Helping Asian Wealth Management Communities interact

Regulation for the wealth management sector in Singapore. What's next?

Sin Yee Koh of Duff & Phelps

Feb 6, 2020

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1. What new AML challenges might arise in 2020?

2. Are there any developing risks in relation to Technology?

3. Any specific examples?

4. Is conduct and accountability a particular focus for 2020?

5. How do new rules based on Employee Misconduct Reporting affect us?

Video transcript

1. What new AML challenges might arise in 2020?

Michael, this is a very challenging question to answer, because the Anti-Money Laundering controls and Counter-Financing of Terrorism Controls are built to capture a whole host of new crime patterns and unlawful conduct that may arise, which for the systemic good have to be constantly evaluated in terms of emerging trends, and require financial institutions to constantly be vigilant in terms of policing and checking. And I’d be hard-pressed to tell you what the new challenges could be, which is why Anti-Money Laundering and Counter-Financing of Terrorism will continue to be a hot topic for some years to come.

2. Are there any developing risks in relation to Technology?

There will be. And technology is one of those things that we don’t know we have a problem until we find out. The problem is likely to be bigger for firms that are using more technology, which probably would mean bigger financial institutions that have the budget and higher dependency on infrastructure in the form of technology. It is unlikely to be so key for smaller firms, who probably would not use technology as heavily in the first place. So for the bigger firms, because of the larger base of technology infrastructure involved, there is likely to be a larger build up in technology risk, which means larger firms should constantly evaluate where the potential sources of technology risk would be. For the smaller firms, the Monetary Authority of Singapore (MAS), as a very progressive, technologically savvy regulator, is extremely facilitative in issuing constant updates on where potential sources of technology risks for widespread firms, including smaller firms, could be. And smaller firms should pay constant attention to the MAS circulars on technology risk.

3. Any specific examples?

An example of a evolving technology risk would be the recent circular by the MAS that there is a vulnerability associated with one of the latest versions of Microsoft Office. Already, I can see that this circular is being taken notice of among my clientele. And I’m gratified that this issue has been pick up quite so quickly and people are so conscious about the need to work against the vulnerabilities.

4. Is conduct and accountability a particular focus for 2020?

Absolutely. So, people have been expecting the release of the ‘Individual Accountability and Conduct Guidelines’ for quite some time now. I think all of us are very ready to launch our frameworks when the MAS actually comes out with the final version of the guidelines. Besides the guidelines, I would like to highlight that there is a focus, also, on conduct for the wealth sector. Primarily because there has been a recent fine, quite a large one, in both Hong Kong and Singapore against a well-known private bank in terms of ensuring proper disclosure of their fees charged to customers. And I’d strongly draw an implication that this case also puts wealth management firms on notice that they need to evaluate their conduct, at least in the terms of how their fees are being disclosed and actually charged to clients.

5. How do new rules based on Employee Misconduct Reporting affect us?

There is going to be a new notice on Employee Misconduct Reporting. Essentially, it changes some of the categories of misconduct that employers are required to notify the MAS of. But more importantly, it seeks to address a current lacuna, where employees that leave a certain employers are not given proper references as to their past employment history in their last firm, and this impedes the effectiveness of the employee background checks that the new employer of said individual can conduct. As such, the notice will make it mandatory for the employers of a leaving employee to provide the leaving employee with a more comprehensive reference as to the performance of that individual while in his current employment.

 

 
 
 
 
 
 
 
 
 
 
 
 
 
 

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