Guidelines to Notice SFA02-N05 on Prevention of Money Laundering and Countering the Financing of Terrorism for Approved Exchanges and Recognised Market Operators

v P9 Monetary Authority of Singapore
GUIDELINES TO
MAS NOTICE SFA02-N05
ON PREVENTION OF
MONEY LAUNDERING
AND COUNTERING THE
FINANCING OF
TERRORISM
13 January 2025
Last Revised on 1 July 2025

TABLE OF CONTENTS
1 Introduction .......................................................................................................... 1
2 Notice Paragraph 2 – Definitions, Clarifications and Examples ........................... 6
4 Notice Paragraph 4 – Assessing Risks and Applying a Risk-Based Approach.... 8
5 Notice Paragraph 5 – New Products, Practices and Technologies.................... 13
6 Notice Paragraph 6 – Customer Due Diligence ................................................. 14
7 Notice Paragraph 7 – Simplified Customer Due Diligence................................. 28
8 Notice Paragraph 8 – Enhanced Customer Due Diligence ................................ 30
9 Notice Paragraph 9 – Reliance on Third Parties................................................ 39
12 Notice Paragraph 12 – Suspicious Transaction Reporting................................. 41
13 Notice Paragraph 13 – Internal Policies, Compliance, Audit and Training ......... 43
I Other Key Topics – Guidance to AEs and RMOs on Proliferation Financing..... 47
II Useful Links ....................................................................................................... 49
APPENDIX A – Examples of CDD Information for Customers (Including Legal Persons
/ Arrangements) .............................................................................. 50
APPENDIX B – Examples of Suspicious Transactions ............................................ 53
For ease of reference, the chapter numbers in these Guidelines mirror the corresponding paragraph numbers in the Notice MAS Notice SFA02-N05 on Prevention of Money Laundering and Countering the Financing of Terrorism – Approved Exchanges and Recognised Market Operators (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 SFA02-N05 ON PREVENTION OF MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM 1 Introduction 1-1 These Guidelines provide guidance to (i) all approved exchanges as defined in
section 2 of the Securities and Futures Act 2001)(“SFA”)(“AE”); and (ii) all
recognised market operators as defined in section 2 of the SFA that is formed or incorporated in Singapore (“RMO”) on some of the requirements in MAS Notice SFA02-N05 on Prevention of Money Laundering and Countering the Financing of Terrorism – Approved Exchanges and Recognised Market Operators (“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 AE or RMO may have an impact on the Authority’s overall risk assessment of the AE or RMO, including the quality of its board and senior management oversight, governance, internal controls and risk management. 1-4 Key Concepts Money Laundering1 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 1992. An AE or RMO 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 1 Money laundering includes proliferation financing, and all references in these Guidelines to money laundering (including money laundering risks) are to be construed accordingly.

GUIDELINES TO MAS NOTICE SFA02-N05 ON PREVENTION OF MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM place the laundered funds back into the economy so that they re-enter the financial system appearing to be legitimate funds. 1-4-3 As capital markets transactions are no longer predominantly cash based (for example, they may now involve digital capital markets product token or digital payment token being transferred across accounts), they are more likely to be used in the layering stage rather than placement stage of money laundering. However, where the transactions are in cash, there is still the risk of capital markets transactions being used at the placement stage. 1-4-4 Capital markets transactions offer a vast array of opportunities for transforming money into a diverse range of assets. The ease with which these assets can be converted to other types of assets, especially if they are liquid and marketable, also aids the layering process. Hence, capital markets transactions are particularly attractive to money-launderers for layering their illicit proceeds for eventual integration into the general economy.

Terrorism Financing
1-4-5 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. AEs and RMOs are reminded of the definitions of “terrorist” and “terrorist act” set out in the Terrorism (Suppression of Financing) Act 2002 (“TSOFA”). 1-4-6 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. 1-4-7 However, terrorist acts and organisations may also be financed from legitimate sources such as donations from charities, legitimate business operations, selffunding by individuals etc. Coupled with the fact that TF need not always involve large sums of money, TF can be hard to detect and AEs and RMOs should remain vigilant. 1-4-8 Singapore’s primary legislation to combat TF is the TSOFA. AEs and RMOs may refer to the Inter-Ministry Committee on Terrorist Designation’s (“IMC-TD”) website for more information. Proliferation Financing 1-4-8A Proliferation financing (“PF”) refers to the raising, moving or making available of funds, other assets or other economic resources, or financing, in whole or in part, to individuals or entities for the purposes of the proliferation of weapons of mass destruction, including the proliferation of their means of delivery or related materials (including both dual-use technology and dual-use goods for nonlegitimate purposes), under the relevant regulations issued under section 192 read

GUIDELINES TO MAS NOTICE SFA02-N05 ON PREVENTION OF MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM with section 15(1)(b) of the Financial Services and Markets Act 2022 (“FSM Act”) relating to sanctions and freezing of assets of persons (“FSM Sanctions Regulations”)2 . The Three Lines of Defence 1-4-9 Each AE and RMO 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. 1-4-10 An AE or RMO’s board of directors and senior management are responsible for ensuring strong governance and sound AML/CFT risk management and controls at the AE or RMO. While certain responsibilities can be delegated to senior AML/CFT employees, final accountability rests with the AE or RMO’s board of directors and senior management. An AE or RMO 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.

1-4-11 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 AE or RMO’s internal audit function. 1-4-12 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 AE or RMO’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 AE or RMO should adequately train employees and officers to be aware of their obligations, and provide instructions as well as guidance on how to ensure the AE or RMO’s compliance with prevailing AML/CFT laws, regulations and notices. 1-4-13 As the core of the second line of defence, the AML/CFT compliance function is responsible for ongoing monitoring of the AE or RMO’s fulfilment of all AML/CFT duties by the AE or RMO. This implies sample testing and the review of exception 2 The FSM Sanctions Regulations include the regulations issued under section 192 read with sections 15(1)(b) and 219(d) of the FSM Act. Please refer to the following link for the FSM Sanctions Regulations:
https://www.mas.gov.sg/regulation/anti-money-laundering/targeted-financial-sanctions/regulations-for-targeted-financialsanctions. Currently, the relevant FSM Sanctions Regulations are those relating to the Democratic People’s Republic of Korea and Iran.

GUIDELINES TO MAS NOTICE SFA02-N05 ON PREVENTION OF MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM reports. The AML/CFT compliance function should alert the AE or RMO’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 AE or RMO 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. 1-4-14 As the third line of defence, the AE or RMO’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 AE or RMO’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 AE or RMO’s compliance with prevailing AML/CFT policies, procedures and controls. An AE or RMO should establish policies for periodic AML/CFT internal audits covering areas such as ― (a) the adequacy of the AE or RMO’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 AE or RMO’s employees and officers in implementing the AE or RMO’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 AE or RMO’s training of relevant employees and officers.

Governance
1-4-15 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 AE or RMO. The board of directors and senior management should ensure that the AE or RMO’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 AE or RMO’s employees and officers having a good understanding of the ML/TF risks inherent in the AE or RMO’s business. 1-4-16 An AE or RMO’s board of directors and senior management should understand the ML/TF risks the AE or RMO is exposed to and how the AE or RMO’s AML/CFT control framework operates to mitigate those risks. This should involve the board and senior management ―

GUIDELINES TO MAS NOTICE SFA02-N05 ON PREVENTION OF MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM (a) receiving sufficient, timely and objective information to form an accurate picture of the ML/TF risks including emerging or new ML/TF risks, which the AE or RMO is exposed to through its activities and individual business relations; (b) receiving sufficient and objective information to assess whether the AE or RMO’s AML/CFT controls are adequate and effective; (c) receiving information on legal and regulatory developments and the impact these have on the AE or RMO’s AML/CFT framework; and (d) ensuring that processes are in place to escalate important decisions that directly impact the ability of the AE or RMO to address and control ML/TF risks, especially where AML/CFT controls are assessed to be inadequate or ineffective.

