AML Laws and Regulations for Merchant Banks in Singapore
In a Nutshell
A merchant bank is a bank in Singapore licensed under section 55S of the Banking Act 1970. It operates primarily in wholesale and investment banking, corporate finance, investment management and underwriting, rather than taking retail deposits from the general public.
From 30 June 2025, the sector’s AML, CFT and CPF framework is anchored in MAS Notice 1014 and its Guidelines, issued under the Financial Services and Markets Act 2022 following the transition from approval under the MAS Act to a licensing under the Banking Act. The framework sets out the core requirements for a risk-based approach programme, including customer due diligence, beneficial ownership, enhanced measures for politically exposed persons, correspondent banking, the wire transfer and digital token value transfer rules, record keeping and suspicious transaction reporting.
Merchant banks form part of Singapore’s broader banking sector, which the 2024 national risk assessment identifies as the country’s highest money laundering risk sector. Their cross-border activities, corporate and institutional clientele and role of wealth management make these controls particularly important.
The framework does not standalone. Its sets within a wider legal and regulatory statute comprising the banking Act, Singapore’s AML/ CFT criminal and sanctions laws, national risk assessments, MAS requirements and FATF standards. This guide maps that hierarchy, explains what each instrument does, and connects each obligation to its underlying source.
AML Laws and Regulations for Merchant Banks in Singapore
A merchant bank operates at the wholesale and private client end of Singapore’s banking system, serving corporate, institutional and high-net-worth clients, and often handling complex, cross-border transactions. These characteristics can create heightened exposure to money laundering risks, particularly where transactions involve complex ownership structures, multiple jurisdictions or movement of substantial funds. This guide explains the instruments that apply to merchant banks in Singapore, from the legislation establishing money laundering offences to the detailed requirements imposed by the Monetary Authority of Singapore (MAS).
The framework is best understood as a hierarchy of complementary instruments. At the foundation are Singapore’s criminal and sanctions laws, which establish offences and measures relevant to money laundering, terrorism financing and targeted financial sanctions. The principal operational AML, CFT and CPF requirements for merchant banks are then set out in MAS Notice 1014, together with its Guidelines, which prescribe the risk-based controls that regulated institutions must apply. Alongside these requirements are the Banking Act 1970, which provides the licensing framework for merchant banks, and the FATF standards behind the whole regime.
Because merchant banks deal in liquid, high-value products and serve clients whose wealth and structures can be complex, the sector is exposed mainly to the layering of illicit funds and to the concealment of who ultimately owns them. That shapes much of what follows, from how a merchant bank assesses risk to how it runs enhanced due diligence on a private banking relationship.
Singapore's merchant banks at a glance
Merchant banks are now licensed under section 55S of the Banking Act 1970, having moved in 2025 from their former approval under the Monetary Authority of Singapore Act; the current list is maintained in the MAS Financial Institutions Directory.
They carry on wholesale and investment banking, corporate finance, capital markets and, for many, private banking and wealth management, and they do not take deposits from the general public in the way a full bank does.
Risk rating: the banking sector, including wealth management, is assessed as posing the highest money laundering risk in Singapore, driven by high-net-worth and PEP clients, complex structures and cross-border flows (Money Laundering National Risk Assessment 2024, chapters 3.12 and 7.1).
Core AML Laws and Regulations for Merchant Banks in Singapore
These statutes and sanctions regulations make money laundering, terrorism financing and proliferation financing offences and require every merchant bank to detect and report them. They are binding, whether or not a MAS notice restates them, and the sector rulebook is layered on top.
The Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act 1992
The CDSA sets out the money laundering offences in Singapore and lets the courts confiscate criminal proceeds. For a merchant bank, the operative duty is section 45: once it knows or suspects that assets moving through a client account are proceeds of crime, it must report to the Suspicious Transaction Reporting Office. The reporting duty applies even where the suspicious transaction has not been completed. The Act also requires financial institutions to retain transaction documents and keep them readily retrievable under section 43. Section 57 makes tipping off the client an offence, a point that matters in a private banking relationship where a manager is close to the client.
