner would be expected to have, and how the customer and beneficial owner acquired the wealth. Although the approved trustee may not have specific information about assets that are not deposited with or processed by the approved trustee, it may be possible to obtain general information from the customer, commercial databases or other open sources. Examples of appropriate and reasonable means of establishing source of wealth are information and documents such as evidence of title, copies of trust deeds, audited accounts, salary details, tax returns and bank statements. 8-5-6 Source of funds refers to the origin of the particular funds or other assets which are the subject of the establishment of business relations (e.g. the amounts being invested, deposited, or wired as part of the business relations). In order to ensure that the funds are not proceeds of crime, the approved trustee should not limit its source of funds inquiry to identifying the
other FI from which the funds have been transferred, but more importantly, the activity that generated the funds. The information obtained should be substantive and facilitate the establishment of the provenance of

GUIDELINES TO MAS NOTICE SFA13-N01 ON PREVENTION OF MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM the funds or reason for the funds having been acquired. Examples of appropriate and reasonable means of establishing source of funds are information such as salary payments or sale proceeds. 8-5-7 Based on its risk assessment of the PEP, an approved trustee should consider whether the information regarding source of wealth and source of funds should be corroborated. In relation to paragraph 8.3(b) of the Notice, examples of “appropriate and reasonable means” for establishing source of wealth or source of funds are financial statements of the legal person or legal arrangement owned or controlled by the PEP, site visits, a copy of the will (in cases where the source of wealth or funds is an inheritance), and conveyancing documents (in cases where the source of wealth or funds is a sale of property). 8-5-8 In relation to paragraph 8.3 of the Notice, other ECDD measures that may be performed include ― (a) using public sources of information (e.g. websites) to gain a better understanding of the reputation of the customer or any beneficial owner of a customer. Where the approved trustee finds information containing allegations of wrongdoing by a customer or a beneficial owner of a customer, the approved trustee should assess how this affects the level of risk associated with the business relations; (b) commissioning external intelligence reports where it is not possible for an approved trustee to easily obtain information through public sources or where there are doubts about the reliability of public information. 8-5-9 In relation to paragraphs 8.4(a) and (b) of the Notice, where the approved trustee assesses that the business relations or transactions with a domestic PEP or an international organisation PEP do not present higher ML/TF risks and that therefore ECDD measures need not be applied, the approved trustee shall nevertheless apply measures under paragraph 6 of the Notice on the customer. However, where changes in events, circumstances or other factors lead to the approved trustee’s assessment that the business relations or transactions with the customer present higher ML/TF risks, the approved trustee should review its risk assessment and apply ECDD measures. 8-5-10 While domestic PEPs and international organisation PEPs may be subject to a risk-based approach, it does not preclude such persons from presenting the same ML/TF risks as a foreign PEP. 8-5-11 With reference to paragraph 8.4(c) of the Notice, while the time elapsed since stepping down from a prominent public function is a relevant factor to consider when determining the level of influence a PEP continues to exercise, it should not be the sole determining factor. Other risk factors that the approved trustee should consider are ―

GUIDELINES TO MAS NOTICE SFA13-N01 ON PREVENTION OF MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM (a) the seniority of the position that the individual previously held when he was a PEP; and (b) whether the individual’s previous PEP position and current function are linked in any way (e.g. whether the ex-PEP was appointed to his current position or function by his successor, or whether the ex-PEP continues to substantively exercise the same powers in his current position or function). Notice Paragraphs 8.5 to 8.8 8-6 Other Higher Risk Categories 8-6-1 In relation to paragraph 8.7 of the Notice, an approved trustee may refer to the preceding paragraph 8-5-8 of these Guidelines for further guidance on the ECDD measures to be performed. 8-6-2 For customers highlighted in paragraph 8.6(a) of the Notice, an approved trustee shall assess them as presenting higher ML/TF risks. For such customers, the approved trustee shall ensure that the ECDD measures performed are commensurate with the risks. For customers highlighted in paragraph 8.6(b) of the Notice, an approved trustee shall assess whether any such customer presents a higher risk for ML/TF and ensure that the measures under paragraph 6 of the Notice or ECDD measures where the approved trustee assesses the customer to present a higher risk for ML/TF, performed are commensurate with the risk. 8-6-3 With reference to paragraph 8.6(a) of the Notice, an approved trustee should refer to the FATF Public Statement on High Risk and NonCooperative Jurisdictions on which FATF has called for countermeasures3 . FATF updates this Public Statement on a periodic basis and approved trustees should regularly refer to the FATF website for the latest updates4 .