GUIDELINES TO MAS NOTICE SFA02-N05 ON PREVENTION OF MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM 2 Notice Paragraph 2 – Definitions, Clarifications and Examples Business Relations 2-1 In relation to the term “business relations”, there may be instances where an AE or RMO has an arrangement with a person in relation to the provision of liquidity or incentive/fee rebate (collectively referred to as the “incentive arrangements”). Depending on the details of the incentive arrangements, it may constitute the establishment of business relations by the AE or RMO with the person. Where the incentive arrangements involve the AE or RMO opening or maintaining an account in the name of the person, this may be considered business relations under limb (a) of the definition. The AE or RMO should also assess if the incentive arrangements constitute the AE or RMO undertaking a transaction with the person as a customer. 2-2 Examples of services as defined in limb (c) of the definition of “business relations” include ancillary services an AE or RMO provides to facilitate the completion of a trade-related transaction on an organised market operated by the AE or RMO such as a trade confirmation service3 . Conversely, a service by the AE or RMO to provide market data to an entity for solely research purposes would not be considered an ancillary service if such entity is not conducting a trade-related transaction on an organised market operated by the AE or RMO. Connected Party 2-3 The term “partnership” as it appears in the definition of “connected parties” includes foreign partnerships. The term “manager” as it appears in limb (b) of the definition of “connected parties” takes reference from section 2(1) of the Limited Liability Partnerships Act 2005 and section 28 of the Limited Partnerships Act 2008. 2-4 Examples of natural persons with executive authority in a company include the Chairman and Chief Executive Officer. An example of a natural person with executive authority in a partnership is the Managing Partner. Customer 3 Using trade confirmation services as an example, a scenario where this applies would be when Person A conducts a trade-related transaction on an organised market operated by the AE/RMO through an intermediated participant, but receives trade confirmation services directly from the Singapore organised market operated by the AE/RMO. In terms of the trade-related transaction, Person A is an indirect participant to the Singapore organised market operated by the AE/RMO. However, by providing trade confirmation services directly to Person A, the Singapore organised market operated by the AE/RMO would have sight of the trades conducted by Person A on its platform and be able to link the trades to Person A. It would be in a position to mitigate ML/TF risks arising from the trading activities of Person A, by reviewing the transactions and filing STRs where needed. Thus, the Singapore organised market operated by the AE/RMO should consider
that it has established business relations with Person A under limb (c) of the definition of “business relations”.

GUIDELINES TO MAS NOTICE SFA02-N05 ON PREVENTION OF MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM 2-5 Given the global nature of modern capital markets, it may often be the case that an AE or RMO’s relationship and transactions with a particular customer is managed by an AE or RMO employee or officer based in one country or jurisdiction, but the account itself is held with an office in another country or jurisdiction for book-keeping purposes. The Authority will generally look at the substance of the relationship management as a whole. An AE or RMO should perform the applicable CDD measures if in substance, the relationship or account is managed by an employee or officer of the AE or RMO in Singapore even though the account is booked in another country or jurisdiction. However, the AE or RMO may rely on the CDD measures carried out by its related entity (or in the case of a branch network, another branch of the AE or RMO) in accordance with paragraph 9 of the Notice. Legal Arrangements 2-6 In relation to the definition of “legal arrangement” in the Notice, examples of legal arrangements are trust, fiducie, treuhand and fideicomiso.

Legal Persons
2-7 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
2-8 A reference to “officer” refers to a member of the board of directors or senior management of an AE or RMO. Trade-related Transaction 2-9 The term "trade-related transaction” refers to activities that relate to the primary role of an AE or RMO, which is to operate an organised market for secondary market activities through the matching of trading interests from market participants. 2-10 An AE or RMO may also provide ancillary services, such as trade confirmation services, to parties in the course of its business. Trade-related transaction and ancillary services are examples of transactions that an AE or RMO may be involved in. For the purposes of the Notice, a transaction is not limited to situations where value is transferred.

GUIDELINES TO MAS NOTICE SFA02-N05 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 In relation to a customer who is a natural person, this refers to the nationality and place of domicile, business or work. For a customer who is a legal person or arrangement, this refers to both the country or jurisdiction of establishment, incorporation, or registration and, if different, the country or jurisdiction of operations as well. 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 AE or RMO shall identify and assess ML/TF risks on an enterprise-wide level.4 This shall include a consolidated assessment of the AE or RMO’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 AE or RMO in Singapore in the following ways:
(a) An AE or RMO 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 Singapore branch of an AE or RMO incorporated outside Singapore may refer to an enterprise-wide ML/TF risk assessment performed by the 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 AE or RMO to better understand its overall vulnerability to ML/TF risks and forms the basis for the AE or RMO’s overall risk-based approach. 4-5 An AE or RMO’s senior management shall approve its enterprise-wide 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 To avoid doubt, ML/TF risks, whether presented by an individual customer or on an enterprise-wide level, include PF risks.

GUIDELINES TO MAS NOTICE SFA02-N05 ON PREVENTION OF MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM 4-6 In conducting an enterprise-wide risk assessment, the broad ML/TF risk factors that the AE or RMO should consider include ― (a) in relation to its customers ― (i) target customer markets and segments; (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 AE or RMO has operations in ― (i) countries or jurisdictions the AE or RMO 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 Noncooperative jurisdictions;
independent and public assessment of the country’s or jurisdiction’s
overall AML/CFT regime such as FATF or FATF-Styled 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;

GUIDELINES TO MAS NOTICE SFA02-N05 ON PREVENTION OF MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM

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 AE or RMO ― (i) the nature, scale, diversity and complexity of the AE or RMO’s business activities; (ii) the nature of products and services offered by the AE or RMO; and (iii) the delivery channels, including the extent to which the AE or RMO deals directly with the customer, relies on third parties to perform CDD 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 AE or RMO’s business. 4-8 As far as possible, an AE or RMO’s enterprise-wide ML/TF risk assessment should entail both qualitative and quantitative analyses to ensure that the AE or RMO accurately understands its exposure to ML/TF risks. A quantitative analysis of the AE or RMO’s exposure to ML/TF risks should involve evaluating data on the AE or RMO’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 AE or RMO 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 AE or RMO should make its own determination as to the risk weights to be given to the individual factor or combination of factors. Singapore’s Risk Assessment Reports 4-11 An AE or RMO should incorporate the results of Singapore’s risk assessment reports5 in its enterprise-wide ML/TF risk assessment process. When performing the enterprise-wide risk assessment, an AE or RMO should take into account any financial or non-financial sector that has been identified in the risk assessment reports as presenting higher ML/TF risks. An AE or RMO should consider the findings in the risk assessment reports and its enterprise-wide ML/TF risk 5 These risk assessment reports include the Money Laundering National Risk Assessment Report, the Terrorism Financing National Risk Assessment Report, the Proliferation Financing National Risk Assessment Report and other risk assessment reports, which can be found at this link: https://www.mas.gov.sg/regulation/anti-money-laundering/ml-tf-pf-riskassessments.

GUIDELINES TO MAS NOTICE SFA02-N05 ON PREVENTION OF MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM assessment results when assessing the ML/TF risks presented by customers from specific sectors. 4-12 The risk assessment reports also identify certain prevailing crime types as presenting higher ML/TF risks. An AE or RMO 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 AE or RMO should also take these results into account as part of the AE or RMO’s ongoing monitoring of the conduct of customers’ accounts and the AE or RMO’s scrutiny of customers’ transactions. 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 AE or RMO shall put in place adequate policies, procedures and controls to mitigate the ML/TF risks. 4-14 An AE or RMO’s enterprise-wide ML/TF risk assessment serves to guide the allocation of AML/CFT resources within the AE or RMO. 4-15 An AE or RMO 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 (e.g. Politically Exposed Persons status) 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 AE or RMO; (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 AE or RMO’s senior management;

GUIDELINES TO MAS NOTICE SFA02-N05 ON PREVENTION OF MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM (h) the coordination between the AE or RMO and regulatory or law enforcement agencies; and (i) the performance of third parties relied upon by the AE or RMO to carry out CDD measures. Documentation 4-16 The documentation should include ― (a) the enterprise-wide ML/TF risk assessment by the AE or RMO; (b) details of the implementation of the AML/CFT risk management systems and controls as guided by the enterprise-wide ML/TF risk assessment; (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 AE or RMO 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 In keeping its enterprise-wide risk assessments up-to-date, an AE or RMO 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 AE or RMO. The results of these reviews should be documented and approved by senior management even if there are no significant changes to the AE or RMO’s enterprise-wide risk assessment.

GUIDELINES TO MAS NOTICE SFA02-N05 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 AE or RMO should keep abreast of such new developments and the ML/TF risks associated with them. 5-2 An AE or RMO’s assessment of ML/TF risks in relation to new products, practices and technologies is separate from, and in addition to, the AE or RMO’s assessment of other risks such as credit risks, operational risks or market risks. For example, in the assessment of ML/TF risks, an AE or RMO should pay attention to new products, practices and technologies that deal with customer assets or the movement of such assets. These assessments should be approved by senior management and heads of business, risk and compliance. 5-3 An example of a “delivery mechanism” as set out in paragraph 5 of the Notice is mobile trading.

GUIDELINES TO MAS NOTICE SFA02-N05 ON PREVENTION OF MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM 6 Notice Paragraph 6 – Customer Due Diligence Notice Paragraph 6.2 6-1 Where There Are Reasonable Grounds for Suspicion prior to the Establishment of Business Relations or Undertaking any Transaction without opening an Account 6-1-1 In arriving at its decision for each case, an AE or RMO 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 6.3 to 6.4 6-2 When CDD is to be Performed and Linked Transactions

6-2-1 Paragraph 6.4 of the Notice is applicable to an AE or RMO when it undertakes transactions for customers who or which have not established business relations with the AE or RMO. 6-2-2 An AE or RMO should monitor whether the related or linked transactions exceed the threshold set out in paragraph 6.3(b) of the Notice and should take these into consideration when formulating scenarios and parameters.

