The strong growth in the Singapore trust services industry has prompted the need to ensure high standards of probity, professionalism and business conduct by trust service providers to strengthen Singapore’s status as an international financial centre. The new TCA framework seeks to achieve this by ensuring, among other things, that only fit and proper persons are allowed to operate in the trust services industry.

Trust business activities regulated under the TCA include the following:

– Providing services with respect to the creation of an express trust.
– Acting as trustee in relation to an express trust.
– Arranging for any person to act as trustee in respect of an express trust.
– Providing trust administration services in relation to an express trust.

The Trustees Act provides, among others, safeguards to ensure that trustees adhere to certain minimum standards when they exercise their trustee powers, and defines a duty of care for trustees when carrying out specified duties or acts.

Persons exempt from holding a trust business license are:

– Banks and merchant banks regulated by MAS.
– Holders of a capital markets services license, or persons who are exempt from holding a capital markets services license for providing fund management or custodial services under the Securities and Futures Act (Cap. 289).
– Lawyers and accountants.
– Private trust companies.
– Overseas persons.
– Persons engaging in trust business in connection with the issuance of debentures.
– Trustees of collective investment schemes approved under the Securities and Futures Act (Cap. 289).
– Persons carrying out introducing activities.

A private trust company is defined in the Trust Companies (Exemption) Regulations as a corporation whose sole purpose is to provide trust business services in respect of a specific trust or of specific trusts.

“Carrying on business” is not defined in the TCA. Typically, MAS would regard any activity which is conducted with system, repetition, and continuity as carrying on a business.

MAS’ objective in its regulation and supervision of trust companies is to ensure safe, sound, and fair dealing financial intermediaries.

In reviewing an application for a trust business license, MAS will consider, inter alia, the following factors:

– Physical presence and management expertise of the applicant in Singapore.
– Financial soundness of the applicant and its parent company.
– Ability to meet the minimum financial requirements and professional indemnity insurance requirements prescribed under the TCR.
– Adequacy of internal compliance systems and processes of the applicant.
– Competence and integrity of the applicant.

MAS reserves the right to terminate the processing of an application where the applicant is unable to meet the admission criteria, when there are significant information gaps or inconsistencies, or when the applicant is unable to satisfactorily address MAS’ queries in a timely manner.

MAS will take approximately 4 months to process and approve an application. To expedite the review process, an applicant should satisfy itself that it fully meets the admission criteria, and has ensured that the application is complete, free of errors or inconsistencies, and is accompanied by the requisite supporting documents as stated in the application form.

A licensed trust company incorporated in Singapore must at all times maintain a net asset value of not less than one-quarter of its relevant annual expenditure of the financial year immediately preceding the current financial year or three-quarters of the minimum paid-up capital of $250,000, whichever is the higher amount.

A licensed trust company incorporated outside Singapore must at all times maintain qualifying assets in the branch in Singapore, of not less than one-quarter of its relevant annual expenditure of the financial year immediately preceding the current financial year or the minimum qualifying assets of $250,000, whichever is the higher amount.

“PII” represents Professional Indemnity Insurance. A licensed trust company must at all times maintain a professional indemnity insurance (“PII”) policy.

Where MAS has not revoked a license under section 10(2)(b) of the TCA, the license will lapse in the following circumstances:

– Where the licensed trust company has not commenced trust business within 6 months from the date of the grant of the license.
– Where the licensed trust company has done the following;
(i) Has ceased to carry on its trust business.
(ii) Has not resumed any trust business for a continuous period of 14 days from the date of cessation of its trust business.
(iii) Has not notified MAS of such cessation of its trust business at any time during the period of 14 days from the date of the cessation.

Licensed trust companies are required to lodge the following documents with MAS on an annual basis:

– A true and fair profit and loss account and a balance sheet made up to the last day of its financial year, within 5 months after the end of the financial year; these documents must be lodged together with an auditor’s report in Form 7.
– A statement in Form 5, showing the maintenance of the licensed trust company’s net asset value or qualifying assets, within 14 days from the grant of its licence and thereafter, within 5 months from the end of each of its financial year.
– A statement in Form 6, regarding information on the licensed trust company’s headcount, sources of revenue and assets under trusteeship in respect of each calendar year, within 60 days from the end of each calendar year; this form is to be lodged with the Financial Centre Development Department (Asset Management Division) of MAS.

Corporate governance can be referred to as having the appropriate people, processes and structures to direct and manage the business and affairs of the company to enhance long-term shareholder value, whilst taking into account the interests of other stakeholders. Companies that embrace the tenets of good governance, including accountability, transparency, and sustainability, are more likely to engender investor confidence and achieve long-term sustainable business performance.

A payment service provider shall ensure that its employees and officers (whether in Singapore or elsewhere) are regularly and appropriately trained on the following:

– AML/CFT laws and regulations, and in particular, CDD measures, detecting, and reporting of suspicious transactions.
– Prevailing techniques, methods, and trends in money laundering and terrorism financing.
– The payment service provider’s internal policies, procedures and controls on AML/CFT and the roles and responsibilities of employees and officers in combating money laundering and terrorism financing.