8-6-4 For the purposes of paragraph 8.8 of the Notice, regulations issued by the Authority include the Regulations relating to the freezing of assets of persons and sanctioning of persons. 8-6-5 With regard to tax and other serious crimes, as a preventive measure, approved trustees are expected to reject a prospective customer where there are reasonable grounds to suspect that the customer’s assets are the proceeds of serious crimes, including wilful and fraudulent tax evasion. Where there are grounds for suspicion in an existing customer http://www.fatf-gafi.org/topics/high-riskandnon-cooperativejurisdictions/ The link to the FATF website is as follows: http://www.fatf-gafi.org/

GUIDELINES TO MAS NOTICE SFA13-N01 ON PREVENTION OF MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM relationship, approved trustees should conduct enhanced monitoring and where appropriate, discontinue the relationship. If the approved trustee is inclined to retain the customer, approval shall be obtained from senior management with the substantiating reasons properly documented, and the business relations subjected to close monitoring and commensurate risk mitigation measures. This requirement applies to serious foreign tax offences, even if the foreign offence is in relation to the type of tax for which an equivalent obligation does not exist in Singapore. Examples of tax crime related suspicious transactions are set out in Appendix B of these Guidelines.

GUIDELINES TO MAS NOTICE SFA13-N01 ON PREVENTION OF MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM 9 Notice Paragraph 9 –Reliance on Third Parties 9-1 Paragraph 9 does not apply to outsourcing. Third party reliance under paragraph 9 of the Notice is different from an outsourcing arrangement or agreement. 9-2 In a third party reliance scenario, the third party will typically have an existing relationship with the customer that is independent of the relationship to be formed by the customer with the relying approved trustee. The third party will therefore perform the CDD measures on the customer according to its own AML/CFT policies, procedures and controls. 9-3 In contrast to a third party reliance scenario, the outsourced service provider performs the CDD measures (e.g. performs centralised transaction monitoring functions) on behalf of the approved trustee, in accordance with the approved trustee’s AML/CFT policies, procedures and standards, and is subject to the approved trustee’s control measures to effectively implement the approved trustee’s AML/CFT procedures. 9-4 The approved trustee may take a variety of measures, where applicable, to satisfy the requirements in paragraphs 9.2(a) and 9.2(b) of the Notice, including ― (a) referring to any independent and public assessment of the overall AML/CFT regime to which the third party is subject, such as the FATF’s or FSRB’s Mutual Evaluation reports and the IMF / World Bank Financial Sector Assessment Programme Reports / Reports on the Observance of Standards and Codes; (b) referring to any publicly available reports or material on the quality of that third party’s compliance with applicable AML/CFT rules; (c) obtaining professional advice as to the extent of AML/CFT obligations to which the third party is subject to with respect to the laws of the jurisdiction in which the third party operates; (d) examining the AML/CFT laws in the jurisdiction where the third party operates and determining its comparability with the AML/CFT laws of Singapore; (e) reviewing the policies and procedures of the third party. 9-5 The reference to “documents” in paragraph 9.2(d) of the Notice includes a reference to the underlying CDD-related documents and records obtained by the third party to support the CDD measures performed (e.g. copies of identification information, CDD/Know Your Customer forms). Where these documents and records are kept by the third party, the approved trustee should obtain an undertaking from the third party to keep all underlying CDD-related documents and records for at least five years following the

GUIDELINES TO MAS NOTICE SFA13-N01 ON PREVENTION OF MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM termination of the approved trustee’s business relations with the customer or the completion of transactions undertaken. 9-6 Paragraph 9.3 of the Notice prohibits the approved trustee from relying on the third party to carry out ongoing monitoring. Paragraph 9.3 of the Notice should be read with the ongoing monitoring requirements in Part (VI) of paragraph 6 of the Notice. 9-7 For the avoidance of doubt, paragraph 9 of the Notice does not apply to the outsourcing of the ongoing monitoring process by an approved trustee, including to its parent entity, branches and subsidiaries. An approved trustee may outsource the first-level review of alerts from the transaction monitoring systems, or sanctions reviews, to another party. However, the approved trustee remains responsible for complying with ongoing monitoring requirements under the Notice.