6-2-3 Two or more transactions may be related or linked if they involve the same sender or recipient. An AE or RMO should be aware that transactions may be entered into consecutively to deliberately restructure an otherwise single transaction, with the intention of circumventing applicable thresholds set out in the Notice in relation to the circumstances set out in paragraph 6.3(b). Notice Paragraphs 6.5 to 6.22 6-3 CDD Measures under Paragraphs 6.5 to 6.22 6-3-1 When relying on documents, an AE or RMO 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 government-issued 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. 6-3-2 An AE or RMO should exercise greater caution when dealing with an unfamiliar or a new customer. Apart from obtaining the identification information required by paragraph 6.6 of the Notice, an AE or RMO should (if not already obtained as part

GUIDELINES TO MAS NOTICE SFA02-N05 ON PREVENTION OF MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM of its account opening process) also obtain additional information on the customer’s background such as occupation, employer’s name, nature of business, range of annual income, other related accounts with the same AE or RMO and whether the customer holds or has held a prominent public function. Such additional identification information enables an AE or RMO to obtain better knowledge of its customers’ risk profile, as well as the purpose and intended nature of the account. Notice Paragraph 6.6 6-4 Identification of Customer 6-4-1 With respect to paragraph 6.6(a)(iii) 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. 6-4-2 An AE or RMO should obtain a customer’s contact details such as personal, office or work telephone numbers. Notice Paragraph 6.8 6-5 Identification of Customer that is a Legal Person or Legal Arrangement

6-5-1 Under paragraph 6 and paragraph 8 of the Notice, an AE or RMO is required to identify and screen all the connected parties of a customer. However, an AE or RMO may verify their identities using a risk-based approach6 . An AE or RMO is reminded of its obligations under the Notice to identify connected parties and remain apprised of any changes to connected parties. 6-5-2 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. 6-5-3 In relation to legal arrangements, an AE or RMO shall perform CDD measures on the customer by identifying the trust relevant parties, as required by paragraph
6.19 of the Notice.
Notice Paragraph 6.11
6-6 Verification of Identity of Customer
6 For the guidance on SCDD measures in relation to the identification and verification of the identities of connected parties of a customer, AEs and RMOs are to refer to paragraph 7-3 of these Guidelines.

GUIDELINES TO MAS NOTICE SFA02-N05 ON PREVENTION OF MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM 6-6-1 Where the customer is a natural person, an AE or RMO should obtain identification documents that contain a clear photograph of that customer. 6-6-2 In verifying the identity of a customer, an AE or RMO may obtain the following documents:
(a) Natural Persons ―
(i) name, unique identification number, date of birth and nationality based on a valid passport or a national identity card that bears a photograph of the customer; and (ii) residential address based on national identity card, recent utility or telephone bill, bank statement or correspondence from a government agency; (b) Legal Persons or Legal Arrangements ― (i) name, legal form, proof of existence and constitution based on certificate of incorporation, certificate of good standing, partnership agreement, trust deed or its equivalent, constitutional document, certificate of registration or any other documentation from a reliable independent source; and (ii) powers that regulate and bind the legal person or arrangement based on memorandum and articles of association, and board resolution authorising the opening of an account and appointment of authorised signatories. 6-6-3 Further guidance on verification of different types of customers (including legal persons or legal arrangements) is set out in Appendix A. 6-6-4 In exceptional circumstances where the AE or RMO is unable to retain a copy of the documentation used to verify the customer’s identity, the AE or RMO 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 AE or RMO’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

GUIDELINES TO MAS NOTICE SFA02-N05 ON PREVENTION OF MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM (d) name of the AE or RMO’s employee or officer who carried out the verification, a statement by that employee or officer certifying verification of the information against the documentation and the date of the verification. Reliability of Information and Documentation 6-6-5 Where an AE or RMO 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 AE or RMO. 6-6-5A An AE or RMO should ensure that staff are provided with adequate guidance on how to identify indicators of fraudulent or tampered data, documents or information. An AE or RMO should also have processes in place to ensure that such indicators are escalated, and the appropriate ML/TF risk mitigation measures are applied, in a timely manner. Examples of indicators of fraudulent or tampered data, documents or information include:
(a) significant discrepancies in a customer’s representations (e.g. relating to material sources of wealth or significant transactions) that are found when these representations are checked against independent sources of information, such as corporate data reports; (b) anomalies in financial statements that are not in line with the AE or RMO’s understanding of the customer’s profile; and (c) lack of sign-off by relevant certifying parties such as an auditor or notary public. 6-6-6 Where the customer is unable to produce an original document, an AE or RMO 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 AE or RMO’s staff independent of the customer relationship has confirmed that he has sighted the original document. 6-6-7 Where a document is in a foreign language, appropriate steps should be taken by an AE or RMO to be reasonably satisfied that the document does in fact provide evidence of the customer’s identity. The AE or RMO 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 AE or RMO may rely on a translation of such document by an AE or RMO’s staff independent of the customer relationship who is conversant in that foreign language. This is to allow all employees and officers of the AE or RMO involved in the performance of any measures required under the Notice to understand the

GUIDELINES TO MAS NOTICE SFA02-N05 ON PREVENTION OF MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM contents of the documents, for effective determination and evaluation of ML/FT risks associated with the customer. 6-6-8 The AE or RMO should ensure that documents obtained for performing any measures required under the Notice are clear and legible. This is important for the establishment of a customer’s identity, particularly in situations where business relations are established without face-to-face contact. Notice Paragraphs 6.12 to 6.17 6-7 Identification and Verification of Identity of Natural Person Appointed to Act on a Customer’s Behalf 6-7-1 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. 6-7-2 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), the AE or RMO should verify at a minimum those natural persons who will deal directly with the AE or RMO. Notice Paragraphs 6.18 to 6.21 6-8 Identification and Verification of Identity of Beneficial Owner 6-8-1 An AE or RMO should note that measures listed under paragraph 6.19(a)(i), (ii) and (iii) as well as paragraph 6.19(b)(i) and (ii) 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. 6-8-2 In relation to paragraph 6.19(a)(i) and (b)(i) of the Notice, when identifying the natural person who ultimately owns the legal person or legal arrangement, the shareholdings within the ownership structure of the legal person or legal arrangement should be considered. It may be based on a threshold (e.g. any person owning more than 25% of the legal person or legal arrangement, taking into account any aggregated ownership for companies with cross-shareholdings). 6-8-3 A natural person who does not meet the shareholding threshold referred to in paragraph 6-8-2 above but who controls the customer (e.g. through exercising significant influence), is a beneficial owner under the Notice.

GUIDELINES TO MAS NOTICE SFA02-N05 ON PREVENTION OF MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM 6-8-4 An AE or RMO 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 AE or RMO 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. 6-8-5 Where the customer is not a natural person and has a complex ownership or control structure, an AE or RMO should obtain enough information to sufficiently understand if there are legitimate reasons for such ownership or control structure. 6-8-6 An AE or RMO should take particular care when dealing with companies with bearer shares, since the beneficial ownership is difficult to establish. For such companies, an AE or RMO should adopt procedures to establish the identities of the beneficial owners of such shares and ensure that the AE or RMO is notified whenever there is a change of beneficial owner of such shares. At a minimum, these procedures should require the AE or RMO to obtain an undertaking in writing from the beneficial owner of such bearer shares stating that the AE or RMO shall be immediately notified if the shares are transferred to another natural person, legal person or legal arrangement. Depending on its risk assessment of the customer, the AE or RMO may require that the bearer shares be held by a named custodian, with an undertaking from the custodian that the AE or RMO will be notified of any changes to ownership of these shares or the named custodian. 6-8-7 For the purposes of paragraph 6.21 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. 6-8-8 In determining if the foreign stock exchange imposes regulatory disclosure and adequate transparency requirements, the AE or RMO 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. 6-8-9 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 the 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.

GUIDELINES TO MAS NOTICE SFA02-N05 ON PREVENTION OF MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM 6-8-10 Where a customer is one which falls within paragraph 6.21 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 6.22 6-9 Information on Purpose and Intended Nature of Business Relations 6-9-1 The measures taken by an AE or RMO 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 AE or RMO should seek to understand upfront the expected account activity (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 accounts. This will enable a more effective ongoing monitoring of the customer’s business relations and transactions.

