Singapore MAS and ACIP release May 2025 guide on "Best Practices on Source of Wealth Due Diligence"
23/05/2025
The AML/CFT Industry Partnership (ACIP), supported by the Monetary Authority of Singapore (MAS), recently released a comprehensive guidance paper on Source of Wealth (SoW) Due Diligence.
This guidance represents a significant shift in how financial institutions (FIs) approach SoW due diligence across various banking segments.
Here are some key points from the guidance:
- Risk-Based, Tiered Approach: The guidance advocates for a "same risk, same control" philosophy, meaning the intensity of SoW due diligence should be driven by the customer's inherent money laundering/terrorism financing (ML/TF) risk, rather than the banking segment they fall under.
- Private Banking and Wealth Management: FIs in this segment are expected to establish and corroborate SoW for all clients, focusing on business ownership, investment gains, employment income, and inheritance.
- Retail Banking: A two-tier system is suggested. Tier 1 involves basic SoW information collection, while Tier 2 requires complete corroboration for higher-risk customers, such as foreign PEPs and those with unusually high assets or transaction throughput.
- Corporate Banking: SoW risk is evaluated at the entity and beneficial ownership levels. Entities with significant personal wealth or opaque structures are subject to heightened scrutiny.
This pragmatic shift aims to enhance the robustness of Singapore's AML/CFT regime and ensure that financial crime risks are effectively mitigated across all banking segments.
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