GUIDELINES TO MAS NOTICE SFA13-N01 ON PREVENTION OF MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM 12 Notice Paragraph 12 – Suspicious Transactions Reporting 12-1 An approved trustee should ensure that the internal process for evaluating whether a matter should be referred to the Suspicious Transaction Reporting Office (“STRO”) via an STR is completed without delay and should not exceed 15 business days of the case being referred by the relevant approved trustee employee or officer, unless the circumstances are exceptional or extraordinary. 12-2 An approved trustee should note that an STR filed with STRO would also meet the reporting obligations under the TSOFA. 12-3 Examples of suspicious transactions are set out in Appendix B of these Guidelines. These examples are not intended to be exhaustive and are only examples of the most basic ways in which money may be laundered or used for TF purposes. Identification of suspicious transactions should prompt further enquiries and where necessary, investigations into the source of funds. An approved trustee should also consider filing an STR if there is any adverse news on its customers in relation to financial crimes. A transaction or activity may not be suspicious at the time, but if suspicions are raised later, an obligation to report then arises. 12-4 Once suspicion has been raised in relation to a customer, business relations with a customer or transactions undertaken in the course of business relations with a customer, in addition to reporting the suspicious activity, an approved trustee should ensure that appropriate action is taken to adequately mitigate the risk of the approved trustee being used for ML/TF activities. This may include strengthening its AML/CFT processes. This may also include a review of either the risk classification of the customer, or the business relations with the customer. Appropriate action should be taken, including escalating the issue to the appropriate decision making level, taking into account any other relevant factors, such as cooperation with law enforcement agencies. 12-5 STR reporting templates are available on CAD’s website 5 . However, approved trustees are strongly encouraged to use the online system provided by STRO to lodge STRs. In the event that the approved trustee is of the view that STRO should be informed on an urgent basis, particularly where a transaction is known to be part of an ongoing investigation by the relevant authorities, the approved trustee should give initial notification to STRO by telephone or email and follow up with such other means of reporting as STRO may direct. 12-6 An approved trustee should document all transactions that have been brought to the attention of its AML/CFT compliance function, including transactions that are not reported to STRO. To ensure that there is proper 5 The website address as at 24 April 2015:
http://www.cad.gov.sg/aml-cft/suspicious-transaction-reportingoffice/suspicious-transaction-reporting.

GUIDELINES TO MAS NOTICE SFA13-N01 ON PREVENTION OF MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM accountability for decisions made, the basis for not submitting STRs for any suspicious transactions escalated by its employees and officers should be properly substantiated and documented. 12-7 Approved trustees are reminded to read paragraph 12.4 of the Notice together with paragraphs 6.31 and 6.32 of the Notice. Where an approved trustee stops performing CDD measures as permitted under paragraph
12.4 and is, as a result, unable to complete CDD measures (as specified
under paragraph 6.32), the approved trustee is reminded that it shall not commence or continue business relations with that customer or undertake any transaction for that customer.

GUIDELINES TO MAS NOTICE SFA13-N01 ON PREVENTION OF MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM 13 Notice Paragraph 13 – Internal Policies, Compliance, Audit and Training 13-1 As internal policies and procedures serve to guide employees and officers in ensuring compliance with AML/CFT laws and regulations, it is important that an approved trustee updates its policies and procedures in a timely manner, to take into account new operational, legal and regulatory developments and emerging or new ML/TF risks. Notice Paragraphs 13.3 to 13.9 13-2 Group Policy 13-2-1 Paragraphs 13.3 to 13.9 of the Notice are intended to be applied by an approved trustee incorporated in Singapore to its branches and subsidiaries, but not to its parent entity and the approved trustee’s other related corporations. . 13-2-2 In relation to paragraph 13.6 of the Notice, examples of the types of information that should be shared within the financial group for risk management purposes are positive name matches arising from screening performed against ML/TF information sources, a list of customers who have been exited by the approved trustee, its branches and subsidiaries based on suspicion of ML/TF and names of parties on whom STRs have been filed. Such information should be shared by a branch or subsidiary of an approved trustee incorporated in Singapore with the approved trustee’s group level compliance, audit, and AML/CFT functions (whether in or outside Singapore), for risk management purposes. Notice Paragraphs 13.10 to 13.11 13-3 Compliance 13-3-1 An approved trustee should ensure that the AML/CFT compliance officer has the necessary seniority and authority within the approved trustee to effectively perform his responsibilities. 13-3-2 The responsibilities of the AML/CFT compliance officer should include ― (a) carrying out, or overseeing the carrying out of, ongoing monitoring of business relations and sample review of transactions undertaken in the course of business relations for compliance with the Notice and these Guidelines; (b) promoting compliance with the Notice and these Guidelines, as well as MAS Regulations issued under section 27A of the MAS Act, and taking overall charge of all AML/CFT matters within the organisation;

GUIDELINES TO MAS NOTICE SFA13-N01 ON PREVENTION OF MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM (c) informing employees and officers promptly of regulatory changes; (d) ensuring a speedy and appropriate reaction to any matter in which ML/TF is suspected; (e) reporting, or overseeing the reporting of, suspicious transactions; (f) advising and training employees and officers on developing and implementing internal policies, procedures and controls on AML/CFT; (g) reporting to senior management on the outcome of reviews of the approved trustee’s compliance with the Notice and these Guidelines, as well as MAS Regulations issued under section 27A of the MAS Act and risk assessment procedures; and (h) reporting regularly on key AML/CFT risk management and control issues (including information outlined in paragraph 1-4-14 of the Guidelines), and any necessary remedial actions, arising from audit, inspection, and compliance reviews, to the approved trustee’s senior management and the board of directors, at least annually and as and when needed. 13-3-3 The business interests of an approved trustee should not interfere with the effective discharge of the above-mentioned responsibilities of the AML/CFT compliance officer, and potential conflicts of interest should be avoided. To enable unbiased judgments and facilitate impartial advice to management, the AML/CFT compliance officer should, for example, be distinct from the internal audit and business line functions. Where any conflicts between business lines and the responsibilities of the AML/CFT compliance officer arise, procedures should be in place to ensure that AML/CFT concerns are objectively considered and addressed at the appropriate level of the approved trustee’s management. Notice Paragraph 13.12 13-4 Audit 13-4-1 An approved trustee’s AML/CFT framework should be subject to periodic audits (including sample testing). Such audits should be performed not just on individual business functions but also on an entity-wide basis. Auditors should assess the effectiveness of measures taken to prevent ML/TF. This would include, among others ― (a) determining the adequacy of the approved trustee’s AML/CFT policies, procedures and controls, ML/TF risk assessment framework and application of risk-based approach;

GUIDELINES TO MAS NOTICE SFA13-N01 ON PREVENTION OF MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM (b) reviewing the content and frequency of AML/CFT training programmes, and the extent of employees’ and officers’ compliance with established AML/CFT policies and procedures; and (c) assessing whether instances of non-compliance are reported to senior management on a timely basis. 13-4-2 The frequency and extent of the audit should be commensurate with the ML/TF risks presented and the size and complexity of the approved trustee’s business. Notice Paragraph 13.13 13-5 Employee Hiring 13-5-1 The screening procedures applied when an approved trustee in Singapore hires employees and appoints officers should include ― (a) background checks with past employers; (b) screening against ML/TF information sources; and (c) bankruptcy searches. 13-5-2 In addition, an approved trustee should conduct credit history checks, on a risk-based approach, when hiring employees and appointing officers. Notice Paragraph 13.14 13-6 Training 13-6-1 As stated in paragraph 13.14 of the Notice, it is an approved trustee’s responsibility to provide adequate training for its employees and officers so that they are adequately trained to implement its AML/CFT policies and procedures. The scope and frequency of training should be tailored to the specific risks faced by the approved trustee and pitched according to the job functions, responsibilities and experience of the employees and officers. New employees and officers should be required to attend training as soon as possible after being hired or appointed. 13-6-2 Apart from the initial training, an approved trustee should also provide refresher training at least once every two years, or more regularly as appropriate, to ensure that employees and officers are reminded of their responsibilities and are kept informed of new developments related to ML/TF. An approved trustee should maintain the training records for audit purposes.

GUIDELINES TO MAS NOTICE SFA13-N01 ON PREVENTION OF MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM 13-6-3 An approved trustee should monitor the effectiveness of the training provided to its employees. This may be achieved by ― (a) testing employees’ understanding of the approved trustee’s policies and procedures to combat ML/TF, their obligations under relevant laws and regulations, and their ability to recognise suspicious transactions; (b) monitoring employees’ compliance with the approved trustee’s AML/CFT policies, procedures and controls as well as the quality and quantity of internal reports so that further training needs may be identified and appropriate action taken; and (c) monitoring attendance and following up with employees who miss such training without reasonable cause. Endnotes on History of Amendments

Guidelines to MAS Notice SFA13-N01 dated 2 July 2007.
Guidelines to MAS Notice SFA13-N01 dated 2 July 2007 cancelled with
effect from 24 May 2015.
Guidelines to MAS Notice SFA13-N01 dated 24 April 2015 with effect from
24 May 2015.
(a) Amended on 30 November 2015.

