Singapore: MAS Consults On Requirements For The Proposed AML/CFT Framework For VCCs

Last Updated: 4 September 2019
Article by Amit Dhume and Abel Ho
Most Read Contributor in Singapore, November 2019


The variable capital company ("VCC") is a new corporate structure for all types of collective investment schemes ("CIS") in Singapore. Each VCC may comprise of one or more CIS, which can be open-ended or closed-ended funds. The VCC will be regulated under the Variable Capital Companies Act 2018 ("VCC Act"), which has not come into force as at August 2019, as well as various proposed items of subsidiary legislation that have not been passed. However, it is expected that the VCC framework will be operational in Q4 2019. The VCC will be regulated jointly by the Accounting and Corporate Regulatory Authority ("ACRA") and the Monetary Authority of Singapore ("MAS") – ACRA would administer the VCC Act, while the anti-money laundering and countering the financing of terrorism ("AML/CFT") obligations of VCCs will come under the purview of MAS.

On the back of the public consultation of the VCC Act in 2017 and feedback received, MAS is proposing to introduce a new AML/CFT framework for VCCs as set out in its consultation paper on the proposed notice on prevention of money laundering and countering the financing of terrorism for VCCs ("Consultation Paper"). A copy of the Consultation Paper can be accessed here. This proposed framework for VCCs will be contained in a new MAS AML/CFT notice to VCCs ("VCC AML/CFT Notice"), which can be accessed here, and reflects the policy outcomes and imposes requirements similar to those required of existing MAS-regulated entities, with some adaptions as discussed below.

Engagement of an eligible financial institution

In order to prevent the use of a VCC as an investment vehicle for nefarious activities, MAS will require a VCC to engage an eligible financial institution ("Eligible Financial Institution") as prescribed in the VCC AML/CFT Notice to conduct the necessary checks and perform the measures to allow the VCC to comply with the majority of the VCC AML/CFT Notice requirements. The prescribed list of Eligible Financial Institutions consists of MAS regulated entities for AML/CFT purposes such as fund managers. MAS expects a VCC to have in place internal policies and procedures, and appropriate compliance, audit and training procedures, similar to those required of existing MAS-regulated entities. Also, a VCC's directors and employees should be adequately trained on applicable AML/CFT requirements.

That said, MAS proposes that a VCC should not delegate the requirements set out in paragraph 3 (Underlying Principles), paragraph 4 (Eligible Financial Institutions), and paragraph 10 (Reliance on Third Party) of the VCC AML/CFT Notice as these requirements are those which only the VCC can comply with.

In practice, MAS notes that a VCC would largely adapt the policies and procedures of the Eligible Financial institution that it has appointed, such as its fund manager. However, MAS expects that the VCC will ultimately still remain responsible for fulfilling its AML/CFT requirements. If a VCC is unable to comply with its AML/CFT obligations due to an act or omission on part of the Eligible Financial Institution, MAS may take appropriate supervisory action or sanction against the VCC and/or its directors after considering all the relevant facts and circumstances. Further, MAS may also take separate supervisory action or sanction against the Eligible Financial Institution if it has been found to be in breach of its own AML/CFT obligations applicable to it.

Definitions of "business relations" and "customers"

The definitions of "business relations" and "customers" would determine the individuals and entities on which a VCC should perform customer due diligence ("CDD"). MAS expects VCCs to conduct CDD on its members and prospective members, whether at a fund or sub-fund level. In practice, MAS notes that the VCC would have engaged its appointed Eligible Financial Institution to perform these CDD procedures.

The proposed definitions are as follows:

  • "business relations" means any direct or indirect contact between a VCC and a person (whether a natural person, legal person or legal arrangement) that results in the entering or maintaining of such person's particulars in the register of members under section 17 of the VCC Act; and
  • "customer" in relation to a VCC, means a person (whether a natural person, legal person or legal arrangement) with whom the VCC establishes or intends to establish business relations.

Register of beneficial owners and nominee directors

VCCs will be required, subject to certain exceptions, to maintain a register of beneficial owners and a register of nominee directors (collectively "Registers"), similar to those required of companies under the Companies Act in relation to registrable controllers and nominee directors. MAS will allow the Registers to be kept confidential, however, they must be made available to ACRA, MAS and other law enforcement authorities. The Registers must: (a) be kept up to date and held at the registered office of the VCC, its appointed fund manager or the Eligible Financial Institution; and (b) contain particulars of the VCC's beneficial owners and persons for which the directors are nominees, including their names and aliases, dates of birth/incorporation, unique identity numbers, addresses, nationalities/places of incorporation, as well as the start and end dates of beneficial ownership or the nominee directorship arrangement.

Reliance by acquiring VCCs on CDD measures already performed

In cases where a VCC acquires another VCC or fund, the VCC AML/CFT Notice as proposed by MAS allows for reliance by the acquiring VCC on CDD measures already performed by the acquired entity on its customers, where the VCC acquires, in whole or in part, the business or shares of another VCC, fund, or their equivalent. This is provided that the VCC has no doubt or concerns with respect to the veracity or adequacy of the CDD information of the acquired entity.

Key differences from the existing AML/CFT notice

Since a VCC's sole object is to be a CIS, various concepts in MAS' AML/CFT notices for existing MAS-regulated entities would not be relevant to VCCs and therefore not included in the proposed VCC AML/CFT Notice. MAS highlights two examples. First, MAS recognises that while a VCC would have members who hold shares/units in the VCC, these members would not have "accounts" with the VCC. Opening or maintenance of accounts would rather be at the VCC's fund manager end, which operates the VCC's CIS. Accordingly, the requirements in relation to "accounts" and "correspondent accounts" are not included in the VCC AML/CFT Notice. Second, since a VCC is not set up to provide services to non-members of a VCC, undertaking of transactions for non-customers are not relevant to VCCs and therefore excluded from the VCC AML/CFT Notice.

This update is provided to you for general information and should not be relied upon as legal advice.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions