There remains a risk that legal arrangements may be misused by bad actors to conceal the beneficial ownership of illicit proceeds. However, they are less frequently exploited as compared to legal persons (in particular companies). It is notable that all of the Money Laundering (ML) cases relating to legal arrangements in Singapore that Law Enforcement Agencies (LEAs) have investigated to-date have involved complex structures with either (i) Singapore Licensed Trust Companies (LTCs) as trustees; or (ii) are based overseas (i.e. foreign trusts).
The table below shows a summary of the risks.
The risk assessment highlights the following inherent vulnerabilities where legal arrangements are used to:
- Conceal control or the ultimate beneficial owner of the trust assets (which may be proceeds of crime)
- Create barriers to recovery of assets
- Act as a layer in a complex structure
In conducting the enterprise-wide risk assessment, FIs should incorporate relevant findings from the risk assessments, and take into account the relevant threats and higher-risk sectors identified to assess the effectiveness of controls and ongoing monitoring of customers’ accounts and transactions.
For the full details, please refer to the MAS website https://www.mas.gov.sg/publications/monographs-or-information-paper/2024/money-laundering-and-terrorism-financing-risk-assessment-of-legal-arrangements
Disclaimer: The information, views or opinions expressed are provided for general information and should not be relied upon as legal or professional advice.