The Monetary Authority of Singapore (MAS) has flagged weaknesses in how some crypto firms apply anti-money laundering (AML) controls.
MAS found that digital payment token service providers generally understand their obligations but need to improve how some controls are implemented.
The regulator identified shortcomings in customer due diligence, transaction monitoring, screening and risk assessments for new tokens.
Some firms lacked clear guidance on how staff should assess and document risks before listing tokens.
Others relied too heavily on customer declarations when checking the source of wealth and funds for higher-risk customers.
MAS also found cases where providers failed to investigate unusually large transactions or properly assess alerts from blockchain analytics tools.
Travel Rule and screening gaps
Crypto firms must securely transmit originator and beneficiary information when transferring digital tokens to another provider.
Enhanced checks should also apply to transfers involving unhosted wallets or wallets hosted by unregulated virtual asset service providers.
Certain firms failed to screen all originators and beneficiaries.
Some also lacked a clear understanding of the databases used by their screening vendors and whether those sources were adequate.
Boards and senior management should oversee gap reviews and remedial action.
The information paper supplements MAS Notice PSN02 and its accompanying guidelines.
Featured image: Edited by Fintech News Singapore, based on image by creativewizard via Magnific
