SINGAPORE Law and Practice Contributed by: Woon Hum Tan, Shook Lin & Bok LLP
4.10 Foreign Account Tax Compliance Act (FATCA)/Common Reporting Standard (CRS) Compliance Regime Singapore has signed a reciprocal Model 1 Intergov - ernmental Agreement with the USA on 13 November 2018. This came into force on 1 January 2021 and supersedes the previous Model 1 Intergovernmental Agreement (IGA) signed between Singapore and the USA on 9 December 2014. In short, effect is given to the automatic tax infor - mation exchange requirements of the US Foreign Account Tax Compliance Act (FATCA). The relevant Singapore regulations and framework for dealing with FATCA requirements have been put in place, and there are also local guidelines published by the IRAS. All financial institutions, including Licensed FMs, are required to comply with these regulations. In addition to the FATCA, the Standard for Automatic Exchange of Financial Account Information in Tax Matters (AEOI), more commonly known as the Com - mon Reporting Standard (CRS) – a framework and set of regulations developed by the Organisation for Economic Co-operation and Development – are also applicable. The relevant Singapore regulations and framework for dealing with AEOI and CRS require - ments have been put in place, and there are also local guidelines published by the IRAS. All financial institu - tions, including Licensed FMs, are required to comply with these regulations. It is important to note that the alternative fund and/ or Licensed FM may be compelled by law to disclose or hand over certain information or documentation to the IRAS pursuant to the rules and regulations con - cerning the FATCA, AEOI and/or CRS. The IRAS may under certain conditions be required to automatically exchange information with the relevant foreign tax authorities or agencies in accordance with the relevant FATCA, AEOI and/or CRS regulations. 4.11 Anti-Money Laundering (AML) and Know Your Customer (KYC) Regime The AML/CFT and KYC regime for Singapore applica - ble to Licensed FMs are found in: • the SFA;
• the Notice SFA 04-N02 to Capital Markets Inter - mediaries on Prevention of Money Laundering and Countering the Financing of Terrorism; and • the Guidelines to Notice SFA 04-N02 on Prevention of Money Laundering and Countering the Financ - ing of Terrorism – Capital Markets Intermediaries issued by the MAS. These legislations, notices and guidelines are instruc - tive and provide the framework for Licensed FMs. The MAS expects a top-down approach where each Licensed FM’s board and senior management are responsible for the oversight of the development and implementation of a sound money laundering and ter - rorism financing (ML/TF) risk management framework. The board of directors and senior management are expected to ensure that the processes are robust and there are adequate risk-mitigating measures in place. The Licensed FM is expected to identify and assess ML/TF risk on an enterprise-wide level. This shall include a consolidated assessment of its ML/TF risks that exist across all its business units, product lines and delivery channels. In conducting an enterprise- wide risk assessment, the broad ML/TF risk factors that the Licensed FM should consider include: • its customers; • the countries or jurisdictions its customers are from or in, or where the Licensed FM has operations; and • the products, services, transactions and delivery channels. The MAS expects that the nature and extent of ML/TF risk management systems and controls implemented by the Licensed FM should be commensurate with the ML/TF risks identified via its enterprise-wide ML/TF risk assessment. The Licensed FM should put in place adequate policies, procedures and controls to miti - gate the ML/TF risks. Proper processes, record keep - ing and documentation must be in place and these are subject to inspection by the MAS on request. The Licensed FM must also review its risk assessment at least once every two years or when material trigger events occur, whichever is earlier.
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