The Monetary Authority of Singapore has imposed a so-called composition penalty of S$1,100,000 (US$788,200) on Asiaciti Trust Singapore Pte Ltd for its failure to comply with the regulator’s anti-money-laundering rules which the MAS uncovered during an inspection.

AsiaCiti has paid the penalty in full and taken remedial actions to solve the risk management deficiencies that led to its punishment.

The MAS says that between 2007 and 2018 the trust thwarted the requirements that it places on trust companies, failing to implement adequate AML policies and procedures and to subject its AML/CFT controls to independent audits, thereby hindering its efforts to detect and offset the money-laundering risks associated with its higher-risk customers.

The regulator has also criticised AsiaCiti's procedures to determine whether its business contact with "trust-relevant parties" presented a high money-laundering risk. Trusts are fiduciary arrangements that allow third parties, or trustees such as AsiaCiti, to hold assets for the benefit of beneficiaries. The "relevant parties" to a trust (as defined in MAS Notice TCA-N03) include any of the following.

• The settlor, who creates the trust and transfers assets into it.
• The beneficiary, who receives the benefits of the assets.
• The trustee, who holds and manages the assets for the benefit of the beneficiaries.
• Any person who has any power over the disposition of any property that is subject to the trust.

According to the regulator, AsiaCiti failed to establish the source of wealth of an effective controller. In relation to a settlor or a trustee, an "effective controller" is the natural person who ultimately owns or controls the settlor or trustee, or the natural person on whose behalf business contact is established or maintained, and includes any person who exercises ultimate effective control over a legal person or legal arrangement. AsiaCiti simply believed the effective controller’s representations about his source of wealth without trying hard enough to corroborate his claims.

Enhanced monitoring of higher-risk customers was not conducted. In particular, AsiaCiti did not inquire into the background and purpose of unusually large transactions with no obvious economic purpose, undertaken by customers who were politically exposed persons or PEPs. Despite these unusual circumstances, it also did not consider sending off any suspicious transaction reports to the city-state's financial intelligence unit.

AsiaCiti Trust response
 “These isolated AML/CFT control and procedural issues have been fully addressed, and since 2018, the Singapore office’s new management team has enhanced internal compliance and governance systems to fully meet the requirements. We are pleased to have resolved this matter with the MAS and look forward to continuing to provide the exceptional client service, responsiveness and independence that we have always been known for,” the firm said in a statement this week. 

“We have resolved a matter with the Monetary Authority of Singapore that specifically relates to our Singapore office failing to meet the MAS’s Anti-Money Laundering and Countering the Financing of Terrorism controls and procedures requirements in the period prior to early 2018."