Notice Paragraphs 6.23 to 6.31
6-10 Ongoing Monitoring
6-10-1 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 AE or RMO 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 AE or RMO to adjust the level of monitoring should be reviewed regularly for effectiveness in mitigating the AE or RMO’s ML/TF risks. 6-10-2 An AE or RMO should make further enquiries when a customer performs frequent and cumulatively large transactions without any apparent or visible economic or lawful purpose. For example, transactions resulting in frequent transfers of value to the same recipient over a short period of time, multiple transactions such that the value transferred due to each transaction is not substantial, but the total of which is substantial. 6-10-3 Where there are indications that the risks associated with existing business relations may have increased (for example, where there are anomalies in the control or conduct of an account or discrepancies relating to a customer’s source of wealth), the AE or RMO should promptly implement commensurate risk mitigation measures, including enhanced ongoing monitoring. Examples of enhanced ongoing monitoring are enhanced monitoring of transactions (including pre-transaction checks) and the imposition of restrictions on the account. The AE

GUIDELINES TO MAS NOTICE SFA02-N05 ON PREVENTION OF MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM or RMO should also request additional information and conduct a review of the customer’s risk profile in order to determine if further measures are necessary. 6-10-4 A key part of ongoing monitoring includes maintaining relevant and up-to-date CDD data, documents and information so that the AE or RMO can identify changes to the customer’s risk profile ― (a) for higher risk categories of customers, an AE or RMO should obtain updated CDD information (including updated copies of the customers’ passport or identity documents if these have expired), as part of its periodic CDD review, or upon the occurrence of a trigger event as deemed necessary by the AE or RMO, whichever is earlier; and (b) for all other risk categories of customers, an AE or RMO should obtain updated CDD information upon the occurrence of a trigger event. 6-10-5 Examples of trigger events are when (i) a significant transaction takes place, (ii) a material change occurs in the way the customer’s account is operated, (iii) the AE or RMO’s policies, procedures or standards relating to the documentation of CDD information change substantially, and (iv) the AE or RMO becomes aware that it lacks sufficient information about the customer concerned. 6-10-6 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 and control information that the AE or RMO has previously obtained remain relevant and up-to-date. 6-10-7 In determining what would constitute suspicious, complex, unusually large or unusual pattern of transactions, an AE or RMO 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 AE or RMO 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) whether a series of transactions is conducted with the intent to avoid reporting thresholds (e.g. by structuring an otherwise single transaction into a number of transactions); (c) the geographic destination or origin of a payment (e.g. to or from a higher risk country); and

GUIDELINES TO MAS NOTICE SFA02-N05 ON PREVENTION OF MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM (d) the parties concerned (e.g. a request to make a payment to or from a person on a sanctions list). 6-10-8 An AE or RMO’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 AE or RMO’s operations. 6-10-9 Nevertheless, the processes and systems used by the AE or RMO should provide its business units (e.g. front office) and compliance officers (including employees and officers who are tasked with conducting investigations) with timely information needed to identify, analyse and effectively monitor customer accounts for ML/TF. 6-10-10 The transaction monitoring processes and systems should enable the AE or RMO 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 (e.g. a customer opening multiple trading accounts across a trading firm’s various trading desks), such information should be shared across their business units () to facilitate a holistic assessment of the ML/TF risks presented by the customer. Therefore, AEs and RMOs should have processes in place to share such information across business units. In addition, AEs and RMOs should perform trend analyses of transactions to identify unusual or suspicious transactions. AEs and RMOs should also monitor transactions with parties in high-risk countries or jurisdictions. 6-10-11 In addition, AEs and RMOs 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. This includes having processes and appropriate confidentiality safeguards to share information on customers and their related accounts within and across business units, where information to be shared should minimally include CDD information collected by the AE or RMO under Section 6 of the Notice as well as source of wealth information collected by the AE or RMO under paragraph 8.3(b) of the Notice. 6-10-12 The parameters and thresholds used by an AE or RMO to identify suspicious transactions should be properly documented and independently validated to ensure that they are appropriate to its operations and context. An AE or RMO should periodically review the appropriateness of the parameters and thresholds used in the monitoring process. Notice Paragraphs 6.32 to 6.34 6-11 CDD Measures for Non-Face-to-Face Business Relations

GUIDELINES TO MAS NOTICE SFA02-N05 ON PREVENTION OF MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM 6-11-1 A reference to “specific risks” in paragraph 6.32 of the Notice includes risks arising from establishing business relations and undertaking transactions according to instructions conveyed by customers through any means of communication (for example, the internet, post, fax or telephone). An AE or RMO 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. 6-11-2 The measures taken by an AE or RMO 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. 6-11-3 Where verification of identity is performed without face-to-face contact (e.g. electronically), an AE or RMO should apply additional checks to manage the risk of impersonation. The additional checks may consist of robust anti-fraud checks that the AE or RMO routinely undertakes as part of its existing procedures, which may include ― (a) telephone contact with the customer at a residential or business number that can be verified independently; (b) confirmation of the customer’s address through an exchange of correspondence or other appropriate method; (c) subject to the customer’s consent, telephone confirmation of the customer’s employment status with his employer’s department at a listed business number of the employer; (d) confirmation of the customer’s salary details by requiring the presentation of recent bank statements from a bank, where applicable; or (e) provision of certified identification documents by lawyers or notaries public.

Notice Paragraph 6.35

GUIDELINES TO MAS NOTICE SFA02-N05 ON PREVENTION OF MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM 6-12 Reliance by Acquiring AE or RMO on Measures Already Performed

6-12-1 When an AE or RMO 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 6.35 of the Notice are met. An AE or RMO shall maintain proper records of its due diligence review performed on the acquired business. 6-12-2 Notwithstanding the reliance on identification and verification that has already been performed, an acquiring AE or RMO is responsible for its obligations under the Notice. 6-12-3 When an AE or RMO acquires the business of another FI, either in whole or in part, the AE or RMO is reminded that in addition to complying with paragraph 6.35 of the Notice, it is also required to comply with ongoing monitoring requirements set out in paragraphs 6.23 to 6.31 of the Notice. Notice Paragraphs 6.38 to 6.40 6-13 Timing for Verification 6-13-1 With reference to paragraph 6.39 of the Notice, an example of when the deferral of completion of the verification is essential in order not to interrupt the normal conduct of business operations is securities trades, where timely execution of trades is critical given changing market conditions. One way an AE or RMO could effectively manage the ML/TF risks arising from the deferral of completion of verification is to put in place appropriate limits on the financial services available to the customer (e.g. limits on the number, type and value of transactions that can be effected) and institute closer monitoring procedures, until the verification has been completed. 6-13-2 With reference to paragraph 6.40 of the Notice ― (a) the completion of verification should not exceed 30 business days after the establishment of business relations; (b) the AE or RMO should suspend business relations with the customer and refrain from carrying out further transactions if such verification remains uncompleted 30 business days after the establishment of business relations; (c) the AE or RMO should terminate business relations with the customer if such verification remains uncompleted 120 business days after the establishment of business relations; and

GUIDELINES TO MAS NOTICE SFA02-N05 ON PREVENTION OF MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM (d) the AE or RMO should factor these time limitations in its policies, procedures and controls. Notice Paragraph 6.44 to 6.45 6-14 Existing Customers

6-14-1 In relation to customer accounts which pre-date the coming into force of the current Notice, the AE or RMO should prioritise the remediation of higher risk customers. 6-14-2 In taking into account any previous measures as referred to in paragraph 6.45 of the Notice, an AE or RMO 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 account is ordinarily operated; (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 AE or RMO. Notice Paragraphs 6.46 to 6.48 6-15 Screening 6-15-1 Screening is intended to be a preventive measure. An AE or RMO is reminded that all parties identified pursuant to the Notice are required to be screened, irrespective of the risk profile of the customer. 6-15-2 Where screening results in a positive hit against sanctions lists, an AE or RMO is reminded of its obligation to freeze without delay and without prior notice, any funds, other financial assets or economic resources owned or controlled, directly or indirectly, by designated persons7 that the AE or RMO has in its possession, custody or control in Singapore, so as to comply with applicable laws and regulations in Singapore, including the TSOFA and the FSM Sanctions Regulations. Any frozen assets should be reported promptly to the relevant 7 A "designated person” may be an individual or entity. Please refer to the definition(s) in the FSM Sanctions Regulations.

GUIDELINES TO MAS NOTICE SFA02-N05 ON PREVENTION OF MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM authorities and a Suspicious Transaction Report (“STR”) should be filed as soon as possible, no later than 1 business day after suspicion was first established. If the AE or RMO does not have in its possession, custody or control of any funds, other financial assets or economic resources of designated persons, it should not allow any transaction to be performed by or through the designated persons on its organised market, whether directly or indirectly, and where the transaction is disallowed, file an STR as soon as possible, no later than 1 business day after suspicion was first established8 . 6-15-3 An AE or RMO should put in place policies, procedures and controls that clearly set out ― (a) the ML/TF information sources used by the AE or RMO for screening (including (i) commercial databases and where appropriate, pertinent search engines9 used to identify adverse information on individuals and entities, (ii) individuals and entities covered under the FSM Sanctions Regulations and TSOFA, and (iii) individuals and entities identified by other sources such as the AE or RMO’s head office, supervisory authority of the parent, and lists and information provided by the Authority and relevant authorities in Singapore); (b) the roles and responsibilities of the AE or RMO’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 AE or RMO’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 AE or RMO’s employees for reporting positive hits to the AE or RMO’s senior management and to the relevant authorities. 6-15-4 The level of automation used in the screening process should take into account the nature, size and risk profile of an AE or RMO’s business. An AE or RMO 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 AE or 8 This refers to the point in time when the AE or RMO concludes that the filing of an STR is warranted, based on available information, the circumstances and its investigations. 9 A risk-based approach may be adopted to determine when additional screening against pertinent search engines to address potential limitations or gaps in existing screening tools is appropriate. Take for example, the case where there is an apparent match in relation to material ML/TF concerns on the person screened, but further information is necessary to determine whether the apparent match is a positive match. In such a case, screening
against pertinent search engines, such as internet-based search engines predominantly used in countries or jurisdictions closely associated with the nationality, residence or source of wealth of the person screened (as available), may be appropriate.