The Terrorism (Suppression of Financing) Act 2002
The TSOFA criminalises raising or handling property for terrorism and dealing in terrorist property. A merchant bank must not hold or move assets it knows, or has reasonable grounds to believe, are owned or controlled by a terrorist, and it must notify the authorities. The obligation is met in practice by screening clients, connected parties and beneficial owners against sanctions and designated lists, and freezing at once on a match.
The United Nations Act 2001
Under this Act, the Minister makes regulations that give United Nations Security Council sanctions domestic force, and it is the backbone of Singapore’s country measures. A merchant bank, however, meets those measures through MAS regulations rather than this Act, because the Act yields where a financial institution is already subject to MAS directions or regulations, so the bank works under the MAS sanctions regime.
The Financial Services and Markets (Sanctions and Freezing of Assets of Persons, Democratic People's Republic of Korea) Regulations 2023
Made by MAS under the Financial Services and Markets Act 2022, these regulations bring United Nations sanctions on North Korea into force and bind every financial institution, so a merchant bank and its overseas branches are covered. The bank must freeze designated persons’ assets without delay, must not deal in or facilitate transactions involving them, and must report to MAS, with liability that does not depend on having known the counterparty was designated.
The Financial Services and Markets (Sanctions and Freezing of Assets of Persons, Iran) Regulations 2023
The Iran regulations, issued by MAS under the FSM Act 2022, give domestic effect to Security Council Resolution 2231. A merchant bank must freeze designated persons’ funds and economic resources and must withhold services that could aid proliferation-sensitive activity, but for narrow exemptions resting on a MAS determination. In practice, the duty is the continuous screening of clients and their counterparties.
Overarching AML Laws and Regulations Applicable to Merchant Banks in Singapore
These instruments cut across the whole regime and give a merchant bank the practical means to discharge its reporting duties and to recognise ML, TF and PF activities when it appears in a client relationship.
Getting Started with SONAR, for STR Filers (2025)
SONAR is the STRO Online Notices and Reporting platform through which a merchant bank lodges its suspicious transaction reports electronically. The guide covers registration, user roles and submission, and it is the operational route by which the Section 45 CDSA duty is met. A merchant bank’s compliance function uses it to file promptly and to hold proof of every filing.
Form Guide for the STR Form (Version 12 August 2025)
A guide, tab by tab, to the current suspicious transaction report form. It shows how each part is completed, from the reporting institution’s particulars to the grounds for suspicion, and it calls for a unique internal reference on every filing. A merchant bank’s compliance officer relies on it to submit a report thorough enough to carry complex corporate and cross-border detail.
Terrorism Financing Indicators
An STRO red-flag reference that sorts terrorism financing indicators into due diligence anomalies, unusual fund movement and transactions without economic purpose. For a merchant bank, it helps surface terrorism financing typologies, including misuse of corporate vehicles and unexplained cross-border transfers, and supports the decision to file a terrorism financing report.
National Risk Assessments Applicable to Merchant Banks in Singapore
Singapore publishes formal assessments of where its money laundering, terrorism financing and proliferation financing risks lie, and MAS Notice 1014 requires a merchant bank to feed its findings into its own enterprise-wide risk assessment. For the banking sector, the assessments are emphatic: it is rated the highest money laundering risk in the country.
Money Laundering National Risk Assessment Singapore 2024
The national money laundering assessment rates the banking sector, including wealth management, as the highest money laundering risk in Singapore. It points to transnational syndicates exploiting banks as a destination or transit, and to the exposure of a wealth management hub serving high-net-worth clients and PEPs. A merchant bank must read these findings straight into its sector risk assessment.
Terrorism Financing National Risk Assessment 2024
The terrorism financing assessment names banks among the sectors posing the medium-high terrorism financing risk, given their central role in moving funds. A merchant bank is not the classic terrorism financing channel, but it must apply the assessment’s typologies, especially the misuse of legal persons and unexplained cross-border transfers, when it screens clients and monitors accounts.
