Saturday, October 31, 2020

Singapore revokes licence of asset management firm over anti-money laundering failures

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The Monetary Authority of Singapore (MAS) on Tuesday (July 28) revoked the capital markets services licence of Apical Asset Management for breaching the authority’s anti-money laundering and countering financing of terrorism (AML/CFT) requirements.

Apical Asset Management’s chief executive Yeh Yin Yee and its director, Mr Bernard Kan Cheok Yin, were also reprimanded by MAS for failing to discharge their duties and functions of ensuring that the asset manager complied with all laws and regulations governing its operations.

MAS said in a statement that an inspection of Apical Asset Management uncovered “severe deficiencies” in its AML/CFT controls from 2013 to 2018, and that it did not have in place basic AML/CFT policies and procedures, which exposed it to the risk of receiving and laundering the proceeds of crime.

This risk was heightened in view of the complex ownership structures, comprising multiple layers and investment entities, used by some of Apical’s customers, said MAS.

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Among its failings was that the asset manager did not conduct any enterprise-wide money-laundering and terrorism-financing risk assessment, which is crucial to enable a better understanding of its overall vulnerability to such risks in order to develop measures to address them.

According to MAS guidelines, financial institutions are expected to perform this assessment at least every two years, or when there are material trigger events, such as the acquisition of new customer segments, or introduction of new products and services.

Apical also did not properly assess its customers to determine whether they presented higher money-laundering and terrorism-financing risks. Its ongoing monitoring controls and procedures were also deficient, resulting in its failure to conduct enhanced monitoring of a fund related to a politically exposed person for a significant length of time.

Finally, the asset manager also did not subject its AML/CFT controls to independent audits to assess their effectiveness, said MAS.

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MAS reprimanded Mr Yeh and Mr Kan as the pair were the only directors on the board and thus principally responsible for the management and conduct of Apical’s affairs.

Ms Loo Siew Yee, assistant managing director in charge of policy, payments and financial crime in MAS, said that the asset manager’s lack of basic AML/CFT controls – despite the risks posed by its clients’ use of complex investment structures – was “an unacceptable failing warranting licence revocation”.

She noted that for such lapses, the board and senior management who “fall short in their duties will also be taken to task”.

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