Anti-Money Laundering/Countering the Financing of Terrorism for Fund Management Companies

What should a fund consider in a risk assessment?

Broadly speaking, considerations in an EWRA include information relating to the customer, information relating to the countries/jurisdictions of the customers and the fund (CMI), and information relating to products, services transactions, and delivery channels.

According to MAS (Guidelines)
last revised 24 April 2015

In conducting an enterprise-wide risk assessment, the broad ML/TF risk factors that the CMI 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 CMI has operations in ―

(i) countries or jurisdictions the CMI is exposed to, either through its own activities (including where its branches and subsidiaries operate in) or the activities of its customers (including the CMI’s network of correspondent account relationships), 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;
    • 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 CMI ―

(i) the nature, scale, diversity and complexity of the CMI’s business activities;
(ii) the nature of products and services offered by the CMI; and
(iii) the delivery channels, including the extent to which the CMI deals directly with the customer, relies on third parties to perform CDD measures or uses technology