MAS Offers Guidelines for Banks Handling Crypto-Related Clients
The Monetary Authority of Singapore (MAS) has released a comprehensive set of guidelines to assist banks in managing clients who are involved in digital assets, such as cryptocurrency exchanges or individuals whose wealth is derived from cryptocurrencies.
Industry working group
According to a report in local media source, The Straits Times, these non-mandatory guidelines, developed by an industry working group, aim to provide best practices for financial institutions to address concerns related to money laundering, terrorism financing, and sanctions risks associated with cryptocurrencies.
The working group suggests that enhanced due diligence may be necessary for firms closely connected to facilitating crypto transactions. For instance, conducting site visits or walk-throughs of a client’s anti-money laundering and anti-terrorism financing processes and controls could be required.
During the onboarding process, banks should request information documenting the customer’s crypto exposure and the intended usage of the account. Additionally, banks are advised to establish the source of the client’s funds or wealth.
To evaluate the regulatory status of a merchant customer’s crypto-related counterparties, especially if they contribute significantly to the merchant’s transactions, banks should conduct thorough assessments.
The working group also highlights the use of blockchain screening tools to review the on-chain activity of digital token payment service providers. Regular screening of new and existing wallet addresses owned or controlled by these providers against the sanctions list and designated wallets is also recommended.
Comprehensive guidelines
Loretta Yuen, Head of Legal and Compliance at Oversea-Chinese Banking Corp (OCBC), a Singapore-headquartered bank, describes the guidelines as one of the most comprehensive in the world, providing insights into banks’ management of crypto-related money laundering, terrorism financing, and sanctions risks.
She believes the guidelines will raise awareness among prospective customers regarding the key risk considerations banks prioritize and enable customers to proactively fulfill banks’ customer due diligence requirements during the onboarding process.
Evy Theunis, DBS Bank’s Head of Digital Assets, views the guidelines as a codification of best practices across the industry, aligning with the bank’s existing protocols. United Overseas Bank (UOB) also acknowledges the benefits of the best practice paper, particularly given the diverse range of digital assets with varying levels of risk.
Eight participating banks
The working group responsible for developing these guidelines includes representatives from eight banks, MAS, the Commercial Affairs Department, and Big Four audit firm Ernst & Young. Formed in August 2022 under the anti-money laundering and countering the financing of terrorism industry partnership (ACIP), the group aims to identify, assess, and mitigate money laundering and terrorism financing risks in Singapore through a collaborative private-public partnership involving the financial sector, regulators, law enforcement agencies, and other government entities.
Singapore is vying to establish itself as a hub for digital asset business in Asia, alongside other centers such as Hong Kong. The Chinese autonomous territory has been making greater progress over the course of the past year.
However, a report in The Wall Street Journal on Monday suggests that banking remains a difficulty for crypto businesses in Hong Kong. Hong Kong’s difficulty may be Singapore’s opportunity, given the work that this working group has carried out in smoothing the way for the banking of digital asset-related businesses.