Proliferation Financing National Risk Assessment and Counter PF Strategy 2024
This assessment pinpoints sanctions evasion, the misuse of legal persons and dual-use trade as the principal proliferation channels. For a merchant bank, the exposure sits in corporate clients with opaque structures, in trade finance and in correspondent relationships, which is why beneficial ownership identification and sanctions screening do the counter-proliferation heavy lifting.
Environmental Crimes Money Laundering National Risk Assessment (May 2024)
A thematic assessment of how proceeds of environmental crime, such as illegal wildlife trade and illegal logging, are laundered. It identifies banks as high-risk sectors because proceeds of environmental crime may enter the financial system through complex corporate structures and commodity-related transactions. For a merchant bank, the assessment is particularly relevant when financing or providing banking services to clients operating in commodity, forestry, natural resource or other environmentally exposed sectors.
Money Laundering and Terrorism Financing Risk Assessment of Legal Persons (2024)
This assessment finds companies to be high risk for misuse and responsible for a disproportionate share of suspicious transaction reports. It speaks directly to a merchant bank, whose client base is heavy with corporate vehicles, funds and holding structures, and it strengthens the duty to look through to each natural person who owns or controls it.
Virtual Assets (Digital Payment Tokens) Risk Assessment (2024)
A sectoral assessment of Singapore’s money laundering and terrorism financing risks arising from virtual assets and digital payment tokens. It is relevant to merchant banks that provide services to virtual asset activities and informs the risk-based controls applied to such relationships, including enhanced due diligence and transaction monitoring for higher-risk digital token activities and transfers involving unregulated or foreign counterparties.
Merchant bank sector ML/TF risk snapshot
Money laundering: the banking sector, including wealth management, is rated the highest ML risk in Singapore, and a merchant bank sits squarely within it (ML NRA 2024, chapters 3.12 and 7.1).
Private banking and wealth: high-net-worth and PEP clients, complex structures and tax-crime exposure make private banking a leading driver of the sector’s risk (ML NRA 2024, chapter 7.3).
Cross-border and correspondent: wholesale and correspondent banking carry higher-risk-jurisdiction and layering exposure, addressed through correspondent due diligence and the travel rule.
Proliferation and terrorism financing: mainly indirect, through corporate clients with opaque ownership or higher-risk links (PF and TF NRAs 2024).
Sector-Specific Guidance Applicable to Merchant Banks in Singapore
This is the core of a merchant bank’s obligations. MAS supervises merchant banks and issues the notices and guidance they must follow. The material is divided into common instruments applicable across financial institutions and sector-specific instruments, led by MAS Notice 1014 and its Guidelines.
Common Law and Guidelines for Merchant Banks
These MAS instruments apply across financial institutions and shape how a merchant bank designs its controls. They do not replace Notice 1014; they explain MAS’s supervisory expectations on themes such as source of wealth, transaction monitoring, misuse of legal persons, sanctions and audit.
The Financial Services and Markets Act 2022
The FSM Act 2022 provides MAS with regulatory and enforcement powers over financial institutions, including powers relevant to AML, CFT and CPF compliance. Section 16 empowers MAS to issue regulations and requirements concerning money laundering, terrorism financing and proliferation financing. The Act also supports MAS’s supervisory, inspection and direction powers, while breaches of applicable AML/CFT requirements may attract significant penalties. It therefore provides the statutory foundation and enforcement framework supporting the obligations imposed under MAS Notice 1014.
Circular AMLD 01/2018: Use of MyInfo and CDD for Non Face to Face Business Relations
This circular recognises the Government’s MyInfo service as a reliable and independent source for a customer’s core identity data. A merchant bank onboarding a MyInfo user can verify the data rather than re-collecting documents, provided it follows the circular’s safeguards, including the additional measures expected when a client is taken on without MyInfo.
Circular AMLD 01/2022: Non Face to Face Customer Due Diligence Measures
This circular sets MAS’s expectations for onboarding people and entities virtually, which matters as merchant banks digitise private client onboarding. It cautions that a video or selfie check on its own may fall short, suggests a second, independent channel for higher-risk clients, and expects the bank to assess any onboarding technology and have its board and senior management approve it.