GUIDELINES TO MAS NOTICE SFA02-N05 ON PREVENTION OF MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM RMO 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 AE or RMO’s employees will need to have access to CDD information to enable them to exercise their judgment in identifying true hits. 6-15-5 An AE or RMO 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 AE or RMO becomes aware of such breaches, it should immediately take the necessary actions and inform the relevant authorities. 6-15-6 In screening periodically as required by paragraph 6.47(c) of the Notice, an AE or RMO 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 subsequently becomes a Politically Exposed Person or 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). 6-15-7 An AE or RMO 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 AE or RMO’s customer database for periodic name screening purposes. This will help the AE or RMO to promptly identify any existing customers who have subsequently become higher risk parties. 6-15-8 In determining the frequency of periodic name screening, an AE or RMO should consider its customers’ risk profile. 6-15-9 The AE or RMO should ensure that it has adequate arrangements to perform screening of the AE or RMO’s customer database when there are changes to the lists of sanctioned individuals and entities covered by the TSOFA and the FSM Sanctions Regulations. The AE or RMO 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 SFA02-N05 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 AE or RMO to adopt a risk-based approach in assessing the necessary measures to be performed, and to perform appropriate SCDD measures in cases where the AE or RMO is satisfied, upon analysis of risks, that the ML/TF risks are low. 7-2 Where an AE or RMO applies SCDD measures, it is still required to perform ongoing monitoring of business relations under the Notice. 7-3 Under SCDD, an AE or RMO may adopt a risk-based approach in assessing whether any measures should be performed for connected parties of the customers. 7-4 Where an AE or RMO is satisfied that the risks of money laundering and terrorism financing are low, an AE or RMO 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 AE or RMO’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; (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); and (iii) an FI incorporated or established outside Singapore that is subject to and supervised for compliance with AML/CFT requirements consistent with standards set by the FATF. (b) Product, service, transaction or delivery channel risk

GUIDELINES TO MAS NOTICE SFA02-N05 ON PREVENTION OF MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM (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 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 SFA02-N05 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 AE or RMO 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 AE or RMO; (ii) the ownership structure of the legal person or arrangement appears unusual or excessively complex given the nature of the legal person’s or legal arrangement’s business; (iii) legal persons or legal arrangements that are personal asset holding vehicles; (iv) the business relation is conducted under unusual circumstances (e.g. significant unexplained geographic distance between the AE or RMO and the customer); (v) companies that have nominee shareholders or shares in bearer form; (vi) cash-intensive businesses; and (vii) customers who exhibit characteristics of a higher risk shell company10 , including but not limited to:
(i) unclear economic purpose for requiring account relationship in Singapore:
(i) E.g. foreign-incorporated companies with no business presence or activities in Singapore seek to open accounts in Singapore (including through a nominee arrangement); 10 FIs may refer to the following papers for further information (i) MAS Guidance Paper on “Effective Practices to Detect and Mitigate the Risk from Misuse of Legal Persons” (June 2019) (ii) MAS “Guidance to Capital Markets Intermediaries on Enhancing AML/CFT Frameworks and Controls” (January 2019) (iii) AML/CFT Industry Partnership (“ACIP”) Best Practice Paper on “Legal Persons Misuse Typologies and Best Practices” (May 2018)

GUIDELINES TO MAS NOTICE SFA02-N05 ON PREVENTION OF MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM (ii) unclear economic purpose for linking a common individual / address to multiple companies:
(i) E.g. multiple companies are linked to the same registered address, where the address is not in line with and/or fit for the companies’ nature of business; (ii) E.g. use of nominee individuals to obscure beneficial ownership and control of the account; (iii) unrelated third parties (e.g. foreigners) added to operate account after account opening:
(i) E.g. authorised signatories or directors are changed, postaccount opening, to allow unrelated third parties to operate the account; (iv)unusual change of corporate structure / beneficial owner after account opening; (v) suspicious transactions which are not in line with the AE or RMO’s understanding of customer; or (vi)superficial corporate websites inconsistent with scale of business:
(i) E.g. companies (including newly incorporated companies) that are stated to be involved in a wide range of activities without a dominant product/expertise; (ii) E.g. corporate websites have vague descriptions and limited information, which are not in line with the turnover or business nature of the companies. (b) Country or geographic risk (i) countries or jurisdictions the AE or RMO 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. 8-3 When considering the ML/TF risks presented by a country or jurisdiction, an AE or RMO should take into account, where appropriate, variations in ML/TF risks across different regions or areas within a country.

GUIDELINES TO MAS NOTICE SFA02-N05 ON PREVENTION OF MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM 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 middle-ranking 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 NonConstituency Members of Parliament. 8-4-3 When determining whether a person is a “close associate” of a PEP, the AE or RMO 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 AE or RMO 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 the information from a customer, the AE or RMO 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 AE or RMO determines that any natural person appointed to act on behalf of a customer or any connected party of a customer is a PEP, the AE or RMO should assess the ML/TF risks presented and consider factors such as the level of influence that the PEP has on the customer. An AE or RMO should consider factors such as whether the PEP is able to exercise substantial influence over the

GUIDELINES TO MAS NOTICE SFA02-N05 ON PREVENTION OF MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM customer, to determine the overall ML/TF risks presented by the customer. Where the customer presents higher ML/TF risks, the AE or RMO should apply ECDD measures on the customer accordingly. 8-5-2 It is generally acceptable for an AE or RMO to refer to commercially available databases to identify PEPs. However, an AE or RMO should also obtain from the customer details of his occupation and the name of his employer. In addition, an AE or RMO should consider other non-public information that the AE or RMO is aware of. An AE or RMO 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 AE or RMO’s AML/CFT compliance function. 8-5-4 In relation to paragraph 8.3(b) of the Notice, an AE or RMO 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 AE or RMO should note that not all declarations are publicly available. An AE or RMO should also be aware that certain jurisdictions impose restrictions on their PEPs’ ability to hold foreign trading 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), and includes seed money that generated subsequent wealth and gifts or other assets (if any) received by the customer and beneficial owner. Source of wealth 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 obtained by the AE or RMO should give an indication, to the extent practicable, about the entire body of wealth that the customer and beneficial owner would be expected to have, and how the customer and beneficial owner acquired the wealth. This information would enable the AE or RMO to make a reasonable assessment of which sources of wealth of the customer and beneficial owner are material and/or present a higher risk for ML/TF. Although the AE or RMO may not have specific information about assets that are not deposited with or processed by the AE or RMO, it may be possible to obtain general information from the customer, commercial databases or other open sources. 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 transferred as a result of a trade-related transaction). In order to ensure that the funds are not proceeds of crime, the AE or RMO 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 the

GUIDELINES TO MAS NOTICE SFA02-N05 ON PREVENTION OF MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM 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 Subject to paragraph 8.4 of the Notice, an AE or RMO should corroborate the information regarding source of wealth and source of funds. 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 information and documents such as copies of trust deeds, salary details, tax returns, bank statements, audited 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), conveyancing documents (in cases where the source of wealth or funds is a sale of property) and credible public information sources. An AE or RMO should take a risk-based approach and focus on corroboration of sources of wealth and sources of funds that are more material and/or present a higher risk for ML/TF. An AE or RMO should ensure that such sources of wealth and sources of funds are established through appropriate and reasonable means, to the extent practicable, using reliable and independent sources of information. In cases where independent sources of information are not available, the AE or RMO should exercise prudence in the use of non-independent sources of information, such as customer representations, assumptions and benchmarks, to ensure adequate rigour of assessment. This should include the performance of additional checks against alternative information sources to determine whether such information, representations, assumptions or benchmarks are reasonable and reliable. The AE or RMO’s basis for using such information should be documented and reviewed periodically. The AE or RMO is also reminded that assumptions and benchmarks should facilitate its assessment of the plausibility of the customer or beneficial owner’s source of wealth or source of funds, and should not be used to justify or support circumstances or explanations provided by the customer or beneficial owner if there are reasons that cast suspicion on their source of wealth or source of funds. 8-5-7A Where an AE or RMO is unable to corroborate any source of wealth or source of funds that is more material and/or presents a higher risk for ML/TF, the AE or RMO should assess whether the residual risks associated with not corroborating such source of wealth or source of funds is acceptable and whether additional risk mitigation measures should be applied in the absence of corroboration. Examples of risk mitigation measures include obtaining senior management’s approval to establish or continue business relations with the customer and conducting enhanced ongoing monitoring of the business
relationship. 8-5-7B Where a material source of wealth of the customer or beneficial owner is a gift or other asset received from third parties, an AE or RMO should obtain information to establish the legitimacy and plausibility of such gift or other asset. This should include establishing the relationship between the third party and the customer or beneficial owner, and verifying the transaction(s) effecting such gift or other asset