GUIDELINES TO MAS NOTICE SFA13-N01 ON PREVENTION OF MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM I Other Key Topics - Guidance to Approved Trustees on Proliferation Financing I-1 Overview I-1-1 MAS issues Regulations under section 27A of the MAS Act in order to discharge or facilitate the discharge of any obligation binding on Singapore by virtue of a United Nations Security Council Resolution (“UNSCR”) 6 . These Regulations apply to all FIs (including approved trustees) regulated by MAS and generally impose financial sanctions on designated persons. I-1-2 Specifically, a UNSCR may designate certain individuals and entities involved in the proliferation of weapons of mass destruction and its financing. The relevant information and full listings of persons designated by UNSCRs can be found on the UN website7 . I-1-3 MAS has given effect to UNSCRs as listed by the FATF Recommendations (2012) to be relevant to combating proliferation financing, by issuing Regulations. Examples of such Regulations are the MAS (Sanctions and Freezing of Assets of Persons – Iran) Regulations 2007, MAS (Freezing of Assets of Persons – Democratic People’s Republic of Korea) Regulations 2009 and MAS (Sanctions – Democratic People’s Republic of Korea) Regulations 2009. I-1-4 An approved trustee should rely on its CDD measures (including screening measures) under the Notice to detect and prevent proliferation financing activities and transactions. I-1-5 An approved trustee should also ensure compliance with legal instruments issued by MAS relating to proliferation financing risks. An example is the MAS Notice on Prohibition on Transactions with the Iranian Government and with Iranian Financial Institutions. I-2 CDD and Internal Controls I-2-1 It is important to ensure that name screening by an approved trustee, as required under the Notice, is performed against the latest UN listings as they are updated from time to time. An approved trustee should have in place policies, procedures and controls to continuously monitor the listings and take necessary follow-up action within a reasonable period of time, as required under the applicable laws and regulations. 6 Please refer to the MAS website for a full listing of Regulations issued by MAS pursuant to the United Nations Security Council Resolutions. 7 Please see: http://www.un.org/sc/committees/1718 and http://www.un.org/sc/committees/1737.

GUIDELINES TO MAS NOTICE SFA13-N01 ON PREVENTION OF MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM I-2-2 An approved trustee should also have policies and procedures to detect attempts by its employees or officers to circumvent the applicable laws and regulations (including MAS Regulations) such as structuring transactions with the purpose of concealing the involvement of designated persons. I-2-3 An approved trustee should have policies and procedures to prevent such attempts, and take appropriate measures against such employees and officers. I-3 Obligation of Approved Trustee to Freeze without Delay

I-3-1 An approved trustee is reminded of its obligations under the MAS Regulations issued under section 27A of the MAS Act 8 to immediately freeze any funds, financial assets or economic resources owned or controlled, directly or indirectly, by designated persons that the approved trustee has in its possession, custody or control. The approved trustee should also file an STR in such cases. I-4 Potential Indicators of Proliferation Financing I-4-1 An approved trustee should develop indicators that would alert it to customers and transactions (actual or proposed) that are possibly associated with proliferation financing-related activities, including indicators such as whether ― (a) the customer is vague and resistant to providing additional information when asked; (b) the customer’s activity does not match its business profile or the enduser information does not match the end-user’s business profile; (c) the transaction involves designated persons; (d) the transaction involves higher risk countries or jurisdictions which are known to be involved in proliferation of weapons of mass destruction or proliferation financing activities; (e) the transaction involves other FIs with known deficiencies in AML/CFT controls or controls for combating proliferation financing; 8 Please refer to the following link for the relevant MAS ML/TF Regulations - http://www.mas.gov.sg/Regulations-and-Financial-Stability/Anti-Money-Laundering-Countering-The-FinancingOf-Terrorism-And-Targeted-Financial-Sanctions/Targeted-Financial-Sanctions/MAS-Regulations.aspx

GUIDELINES TO MAS NOTICE SFA13-N01 ON PREVENTION OF MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM (f) the transaction involves possible shell companies (e.g. companies that do not have a high level of capitalisation or display other shell company indicators); or (g) there are inconsistencies in the information provided in trade documents and financial flows (e.g. in the names, companies, addresses). I-5 Other Sources of Guidance on Proliferation Financing I-5-1 The FATF has also provided guidance on measures to combat proliferation financing and an approved trustee may wish to refer to the FATF website for additional information.