Circular AMLD 02/2023: ML/TF Risks in the Wealth Management Sector
This circular speaks directly to a merchant bank with a private banking or wealth arm. MAS asks for firmer board oversight, review of due diligence and quality assurance, and for looking through trusts and holding vehicles to the real beneficial owners; a client who walks away rather than answering the questions is itself a signal to weigh a report.
Circular AMLD 08/2024: Establishing the Sources of Wealth of Customers
This circular explains how a firm should establish a client’s source of wealth before business begins, a central task for a private banking book. A merchant bank is expected to take reasonable steps to establish it, to corroborate it against independent documents or sources under the tests of materiality, prudence and relevance, and to escalate what it cannot substantiate.
Circular AMLD 05/2026: Risk Proportionate Source of Wealth Establishment
A 2026 circular that defines the source of wealth expectations. MAS wants the work kept effective, efficient and proportionate to risk, so legitimate wealth is not burdened. A merchant bank should focus corroboration on material or higher-risk wealth, spare established clients repeated or excessive requests, and hold escalation back for genuine red flags.
Circular AMLD 11/2023: Ensuring Effective Detection of Sanctions Related Risks
MAS requires banks to detect and manage sanctions risk, including unilateral sanctions imposed by other jurisdictions. The board must set the risk appetite, and the circular highlights a lookback mechanism: retrospective reviews of wire transfers after a designation, covering at minimum corporate accounts and the 12 months before designation, completed within two months, to catch layering through third parties.
Circular AMLD 12/2024: Audit of AML/CFT Policies, Procedures and Controls
This circular is about the independent audit that forms a merchant bank’s third line of defence. The bank must keep an audit function that regularly tests whether its AML/CFT controls actually work, staff it with the right expertise, train it first on the higher-risk areas such as private banking and correspondent relationships, and benchmark what it finds against industry best practice.
Strengthening AML/CFT Controls on Misuse of Legal Persons and Complex Structures (August 2023)
Drawn from inspections, this MAS paper describes firms that allowed worrying flows to pass through trusts, foundations and stacked corporate layers, exactly the structures a merchant bank encounters in wholesale and private banking. Its case studies expose failures to pin down the true beneficial owner and to join up source of wealth concerns, and it expects a merchant bank to benchmark itself and remediate under senior-management oversight.
AML/CFT Supervisory Expectations from Recent Inspections (October 2024)
This inspection-based paper sets out MAS’s expectations under five headings: reading multiple nationalities and investment migration links as risk factors, catching document red flags, stress testing the plausibility of a client’s source of wealth, following a report or an exit with real mitigation, and sharing client information across business lines. For a merchant bank, each heading lands on private client onboarding and review.
Best Practices in Relation to Risks in Wealth Management (May 2025)
An industry paper for firms serving wealthy clients, consolidating case studies on private investment companies, trusts, sanctions and geopolitical events, remote onboarding and investment migration clients. It is squarely relevant to a merchant bank’s private banking arm, and it confirms that where an external manager sits between the bank and the end client, the bank must still satisfy the due diligence requirements on that end client.
Effective Practices to Detect and Mitigate the Risk from Misuse of Legal Persons (June 2019)
This MAS paper is about guarding against shell and front companies across the client lifecycle. It offers multi-factor risk assessment, red-flag lists, network link analysis and staff training, and it warns that one red flag rarely settles the matter. A merchant bank onboarding corporate and holding company clients should read several signals together before it acts.
Guidance for Effective AML/CFT Transaction Monitoring Controls (September 2018)
This paper draws together MAS’s inspection findings on transaction monitoring. It addresses risk-based calibration of parameters and thresholds, back testing, data integrity, how alerts are worked and documented, and the treatment of outsourced first-level review. For a merchant bank watching wholesale and private client flows, it cautions against closing alerts on generic grounds without confirming the risk has really been addressed.
Guidance to Capital Markets Intermediaries on Enhancing AML/CFT Frameworks and Controls (January 2019)
Written for capital markets intermediaries, this MAS guidance on governance, risk awareness and execution binds a merchant bank directly to the extent it carries on capital markets activities, which many do. Its case studies on board accountability, the three lines of defence and outsourced compliance read across naturally to a merchant bank’s investment banking and capital markets business.