GUIDELINES TO MAS NOTICE SFA02-N05 ON PREVENTION OF MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM against reliable and independent sources of information such as bank statements or public sources where practicable. An AE or RMO should also assess the plausibility of the third party’s source of wealth as part of the assessment. Where unable to do so, the AE or RMO should assess the residual risks presented by the third party’s source of wealth, and consider whether the additional risk mitigation measures as set out in paragraph 8-5-7A should be applied on the business relationship with the customer. 8-5-7C An AE or RMO should assess if the customer and beneficial owner’s source of wealth and source of funds are plausible and legitimate, considering all the information and documents that the AE or RMO has obtained. Where the AE or RMO is unable to ascertain the plausibility and legitimacy of the customer or beneficial owner’s source of wealth or source of funds, the AE or RMO should consider if there are grounds for terminating business relations with the customer and whether an STR should be filed. 8-5-8 In relation to paragraph 8.3 of the Notice, other ECDD measures that may be performed include ― (a) requiring the first payment to be carried out through an account in the customer’s name with another FI subject to similar or equivalent CDD standards; (b) 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 AE or RMO finds information containing allegations of wrongdoing by a customer or a beneficial owner of a customer, the AE or RMO should assess how this affects the level of risk associated with the business relations; (c) commissioning external intelligence reports where it is not possible for an AE or RMO 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 AE or RMO 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 AE or RMO 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 AE or RMO’s assessment that that the business relations or transactions with the customer present higher ML/TF risks, the AE or RMO should review its risk assessment and apply ECDD measures.

GUIDELINES TO MAS NOTICE SFA02-N05 ON PREVENTION OF MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM 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 AE or RMO should consider are ― (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 AE or RMO may refer to the preceding paragraph 8-5-8 of these Guidelines for further guidance on the ECDD measures to be performed. An AE or RMO should assess whether the information regarding the source of wealth and source of funds of the customer and any beneficial owner should be corroborated against additional documentary evidence or public information sources and document its assessment11. The AE or RMO may refer to the preceding paragraphs 8-5-5 to 8-5-7C of these Guidelines for further guidance on establishing the source of wealth and source of funds of customers and beneficial owners. 8-6-1A An AE or RMO should pay attention to changes in the customer’s risk profile, information and/or transactions that would warrant corroboration of the customer and any beneficial owner’s source of wealth and source of funds, and do so in a timely manner. 8-6-2 For customers highlighted in paragraph 8.6(a) of the Notice, an AE or RMO shall assess them as presenting higher ML/TF risks. For such customers, the AE or RMO shall ensure that the ECDD measures performed are commensurate with the 11 For example, the AE or RMO may assess whether source of wealth corroboration against additional documentary evidence is necessary, where the AE or RMO’s customer is (i) a listed company that has publicly available information on its wealth-generating commercial activities, or (ii) a financial institution that is subject to and supervised for compliance with AML/CFT requirements consistent with standards set by the FATF and thus subject to corporate governance or other regulatory requirements.

GUIDELINES TO MAS NOTICE SFA02-N05 ON PREVENTION OF MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM risks. For customers highlighted in paragraph 8.6(b) of the Notice, an AE or RMO 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 AE or RMO 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 AE or RMO should refer to the FATF’s Public Statements on High-Risk Jurisdictions subject to a Call for Action12. FATF updates this Public Statement on a periodic basis and AEs and RMOs should regularly refer to the FATF website for the latest updates13 . 8-6-4 For higher risk customers (e.g. high-net-worth individuals) which inherently presents higher ML/TF risks, an AE or RMO should, refer to the sound practices highlighted in the MAS Information Paper, “Guidance on Private Banking Controls”14. Such practices include ensuring that – (a) information obtained on the source of wealth of the customers and beneficial owners should be independently corroborated against documentary evidence or public information sources; (b) parties screened should include operating companies and individual benefactors contributing to the customer’s and beneficial owner’s wealth/ funds; (c) the AE or RMO conducts periodic reviews of such customers; and (d) where the AE or RMO is aware of customers having a common beneficial owner or a customer having multiple accounts with the AE or RMO, the AE or RMO should scrutinise transactions of these customer accounts holistically to better identify suspicious, complex, unusually large or unusual patterns of transactions, and perform periodic reviews on a consolidated basis. 8-6-5 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. 8-6-6 With regard to tax and other serious crimes, as a preventive measure, AEs and RMOs 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 12 Please refer to the high-risk jurisdictions subject to a FATF call on its members and other jurisdictions to apply countermeasures (i.e. “black list” jurisdictions) in the FATF webpage - https://www.fatf-gafi.org/en/publications/High-riskand-other-monitored-jurisdictions.html 13 The link to the FATF website is as follows: http://www.fatf-gafi.org/ 14 https://www.mas.gov.sg/publications/monographs-or-information-paper/2014/guidance-on-private-banking-controls

GUIDELINES TO MAS NOTICE SFA02-N05 ON PREVENTION OF MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM in an existing customer relationship, AEs and RMOs should conduct enhanced monitoring and where appropriate, discontinue the relationship. If the AE or RMO is inclined to retain the customer, approval shall be obtained from senior management with the substantiating reasons properly documented, and the account 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 SFA02-N05 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 AE or RMO. 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 AE or RMO, in accordance with the AE or RMO’s AML/CFT policies, procedures and standards, and is subject to the AE or RMO’s control measures to effectively implement the AE or RMO’s AML/CFT procedures. 9-4 The AE or RMO 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 or FSRBs’ 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 AE or RMO should obtain an undertaking from the third party to keep all underlying CDD-related documents and records for at least five years following the termination of the AE or RMO’s business relations with the customer or the completion of transactions undertaken.

GUIDELINES TO MAS NOTICE SFA02-N05 ON PREVENTION OF MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM 9-6 Paragraph 9.3 of the Notice prohibits the AE or RMO from relying on the third party to carry out ongoing monitoring. Paragraph 9.3 of the Notice on ongoing monitoring 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 prevent the AE or RMO from outsourcing a part of the ongoing monitoring processes. An AE or RMO may outsource the first-level review of alerts from the transaction monitoring systems, or sanctions reviews, to another party. However, the AE or RMO remains responsible for complying with ongoing monitoring requirements under the Notice.

GUIDELINES TO MAS NOTICE SFA02-N05 ON PREVENTION OF MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM 12 Notice Paragraph 12 – Suspicious Transactions Reporting 12-A The detection and investigation of concerns of higher ML/TF risks, even before suspicions of ML/TF are raised, can facilitate the early imposition of ML/TF risk mitigation measures. In this regard, an AE or RMO should ensure that processes are in place to:
(a) identify and prioritise the review of concerns of higher ML/TF risks; (b) ensure that such concerns of higher ML/TF risks are reviewed promptly; and (c) require any such concerns of higher ML/TF risks that cannot be reviewed promptly to be escalated to senior management, or a similar oversight body, for the application of appropriate ML/TF risk mitigation measures. 12-1 An AE or RMO 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. The filing of an STR should not exceed 5 business days after suspicion was first established15 , unless the circumstances are exceptional or extraordinary. In cases involving sanctioned parties16 and parties acting on behalf of or under the direction of sanctioned parties17, an AE or RMO should file the STRs as soon as possible, and no later than 1 business day after suspicion was first established18 . 12-2 An AE or RMO 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 AE or RMO 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 or any transaction for that customer, in addition to reporting the suspicious activity, an AE or RMO should 15 This refers to the point in time when the AE or RMO concludes that the filing of an STR is warranted, based on available information, the circumstances and its investigations. 16 “Sanctioned parties” include persons designated or covered under the Terrorism (Suppression of Financing) Act 2002 and the regulations issued under section 192 read with section 15(1)(b) of the Financial Services and Markets Act 2022 relating to sanctions and freezing of assets of persons. 17 Such cases include cases involving any funds, other financial assets or economic resources owned or controlled, directly or indirectly, by sanctioned parties. 18 This refers to the point in time when the AE or RMO concludes that the filing of an STR is warranted, based on available information, the circumstances and its investigations.

