MAS Proposes Major Overhaul of AML/CFT Rules to Bolster Defence Against Emerging Threats

MAS Proposes Major OverhaulThe Monetary Authority of Singapore (MAS) has released a wide-ranging consultation paper that signals a significant tightening of Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) regulations across Singapore’s financial ecosystem. The proposed reforms, targeting financial institutions (FIs) and Variable Capital Companies (VCCs), are aimed at addressing evolving global threats such as proliferation financing (PF) while aligning Singapore with the latest international standards from the Financial Action Task Force (FATF).

These amendments, slated to come into effect on 30 June 2025, will apply to all major market participants—banks, insurers, digital payment providers, capital markets intermediaries, digital token service providers, VCCs, and trust companies.

1. Proliferation Financing Takes Centre Stage

A landmark change in this consultation is the explicit inclusion of PF in the AML/CFT framework. While many institutions already consider PF risks informally, MAS is now looking to codify the requirement—mandating that PF be formally assessed and managed alongside money laundering (ML) and terrorism financing (TF) risks.

PF, as defined by FATF, refers to the risk of funds or assets being used to finance the spread of weapons of mass destruction. This move underscores MAS’s commitment to strengthening national security and fulfilling Singapore’s obligations under the revised FATF standards.

2. Unpacking Trust Transparency: A Shift Towards Accountability

In a bid to enhance transparency around trusts and legal arrangements—long viewed as vehicles vulnerable to financial crime—MAS is proposing significant updates to MAS Notice TCA-N03, which governs trust companies.

The proposed changes include:

• Expanded definition of “trust relevant parties” to include protectors, classes of beneficiaries, objects of a power, and others with influence.

• Mandatory collection of granular information, such as identification and control data of all trust-related parties and legal entities associated with them.

• Stronger transparency obligations around the structure and purpose of trusts.

These changes align with updates to FATF Recommendation 25 and are expected to raise the bar for compliance in trust services—a critical node in global AML/CFT defences.

3. Speeding Up Suspicious Transaction Reporting (STRs)

MAS is introducing tighter timelines for STR submissions:

• Within five business days of establishing suspicion.

• Within one business day for cases involving sanctioned parties or their proxies.

This reflects MAS’s growing urgency around fast detection and escalation of financial crime risks. Additionally, MAS plans to remove the requirement for institutions to send STR copies to MAS directly, given the regulator’s access to the STRO system. Instead, FIs must provide reports only upon MAS request—streamlining compliance without compromising oversight.

4. Clarifying the Grey Zones: Additional Amendments

Beyond these structural shifts, the MAS consultation outlines a range of clarifications designed to bring supervisory expectations into clearer focus:

• Enhanced screening protocols, including local-language and jurisdiction-specific search tools.

• Internal data sharing across business units, particularly for due diligence and source of wealth assessments.

• Improved detection of fraudulent documents and red flag escalation.

• Expanded guidance on high-risk segments, especially in private banking.

• New indicators of suspicious activity, such as shell companies and tax amnesty participation.

There’s also a terminology refresh, with “trusts” now replaced by “legal arrangements,” reflecting broader international usage and regulatory harmonisation.

What’s Next?

The MAS consultation is open for public and industry feedback until 8 May 2025. This is a key opportunity for financial institutions, legal professionals, and compliance leaders to shape the future of Singapore’s financial crime compliance landscape.

As regulatory expectations grow sharper and more aligned with global norms, firms should begin reviewing their internal policies, systems, and staff readiness—particularly in areas like PF risk assessment, STR timelines, and trust services compliance.

*This blog post is based on an article originally published in Regulation Asia titled “MAS Proposes Amendments to AML/CFT Rules for FIs and VCCs” by Nithya Subramanian, published on 9 April 2025.