This circular highlights key observations from the MAS thematic review of VCCs and their managers, and sets out supervisory expectations and good practices for VCC managers in their governance and management of VCCs.
🏛️ Key Regulatory Requirements
VCCs and their managers are subject to the following key requirements specific to the governance and management:
- Collective Investment Scheme (CIS): VCCs must operate as one or more CIS entities.
- MAS-Regulated Manager: VCCs must appoint a manager regulated by MAS.
- Director Requirement from the Manager: At least one VCC director must be a director or qualified representative of the VCC manager.
- AML/CFT Compliance: VCCs must appoint an Eligible Financial Institution (EFI) to fulfil Anti-Money Laundering and Countering the Financing of Terrorism requirements.
🔍 MAS Review Observations and Expectations
- Lack of Custody Arrangements: Some VCCs investing in certain types of assets (e.g. listed equities and fixed income instruments) lacked required independent custodians.
- Licensing: VCC Directors performing regulated activities should be appointed as licensed representatives of the VCC manager.
- Inactive or Dormant VCCs: Some VCCs had no assets or investors despite being incorporated for over a year. These should be periodically reviewed and wind down.
- No Substantive Fund Management: Some managers transferred investor assets into VCCs without offering active investment management. The VCC manager should be actively involved in all aspects of investment and risk management, and not provide a conduit for customers to structure investments.
🛡️ AML/CFT Compliance
- Sufficient oversight exercised by VCC directors over the EFIs appointed.
- Implement systems for customer due diligence, beneficial ownership checks, screening, and enhanced due diligence for higher risk customers.
- Maintain an up-to-date register of beneficial owners.
- Ensure ongoing AML/CFT training.
For the full details, refer to https://www.mas.gov.sg/regulation/circulars/iid-04-2025-governance-and-management-of-variable-capital-companies
Disclaimer: The information, views or opinions expressed are provided for general information and should not be relied upon as legal or professional advice.