Guidelines on Risk Management Practices, Internal Controls (July 2024)
A prudential guideline on MAS’s expectations for a firm’s control environment and its business process controls. It handles customer due diligence only at a high level and defers to the AML/CFT notices and guidelines for the details, so for a merchant bank it gives the internal controls scaffolding, from segregation of duties to management reporting, that the AML/CFT programme is built around rather than a source of AML obligations in itself.
Guidelines on Provision of Digital Advisory Services (October 2018)
A conduct guideline for digital or robo-advisory services. It touches on a merchant bank that offers automated advice or discretionary management online alongside its private banking business. Its AML/CFT footprint is small: the point that any remote channel still needs adequate ML/TF controls and must manage the impersonation risks of onboarding a client who is never seen in person.
Sound Practices to Counter Proliferation Financing (August 2018)
A conduct guideline for digital or robo-advisory services. It touches on a merchant bank that offers automated advice or discretionary management online alongside its private banking business. Its AML/CFT footprint is small: the point that any remote channel still needs adequate ML/TF controls and must manage the impersonation risks of onboarding a client who is never seen in person.
Strengthening Financial Institutions' CFT Controls (May 2023)
Grounded in an industry survey, this MAS information paper is about countering the financing of terrorism. It restates the duty to freeze and report designated party assets and sets out expectations for screening, data analytics, and high-quality reporting, all of which a merchant bank brings to bear on its clients, connected parties and counterparties.
Specific Guidelines for Merchant Banks
These are the instruments written for the sector. Two of them, MAS Notice 1014 and its Guidelines, are the rulebook a merchant bank lives by, so they are covered in full below. The remaining notices apply to a merchant bank when, and to the extent that, it carries on the particular activity each one governs.
MAS Notice 1014 on Prevention of Money Laundering and Countering the Financing of Terrorism, Merchant Banks
Notice 1014 is the binding AML, CFT and CPF rulebook for the sector. It is issued under section 16 of the Financial Services and Markets Act 2022 and applies to all merchant banks in Singapore, as defined in the Banking Act 1970 and licensed under its section 55S. The current version takes effect from 30 June 2025, as part of the move that brought merchant banks under the Banking Act.
The Notice first fixes what counts as a customer and a business relationship, then requires a merchant bank to identify, assess and understand its money laundering and terrorism financing risk across its customers, the countries it and they operate in, and its products, services and channels, and to apply a risk-based approach with senior-management approved policies and enhanced measures where risk is higher. New products, practices and technologies must be risk-assessed before launch, with attention to features that favour anonymity, a point that reaches a merchant bank adopting digital token or platform-based services.
Customer due diligence is the core. A merchant bank may not keep anonymous or fictitious name accounts, and it must perform customer due diligence when it establishes business relations, when it undertakes an occasional transaction above SGD 20,000, when it undertakes any digital token transaction, when it effects or receives a domestic wire transfer or a cross-border wire transfer above SGD 1,500, when it effects or receives a digital token value transfer, when it suspects money laundering or terrorism financing, or when it doubts information it holds. It must identify and verify the customer, identify any person acting for the customer, identify connected parties of a legal person, and identify and verify beneficial owners through cascading steps of ownership, then control, then senior management. Where the customer is a legal person or arrangement, the bank must grasp its ownership and control structure and the purpose it serves.
Simplified due diligence is available only where risk is demonstrably low. Enhanced due diligence is mandatory for politically exposed persons, requiring senior-management approval, establishment of source of wealth and source of funds and enhanced monitoring, and for other higher-risk situations, which for a merchant bank centre on private banking, complex structures and personal asset holding vehicles. A merchant bank may rely on a qualifying third party for elements of due diligence but never for ongoing monitoring, and it remains responsible for its own obligations.
The later paragraphs carry the sector’s wholesale and cross-border obligations. Correspondent banking, where a merchant bank provides accounts or similar services to another financial institution, requires the bank to assess the respondent, understand each party’s responsibilities and obtain senior-management approval, to guard against payable-through account misuse, and never to deal with a shell bank. The wire transfer rules require the ordering institution to identify the originator and to send required originator and beneficiary information with a cross-border transfer, with names and account or reference numbers for both parties at or below SGD 1,500 and identification and verification of the originator above it; parallel rules apply to digital token value transfers. Records must be kept for at least five years; suspicions must be reported to the Suspicious Transaction Reporting Office through a single internal reference point, mindful of the tipping-off offence in section 57 of the CDSA, and the bank must maintain internal policies, a group policy across its branches and subsidiaries, an AML/CFT compliance officer at management level, an independent audit function and regular training.
Guidelines to MAS Notice 1014 (the primary guidance for merchant banks)
The Guidelines to Notice 1014 are the primary guidance a merchant bank works with, and they are given the fullest treatment here. They are dated 1 July 2025, and their chapters mirror the paragraphs of the Notice, so a bank can read each obligation next to its explanation. They are guidance and not binding rules, yet MAS makes clear that how far a bank observes them can feed into its overall view of the bank, including how well its board and senior management exercise oversight, so in practice they are the benchmark a merchant bank is judged against.
The Guidelines open with the sector’s risk profile. A merchant bank deals in liquid, high-value instruments and serves corporate, institutional and high-net-worth clients, so it is used more to layer and to conceal ownership than to place cash, and its private banking and cross-border business carries the sharpest exposure. They confirm that proliferation financing is treated as part of money laundering throughout, and they set out the accountability model: the board and senior management own AML/CFT effectiveness, supported by the three lines of defence, with the control framework resourced for the bank’s wholesale and private client volumes.
On the risk-based approach, a merchant bank must assess its money laundering and terrorism financing risk not only for individual clients but on an enterprise-wide basis, consolidating across business units, products and channels, and including overseas branches and subsidiaries for a Singapore-incorporated bank. The enterprise-wide assessment must be approved by senior management, should combine qualitative and quantitative analysis, must incorporate the findings of Singapore’s national risk assessments, and should be reviewed at a sensible interval and when a material trigger occurs, such as a new client segment, product or jurisdiction.
The customer due diligence chapter is the longest, and it is where the shape of the sector comes through. It explains verification from reliable and independent sources, how to treat a person acting for the client, connected parties and beneficial owners, and it sets the widely used benchmark that a beneficial owner is generally a natural person who owns more than 25% of an entity, while making clear that anyone who controls the client through other means is a beneficial owner regardless of any percentage. It works through legal persons and arrangements, trusts and nominee holdings, the structures a merchant bank meets constantly, and it addresses non-face-to-face onboarding and the measures that counter impersonation. On timing, verification should generally be completed before or during the establishment of business relations, with relations suspended and, if necessary, terminated where it cannot be completed.
The enhanced due diligence chapter carries the sector’s heaviest load. It defines politically exposed persons in line with the FATF standard, confirms that domestic PEPs include at least Ministers and Members of Parliament, and draws the important distinction between source of wealth and source of funds: source of wealth is the origin of the client’s entire body of wealth and how it was acquired, while source of funds is the origin of the particular money involved. For private banking and wealth management for high-net-worth clients, the Guidelines point to sound practices, expect the bank to corroborate source of wealth against reliable independent sources, and require it to reject a prospective client where there are reasonable grounds to suspect the assets are proceeds of serious crime, including wilful foreign tax evasion, applying enhanced due diligence to the relationships that warrant it. Screening guidance requires all identified parties to be screened regardless of risk, sanctions hit to be frozen without delay, and a report to be filed no later than one business day after suspicion is established in sanctions cases.
The remaining chapters complete the picture. Reliance is distinguished from outsourcing, where the bank keeps responsibility for ongoing monitoring. Correspondent banking guidance sets out respondent due diligence, the treatment of payable through accounts and nested relationships, and the prohibition on dealing with shell banks. The wire transfer chapter explains the ordering, intermediary and beneficiary institution duties, the SGD 1,500 information split and the policies to hold, return or reject an incoming transfer that lacks required information, with the same discipline applied to digital token value transfers. Record keeping, suspicious transaction reporting, where the general standard is no later than five business days after suspicion is established, and the chapters on the compliance officer, audit and training complete the operational detail, and a dedicated section on proliferation financing directs a merchant bank to screen against the latest United Nations Security Council lists and to freeze without delay, with worked examples in the appendices.
