The circular provides further guidance on establishing source of wealth (SOW).
- Independently corroborate information obtained from the customers against documentary evidence or public information sources.
- Policies and procedures are risk-proportionate and reasonable, taking into account the unique circumstances and profile of each customer. Eg. for customers with prominent public profiles, FIs may corroborate their representations on their SOW against reliable public information sources.
- Policies and procedures design considerations:
- Materiality
- Obtain information on entire body of wealth to the extent practicable to determine the SOW that are material or higher risk.
- For situations where it may not be possible or practicable to corroborate, (i) focus on corroborating the SOW that are more material or of higher risk, and (ii) assess whether the residual risk of the uncorroborated wealth is acceptable to the FI and whether additional risk-mitigating measures are needed in the absence of corroboration.
- Prudence
- For material SOW, use more reliable corroborative information, such as audited accounts or documents issued by independent third parties.
- If benchmarks or assumptions are used to (i) assess the plausibility of information received from customers, or (ii) to estimate a segment of a customer’s wealth in the absence of corroborative evidence, FIs should ensure that they are reasonable, relevant and appropriate for the customer’s specific risk profile and circumstances. Document the basis for the benchmarks or assumptions, and review periodically.
- Benchmarks and assumptions should facilitate assessment of the plausibility of the customer’s SOW, and should not be used to justify or support circumstances or explanations provided by the customer if there are reasons that cast suspicion on the SOW.
- Relevance
- Obtain pertinent, fit-for-purpose corroborative evidence to the extent practicable.
- Determine which documents are critical for corroborating a customer’s SOW and which documents they may reasonably do without.
- Utilise independent and reliable documents and information obtained from credible public sources to support their assessment of customers’ SOW, without having to rely on customers to provide corroborative evidence.
- Materiality
- Senior management responsibilities:
- Exercise close oversight over higher risk accounts – If unable to corroborate a significant portion of a customer’s wealth, escalate to senior management for approval before establishing business relations. Consider whether additional risk-mitigating measures are needed.
- Ensure that ongoing monitoring controls take into account the customer’s risk profile – When performing ongoing monitoring, consider customer information obtained from SOW (eg. total net worth and expected sources of funds), to assess whether the customer’s account activities are in line with their profile.
For the full details, please refer to the MAS website https://www.mas.gov.sg/regulation/circulars/circular-on-establishing-the-sources-of-wealth-of-customers
Disclaimer: The information, views or opinions expressed are provided for general information and should not be relied upon as legal or professional advice.