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VSTPL’s failures placed the trust at a higher risk of being used as a conduit for illegal activities, says MAS.

The Monetary Authority of Singapore (MAS) has penalised the trust company, Vistra Trust (Singapore) Pte. Ltd (VTSPL), for failures to comply with MAS’ Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) requirements in 2019.

VTSPL has paid the penalty of $1.1m, and taken remedial actions to address the risk management deficiencies that led to the breaches, MAS said.

The breach was found during an inspection carried out between April to June 2019. VSTPL was found to have serious breaches of MAS’ anti-money laundering requirements for trust companies. This reportedly placed the trust at a higher risk of being used as a conduit for illicit activities.

The failures were particularly in relation to higher risk trust relevant parties, such as the settlor, the beneficiary, the trustee, and any person who has power over the disposition of trust property. 

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“VTSPL did not implement adequate procedures to determine if trust relevant parties presented a higher risk for money laundering or terrorism financing. This resulted in VTSPL failing to identify certain higher-risk accounts and subjecting these accounts to enhanced customer due diligence (CDD) measures, both during account acquisition as well as on an ongoing basis,” MAS said in the press announcement.

VTSPL also reportedly failed to perform adequate enhanced CDD for some accounts that had been identified as being of higher risk, according to MAS. 

“Specifically, VTSPL did not establish the settlors’ source of wealth and source of funds, and failed to obtain VTSPL’s senior management’s approval to establish or continue business contact with these higher-risk accounts,” the statement read.

Singapore’s regulator said that it has directed VTSPL to appoint an independent party to validate the adequacy and effectiveness of its remediation measures and report its findings to MAS.