The Board establishes a Nominating Committee for recommendations regarding the following:

– The review of succession plans for directors, in particular, the appointment and/or replacement of the Chairman, the CEO and key management personnel.
– The process and criteria for evaluation of the performance of the Board, its board committees and directors.
– The review of training and professional development programs for the Board and its directors.
– The appointment and re-appointment 12 of directors.

The NC comprises of a minimum of three directors, the majority of whom, including the NC Chairman, are independent. The lead independent director, if any, is a member of the NC.

The Nominating Committee recommends for the evaluation of the effectiveness of the Board as a whole, and of each board committee separately, as well as the contribution by the Chairman and each individual director to the Board.

No director is involved in deciding his or her own remuneration. The Board has a formal and transparent procedure for developing policies on director and executive remuneration, and for fixing the remuneration packages of individual directors and key management personnel.

The following is true about the Remuneration Committee:

– The RC comprises at least three directors. All members of the RC are non-executive directors, the majority of whom, including the RC Chairman, are independent.
– The RC considers all aspects of remuneration, including termination terms, to ensure they are fair.
– The company discloses the engagement of any remuneration consultants and their independence in the company’s annual report.

The company discloses in its annual report the policy and criteria for setting remuneration, as well as names, amounts, and breakdown of remuneration as follows:

– Each individual director and the CEO.
– At least the top five key management personnel (who are not directors or the CEO) in bands no wider than S$250,000 and in aggregate the total remuneration paid to these key management personnel.
– The company discloses the names and remuneration of employees who are substantial shareholders of the company or are immediate family members of a director, the CEO or a substantial shareholder of the company, and whose remuneration exceeds S$100,000 during the year, in bands no wider than S$100,000, in its annual report. The disclosure states clearly the employee’s relationship with the relevant director or the CEO or substantial shareholder.
– The company discloses in its annual report all forms of remuneration and other payments and benefits, paid by the company and its subsidiaries to directors and key management personnel of the company. It also discloses details of employee share schemes.

The Audit Committee has the following duties:

– Reviewing the significant financial reporting issues and judgments so as to ensure the integrity of the financial statements of the company and any announcements relating to the company’s financial performance.
– Reviewing at least annually the adequacy and effectiveness of the company’s internal controls and risk management systems.
– Reviewing the assurance from the CEO and the CFO on the financial records and financial statements.
– Making recommendations to the Board on:
(i) The proposals to the shareholders on the appointment and removal of external auditors.
(ii) The remuneration and terms of engagement of the external auditors.
– Reviewing the adequacy, effectiveness, independence, scope, and results of the external audit and the company’s internal audit function.
– Reviewing the policy and arrangements for concerns about possible improprieties in financial reporting or other matters to be safely raised, independently investigated and appropriately followed up on. The company publicly discloses, and clearly communicates to employees, the existence of a whistle-blowing policy and procedures for raising such concerns.

The following are provisions for managing stakeholder relationship:

– The company has arrangements in place to identify and engage with its material stakeholder groups and to manage its relationships with such groups.
– The company discloses in its annual report its strategy and key areas of focus in relation to the management of stakeholder relationships during the reporting period.
– The company maintains a current corporate website to communicate and engage with stakeholders.

Beneficiary institution means the financial institution that receives the wire transfer from the ordering institution, directly or through an intermediary institution, and makes the funds available to the wire transfer beneficiary. A payment service provider that is a beneficiary institution shall take reasonable measures, including post-event monitoring or real-time monitoring where feasible, to identify cross-border wire transfers that lack the required wire transfer originator or required wire transfer beneficiary information.

“Cross-border wire transfer” can be referred to as a wire transfer where the ordering institution and the beneficiary institution are located in different countries or jurisdictions and also refers to any chain of wire transfer in which at least one of the financial institutions involved is located in a different country or jurisdiction. For cross-border wire transfers where the beneficiary institution pays out funds in cash or cash equivalent to the wire transfer beneficiary in Singapore, a beneficiary institution shall identify and verify the identity of the wire transfer beneficiary if the identity has not been previously verified.

A payment service provider shall take the following appropriate steps to identify, assess and understand, its money laundering and terrorism financing risks in relation to the following:

– Its customers.
– The countries or jurisdictions its customers are from or in.
– The countries or jurisdictions the payment service provider has operations in.
– The products, services, transactions and delivery channels of the payment service provider.

The following are principles that shall serve as a guide for all payment service providers in the conduct of their operations and business activities:

– A payment service provider shall exercise due diligence when dealing with customers, natural persons appointed to act on the customer’s behalf, connected parties of the customer and beneficial owners of the customer.
– A payment service provider shall conduct its business in conformity with high ethical standards, and guard against establishing any business relations or undertaking any transaction, that is or may be connected with or may facilitate money laundering or terrorism financing.
– A payment service provider shall, to the fullest extent possible, assist and cooperate with the relevant law enforcement authorities in Singapore to prevent money laundering and terrorism financing.

A payment service provider shall take the following appropriate steps to identify, assess and understand, its money laundering and terrorism financing risks:

– Documenting the payment service provider’s risk assessments.
– Considering all the relevant risk factors before determining the level of overall risk and the appropriate type and extent of mitigation to be applied.
– Keeping the payment service provider’s risk assessments up-to-date.
– Having appropriate mechanisms to provide its risk assessment information to the authority.