GUIDELINES TO MAS NOTICE SFA13-N01 ON PREVENTION OF MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM II Useful Links Financial Action Task Force (“FATF”): http://www.fatf-gafi.org/ ………………………….

GUIDELINES TO MAS NOTICE SFA13-N01 ON PREVENTION OF MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM
APPENDIX A – Examples of CDD Information for Customers
Customer Type Examples of CDD Information Companies • Full name of entity

Business address or principal place of business
Information about the purpose and intended nature of
the business relations with the approved trustee
Names of all natural persons who act on behalf of the
entity
Names of all connected parties
Names of all beneficial owners
Information about the source of funds
A report of the approved trustee’s visit to the
customer’s place of business, where the approved trustee assesses it as necessary
Ownership and control structure
Records in an independent company registry
Certificate of incumbency, certificate of good
standing, share register, as appropriate
Memorandum and Articles of Association
Certificate of Incorporation
Board resolution authorising the establishment of
business relations with the approved trustee
Any association the entity may have with other
countries or jurisdictions (e.g. the location of the entity’s headquarters, operating facilities, branches, subsidiaries) Public sector bodies, government, stateowned companies and supranationals (other than sovereign wealth funds)
Full name of entity
Nature of entity (e.g. overseas government, treaty
organisation)
Business address or principal place of business
Information about the purpose and intended nature of
the business relations with the approved trustee
Name of the home state authority and nature of its
relationship with its home state authority
Names of all natural persons who act on behalf of the
entity
Names of all connected parties
Information about the source of funds
Ownership and control structure
A report of the approved trustee’s visit to the
customer’s place of business, where the approved trustee assesses it as necessary
Board resolution authorising the establishment of
business relations with the approved trustee

GUIDELINES TO MAS NOTICE SFA13-N01 ON PREVENTION OF MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM
APPENDIX B – Examples of Suspicious Transactions
B-1 General Comments
B-1-1 The list of situations given below is intended to highlight some basic ways in which money may be laundered or used for TF purposes. While each individual situation may not be sufficient to suggest that ML/TF is taking place, a combination of such situations may be indicative of a suspicious transaction. The list is intended solely as an aid, and must not be applied as a routine instrument in place of common sense. B-1-2 The list is not exhaustive and may be updated due to changing circumstances and new methods of laundering money or financing terrorism. Approved trustees are to refer to STRO’s website for the latest list of red flags9 . B-1-3 A customer’s declarations regarding the background of such transactions should be checked for plausibility. Not every explanation offered by the customer can be accepted without scrutiny. B-1-4 It is reasonable to suspect any customer who is reluctant to provide normal information and documents required routinely by the approved trustee in the course of the business relations. Approved trustees should pay attention to customers who provide minimal, false or misleading information, or when applying to establish business relations, provide information that is difficult or expensive for the approved trustee to verify. B-2 Approved Trustees Related Transactions i) Transactions undertaken by fund manager which do not make economic sense, for example, buying and selling of a security with no discernible purpose or in circumstances which appear unusual. ii) Subscriptions and/or redemptions by fund managers for a large amount of units in collective investment schemes. iii) Subscriptions and/or redemptions of an unusually large volume by an end investor. 9 The website address as at 24 April 2015: http://www.cad.gov.sg/aml-cft/suspicious-transaction-reportingoffice/suspicious-transaction-reporting

GUIDELINES TO MAS NOTICE SFA13-N01 ON PREVENTION OF MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM B-3 Tax Crimes Related Transactions i) Negative tax-related reports from the media or other credible information sources. ii) Unconvincing or unclear purpose or motivation for having business relations in Singapore. iii) Business relations managed by external asset managers who may not be adequately regulated and supervised. iv) Purchase or sale of large amounts of precious metals by a customer which is not in line with his business or background. v) Purchase of bank cheques on a large scale by a customer. vi) Extensive or increased use of safe deposit facilities that do not appear to be justified by the background of the customer and for no apparent reason. B-4 Other Types of Transactions i) The customer fails to reasonably justify the purpose of a transaction when queried by the approved trustee. ii) Transactions with countries or entities that are reported to be associated with terrorism activities or with persons that have been designated as terrorists. iii) Frequent changes to the address or authorised signatories. iv) When a person receives funds from a religious or charitable organisation and utilises the funds for purchase of assets or transfers out the funds within a relatively short period. v) Transactions that are suspected to be in violation of another country’s or jurisdiction’s foreign exchange laws and regulations.

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