GUIDELINES TO MAS NOTICE SFA02-N05 ON PREVENTION OF MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM ensure that appropriate action is taken to adequately mitigate the risk of the AE or RMO 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. Other appropriate action that should be taken include escalating the issue to the appropriate decision making level, taking into account any other relevant factors, such as cooperation with law enforcement agencies. After reporting the suspicious activity, where further suspicion is raised in relation to the customer or any transaction for the customer, the AE or RMO should assess if the filing of a further or supplementary STR to report the further suspicion is warranted. 12-5 STR reporting templates are available on CAD’s website19. However, AEs and RMOs are strongly encouraged to use the online system provided by STRO to lodge STRs. In the event that the AE or RMO 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 AE or RMO 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 AE or RMO 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 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 AEs and RMOs are reminded to read paragraph 12.4 of the Notice together with paragraphs 6.41 and 6.42 of the Notice. Where an AE or RMO stops performing CDD measures as permitted under paragraph 12.4 and is, as a result, unable to complete CDD measures (as specified under paragraph 6.42), the AE or RMO is reminded that it shall not commence or continue business relations with that customer or undertake any transaction for that customer. 19 The website address as at 30 June 2025: https://www.police.gov.sg/Advisories/Crime/Commercial-Crimes/SuspiciousTransaction-Reporting-Office

GUIDELINES TO MAS NOTICE SFA02-N05 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 AE or RMO 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 13.10 13-2 Group Policy 13-2-1 For the avoidance of doubt, Singapore branches of AEs and RMOs incorporated outside Singapore need not comply with paragraphs 13.3 to 13.10 of the Notice. Paragraphs 13.3 to 13.10 of the Notice are intended to be applied by an AE or RMO incorporated in Singapore to its branches and subsidiaries, but not to its parent entity and the AE or RMO’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 AE or RMO, 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 AE or RMO incorporated in Singapore with the AE or RMO’s group level compliance, audit, and AML/CFT functions (whether in or outside Singapore), for risk management purposes. Notice Paragraphs 13.12 to 13.13 13-3 Compliance

13-3-1 An AE or RMO should ensure that the AML/CFT compliance officer has the necessary seniority and authority within the AE or RMO 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 accounts for compliance with the Notice and these Guidelines;

GUIDELINES TO MAS NOTICE SFA02-N05 ON PREVENTION OF MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM (b) promoting compliance with the Notice and these Guidelines, as well as the FSM Sanctions Regulations, and taking overall charge of all AML/CFT matters within the organisation; (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 AE or RMO’s compliance with the Notice and these Guidelines, as well as the FSM Sanctions Regulations and risk assessment procedures; and (h) reporting regularly on key AML/CFT risk management and control issues (including information outlined in paragraph 1-4-16 of the Guidelines), and any necessary remedial actions, arising from audit, inspection, and compliance reviews, to the AE or RMO’s senior management, and in the case of locally incorporated AEs and RMOs, to the board of directors, at least annually and as and when needed. 13-3-3 The business interests of an AE or RMO 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 AE or RMO’s management. Notice Paragraph 13.14 13-4 Audit

13-4-1 An AE or RMO’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 AE or RMO-wide basis. Auditors should assess the effectiveness of measures taken to prevent ML/TF. This would include, among others ―

GUIDELINES TO MAS NOTICE SFA02-N05 ON PREVENTION OF MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM (a) determining the adequacy of the AE or RMO’s AML/CFT policies, procedures and controls, ML/TF risk assessment framework and application of risk-based approach; (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 AE or RMO’s business. Notice Paragraph 13.15 13-5 Employee Hiring

13-5-1 The screening procedures applied when an AE or RMO 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 AE or RMO should conduct credit history checks, on a risk-based approach, when hiring employees and appointing officers. Notice Paragraph 13.16 13-6 Training 13-6-1 As stated in paragraph 13.16 of the Notice, it is an AE or RMO’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 AE or RMO 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 AE or RMO should also provide refresher training at least once every two years, or more regularly as appropriate, to ensure that

GUIDELINES TO MAS NOTICE SFA02-N05 ON PREVENTION OF MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM employees and officers are reminded of their responsibilities and are kept informed of new developments related to ML/TF. An AE or RMO should maintain the training records for audit purposes. 13-6-3 An AE or RMO should monitor the effectiveness of the training provided to its employees and officers. This may be achieved by ― (a) testing employees’ and officers’ understanding of the AE or RMO’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’ and officers’ compliance with the AE or RMO’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 and who miss such training without reasonable cause.

GUIDELINES TO MAS NOTICE SFA02-N05 ON PREVENTION OF MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM I Other Key Topics – Guidance to AEs and RMOs on Proliferation Financing I-1 Overview I-1-1 MAS issues the FSM Sanctions Regulations in order to discharge or facilitate the discharge of any obligation binding on Singapore by virtue of a United Nations Security Council Resolution (“UNSCR”) adopted by the United Nations Security Council (“UNSC”). These Regulations apply to all FIs (including AEs and RMOs) regulated by MAS and generally impose financial sanctions on designated persons. I-1-2 Specifically, the UNSC may designate certain individuals and entities involved in the proliferation of weapons of mass destruction and its financing. The relevant information and full lists of individuals and entities designated by the UNSC can be found at the UNSC’s website20 . I-1-3 MAS has given effect to the UNSCRs as listed in the FATF Recommendations 2012 (as updated) to be relevant to combatting proliferation financing by issuing the FSM Sanctions Regulations. Examples of such Regulations are the Financial Services and Markets (Sanctions and Freezing of Assets of Persons – Iran) Regulations 2023, and the Financial Services and Markets (Sanctions and Freezing of Assets of Persons – Democratic People’s Republic of Korea) Regulations 2023. I-1-4 An AE or RMO 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 AE or RMO should also ensure compliance with any other legal instrument issued by MAS relating to proliferation financing risks. I-2 CDD and Internal Controls I-2-1 It is important to ensure that name screening by an AE or RMO, as required under the Notice, is performed against the latest UNSC sanctions lists as they are updated from time to time. An AE or RMO should have in place policies, procedures and controls to continuously monitor the lists and take necessary follow-up action within a reasonable period of time, as required under the applicable laws and regulations. I-2-2 An AE or RMO should also have policies and procedures to detect attempts by its employees or officers to circumvent the applicable laws and regulations (including the FSM Sanctions Regulations), such as ― 20 Please see: https://main.un.org/securitycouncil/en/content/un-sc-consolidated-list

GUIDELINES TO MAS NOTICE SFA02-N05 ON PREVENTION OF MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM (a) omitting, deleting or altering information in transaction messages for the purpose of avoiding detection of that information by the AE or RMO; and (b) structuring transactions with the purpose of concealing the involvement of designated persons. I-2-3 An AE or RMO should have policies and procedures to prevent such attempts, and take appropriate measures against such employees and officers. I-3 Obligation of AE or RMO to Freeze without Delay and Disallowing of Transactions

I-3-1 An AE or RMO is reminded of its obligations under the FSM Sanctions Regulations to immediately freeze any funds, other financial assets or economic resources owned or controlled, directly or indirectly, by designated persons21 that the AE or RMO has in its possession, custody or control in Singapore. The AE or RMO should report the freeze to MAS and file an STR as soon as possible, no later than 1 business day after suspicion was first established22. If the AE or RMO does not have in its possession, custody or control of any funds, other financial assets or economic resources of designated persons, it should not allow any transaction to be performed by or through the designated persons on its organised market, whether directly or indirectly, and where the transaction is disallowed, file an STR as soon as possible, no later than 1 business day after suspicion was first established23 . I-4 Potential Indicators of Proliferation Financing I-4-1 An AE or RMO should develop indicators that would alert it to customers and transactions (actual, attempted 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 end-user information does not match the end-user’s business profile; (c) the transaction involves designated persons; 21 A "designated person” may be an individual or entity. Please refer to the definitions in the FSM Sanctions Regulations. 22 This refers to the point in time when the AE or RMO concludes that the filing of an STR is warranted, based on available information, the circumstances and its investigations. 23 This refers to the point in time when the AE or RMO concludes that the filing of an STR is warranted, based on available information, the circumstances and its investigations.

GUIDELINES TO MAS NOTICE SFA02-N05 ON PREVENTION OF MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM (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; (f) the transaction involves possible shell companies (e.g. companies that do not have a high level of capitalisation or display other shell company characteristics); (g) the transaction involves containers whose numbers have been changed or ships that have been renamed; (h) the shipment of goods takes a circuitous route or the financial transaction is structured in a circuitous manner; (i) the transaction involves the shipment of goods inconsistent with normal geographic trade patterns (e.g. the country involved would not normally export or import such goods); (j) the transaction involves the shipment of goods incompatible with the technical level of the country to which goods are being shipped (e.g. semiconductor manufacturing equipment shipped to a country with no electronics industry); or (k) there are inconsistencies in the information provided in trade documents and financial flows (e.g. in the names, companies, addresses, ports of call and final destination). 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 AE or RMO may wish to refer to the FATF website for additional information.

II Useful Links
Financial Action Task Force (“FATF”): http://www.fatf-gafi.org/ The International Organization of Securities Commissions: http://www.iosco.org/

………………………….

GUIDELINES TO MAS NOTICE SFA02-N05 ON PREVENTION OF MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM
APPENDIX A – Examples of CDD Information for Customers (Including Legal Persons
/ Arrangements)
Customer Type Examples of CDD Information
Sole proprietorships • Full registered business name

Business address or principal place of business
Information about the purpose and intended nature of the
business relations with the AE or RMO
Names of all natural persons who act on behalf of the sole
proprietor (where applicable)
Name of the sole proprietor
Information about the source of funds
A report of the AE or RMO’s visit to the customer’s place of
business, where the AE or RMO assesses it as necessary
Structure of the sole proprietor’s business (where applicable)
Records in an independent company registry or evidence of
business registration
Partnerships and unincorporated bodies
Full Name of entity
Business Address or principal place of business
Information about the purpose and intended nature of the
business relations with the AE or RMO
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 AE or RMO’s visit to customer’s place of
business, where the AE or RMO assesses it as necessary
Ownership and control structure
Records in an independent company registry
Partnership deed
The customer’s membership with a relevant professional body
Any association the entity may have with other countries or
jurisdictions (e.g. the location of the entity’s headquarters, operating facilities, branches, subsidiaries)

GUIDELINES TO MAS NOTICE SFA02-N05 ON PREVENTION OF MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM 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 AE or RMO
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 AE or RMO’s visit to the customer’s place of
business, where the AE or RMO 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 opening of the customer’s
account with the AE or RMO
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 AE or RMO
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 AE or RMO’s visit to the customer’s place of
business, where the AE or RMO assesses it as necessary
Board resolution authorising the opening of the customer’s
account with the AE or RMO

GUIDELINES TO MAS NOTICE SFA02-N05 ON PREVENTION OF MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM Customer Type Examples of CDD Information Clubs, Societies and Charities

Full name of entity
Business address or principal place of business
Information about the purpose and intended nature of
business relations with the AE or RMO
Information about the nature of the entity’s activities and
objectives
Names of all trustees (or equivalent)
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 AE or RMO’s visit to the customer’s place of
business, where the AE or RMO assesses it as necessary
Ownership and control structure
Constitutional document
Certificate of registration
Committee/Board resolution authorising the opening of the
customer’s account with the AE or RMO
Records in a relevant and independent registry in the country
of establishment
Trusts and Other
Similar Arrangements
(e.g. Foundations,
Fiducie, Treuhand and
Fideicomiso)
Full name of entity
Business address or principal place of business
Information about the nature, purpose and objectives of the
entity (e.g. discretionary, testamentary)
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 AE or RMO’s visit to the customer’s place of
business, where the AE or RMO assesses it as necessary
Information about the purpose and intended nature of
business relations with the AE or RMO
Records in a relevant and independent registry in the country
or jurisdiction of constitution
Country or jurisdiction of constitution
Trust deed or its equivalent
Names of the trust relevant parties
Declaration of trusts or its equivalent
Deed of retirement and appointment of trustees (where
applicable)

GUIDELINES TO MAS NOTICE SFA02-N05 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. AEs and RMOs are to refer to STRO’s website for the latest list of red flags24 . 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 AE or RMO in the course of the business relations. AEs and RMOs should pay attention to customers who provide minimal, false or misleading information, or when applying to open an account, provide information that is difficult or expensive for the AE or RMO to verify. B-2 Transactions Which Do Not Make Economic Sense i) Transactions that cannot be reconciled with the usual activities of the customer, for example switching from trading only penny stocks to predominantly blue chips. ii) A customer relationship with the AE or RMO where a customer has a large number of accounts with the same AE or RMO, and has frequent transactions between different accounts. iii) Transactions in which assets are withdrawn immediately after being deposited25, unless the customer’s business activities furnish a plausible reason for immediate withdrawal. 24 The website address as at 30 June 2025: Please see https://www.police.gov.sg/Advisories/Crime/CommercialCrimes/Suspicious-Transaction-Reporting-Office 25 For AEs and RMOs, this could mean depositing of funds into trust accounts, margin accounts, as collaterals or for fund management purposes.

GUIDELINES TO MAS NOTICE SFA02-N05 ON PREVENTION OF MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM iv) Transactions which, without plausible reason, result in the intensive use of what was previously a relatively inactive account, such as a customer’s account which shows virtually no normal personal or business-related activities but is used to receive or disburse unusually large sums which have no obvious purpose or relationship to the customer or his business. v) Unexpected repayment of a delinquent account without any plausible explanation. vi) Corporate finance transactions under consideration that do not make economic sense in respect of the business operations of the customer, particularly if the customer is not a listed company. vii) Request by a customer for investment management services where the source of funds is unclear or not consistent with the customer’s apparent standing. viii) Buying and selling of capital markets products with no discernible purpose or in circumstances which appear unusual. ix) Large amounts of funds deposited into an account, which is inconsistent with the salary of the customer.

B-3 Transactions Involving accounts with AEs and RMO26 i) Substantial increases in deposits of cash or negotiable instruments by a professional firm or company, using customer accounts or in-house company or trust accounts, especially if the deposits are promptly transferred between other customer company and trust accounts. ii) Transfers of funds from a company’s account to an individual account of an employee or persons related to the employee and vice-versa. iii) Multiple persons using a single account. iv) Paying in large third party cheques endorsed in favour of the customer in settlement for securities purchased, or for other financial services provided. v) Frequent deposits of a company’s cheques into an employee’s account. vi) An account operated in the name of an offshore company with structured movement of funds. 26 Please see FATF Report: Money Laundering and Terrorist Financing in the Securities Sector, October 2009 for additional examples of suspicious indicators.

GUIDELINES TO MAS NOTICE SFA02-N05 ON PREVENTION OF MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM vii) Requests for refunds of unaccountable “erroneous” payments to AEs and RMOs’ or customers’ trust accounts by unknown persons. viii) Transfers of funds from various third parties into an account, which is inconsistent with the nature of the customer’s business. ix) Larger or unusual settlements of trading activities related to capital markets products in cash form. x) Buying and selling of a capital markets product with no discernible purpose or in circumstances which appear unusual. xi) Large transfers of a derivatives contracts, securities or units in collective investment schemes to non-related accounts. B-4 Transactions Involving Transfers Abroad i) Large and regular transactions that cannot be clearly identified as bona fide transactions or trades, resulting in assets or funds transferred from and to countries or jurisdictions associated with (a) the production, processing or marketing of narcotics or other illegal drugs or (b) other criminal conduct. ii) Cross border transactions involving acquisition or disposal of high value assets that cannot be clearly identified as bona fide transactions. iii) Substantial increase in injection of funds by a customer without apparent cause, especially if such injections are subsequently transferred within a short period of time out of the account or to a destination not normally associated with the customer. B-5 Transactions Involving Unidentified Parties i) Transfer of money to a CMI without indication of the beneficiary. ii) Payment orders with inaccurate information concerning the person placing the orders. iii) Use of pseudonyms or numbered accounts for effecting commercial transactions by enterprises active in trade and industry. iv) Holding in trust of shares in an unlisted company whose activities cannot be ascertained by the AE or RMO.

GUIDELINES TO MAS NOTICE SFA02-N05 ON PREVENTION OF MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM v) Provision of collateral by way of pledge or guarantee without any discernible plausible reason by third parties unknown to the AE or RMO and who have no identifiable close relationship with the customer. vi) Customers who wish to maintain a number of trustee or customers’ accounts that do not appear consistent with their type of business, including transactions that involve nominee names. B-6 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 accounts opened in Singapore. iii) Originating sources of multiple or significant deposits/withdrawals are not consistent with the declared purpose of the account. iv) Inability to reasonably justify frequent and large transactions that result in asset or fund transfers from or to a country or jurisdiction that presents higher risk of tax evasion. v) Reinvestment of funds back into the original country or jurisdiction after being transferred to another country or jurisdiction, often a tax haven with poor track record on CDD or record keeping requirements. vi) Accounts managed by external asset managers who may not be adequately regulated and supervised. vii) Purchase or sale of large amounts of precious metals by a customer which is not in line with his business or background. viii) Purchase of bank cheques on a large scale by a customer. ix) Participation in a Tax Amnesty Programme (“TAP”)27 27 If a customer participates in a TAP, an AE or RMO should:
(i) file an STR, indicating that the customer has participated in a TAP and which account(s) has been declared under the TAP; (ii) adopt a risk-based approach to determine whether to conduct a review of the customer’s account(s) and if so, how to prioritise this review; (iii) where a review raises grounds for suspicion, file a further STR with the findings of the account(s) review. The AE or RMO should encourage customers to use the opportunity accorded by a TAP to ensure that their tax affairs are in order or regularised.

GUIDELINES TO MAS NOTICE SFA02-N05 ON PREVENTION OF MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM B-7 Other Types of Transactions i) Account activity is not commensurate with the customer’s known profile (e.g. age, occupation, income). ii) The customer fails to reasonably justify the purpose of a transaction when queried by the AE or RMO. iii) Transactions with countries or entities that are reported to be associated with terrorism activities or with persons that have been designated as terrorists. iv) Frequent changes to the address or authorised signatories. v) A large amount of funds is received and immediately used as collateral for margining or financing facilities. vi) When a young person (aged about 17-26) opens an account and either withdraws or transfers the funds within a short period, which could be an indication of terrorism financing. vii) 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. viii) The customer uses intermediaries which are not subject to adequate AML/CFT laws. ix) Transactions that are suspected to be in violation of another country’s or jurisdiction’s foreign exchange laws and regulations.

Guidelines to Notice SFA02-N05 on Prevention of Money Laundering and Countering the Financing of Terrorism for Approved Exchanges and Recognised Market Operators

Lineage: In force

Similar documents from other regulators