MAS Notice PS N01 (Specified Payment Services)
PS N01 is the AML/CFT notice for holders of a payment services licence carrying on a specified payment service, such as account issuance or cross-border money transfer. A merchant bank is caught to the extent it provides such a service, and for that business it applies the risk-based approach, customer due diligence and wire transfer information rules the notice sets, alongside its Notice 1014 obligations for the rest of its business.
MAS Notice PSN 10 (Exempt Payment Service Providers)
PSN 10 applies to persons exempt under section 13(1) of the Payment Services Act, and it names a merchant bank licensed under the Banking Act as one of those exempt persons. Where a merchant bank provides a specified payment service as an exempt person, PSN 10 sets the AML/CFT requirements for that activity, closing the gap so that payment services a merchant bank offers outside a payment services licence are still covered.
MAS Notice PSM N01 (Precious Stones and Precious Metals)
PSM N01 applies to financial institutions carrying on regulated dealing in precious stones or precious metals or acting as an intermediary in such dealing. A merchant bank is caught only to the extent it does this, and for that dealing PSM N01 replaces the notice that would otherwise govern. Most merchant banks will not engage in it, but the notice is kept for those whose business extends into precious stones or precious metals dealing.
MAS Notice SFA 04 N19 (Cross Border Arrangements, Foreign Related Corporations)
Issued under the FSM Act, this notice applies to specified persons whose foreign related corporations serve customers cross-border under the Securities and Futures cross-border exemption. A merchant bank with a capital markets business is caught when it relies on that exemption, and it must keep the related corporation’s due diligence records for at least five years, maintain policies so that the corporation’s due diligence stays consistent with the bank’s own notice, monitor the exemption conditions and produce records to MAS.
MAS Notice SFA 04 N20 (Cross Border Arrangements, Foreign Offices)
The companion to N19 for a bank’s own foreign offices rather than related corporations. It applies where a merchant bank carries on qualifying capital markets business through a foreign branch under the cross-border foreign-offices exemption, and it imposes the same set: five-year record-keeping of the foreign office’s due diligence, controls to keep it consistent with the applicable notice, monitoring of the exemption conditions and provision of records to MAS.
MAS Notice FAA N25 (Financial Advisers, Cross-Border Foreign Offices)
Issued under the FSM Act, this notice applies to licensed and specified exempt financial advisers operating through their own foreign offices under the Financial Advisers cross-border exemption. Where a merchant bank carries on a financial advisory business through a foreign office, it applies the same cross-border set to that office: five-year record keeping, consistency controls, monitoring of the exemption conditions and records to MAS.
Which adjacent notice applies to a merchant bank and when?
Notice 1014 and its Guidelines govern a merchant bank’s business generally. The other notices apply only where the bank carries on the specific activity each one governs, as summarised below.
Notice | What it covers | When it applies to a merchant bank |
MAS Notice 1014 | The core AML/CFT rulebook for merchant banks | Always, as it is the sector specific AML, CFT and CPF notice |
Guidelines to Notice 1014 | The primary guidance on meeting Notice 1014 | Always, read together with the Notice |
Notice PS N01 | AML/CFT for specified payment services | Where the bank holds a payment services licence and provides such a service |
Notice PSN 10 | AML/CFT for exempt payment service providers | Where the bank provides a specified payment service as an exempt person (it is named as one) |
Notice PSM N01 | AML/CFT for dealing in precious stones or metals | Only where the bank carries on such dealing |
Notice SFA 04-N19 | Cross-border arrangements, foreign related corporations | Where the bank relies on the SF cross-border exemption via a related corporation |
Notice SFA 04-N20 | Cross-border arrangements, foreign offices | Where the bank runs qualifying capital markets business through a foreign office |
Notice FAA N25 | Financial advisers, cross-border foreign offices | Where the bank runs a financial advisory business through a foreign office |
Allied Laws Applicable to Merchant Banks in Singapore
These statutes are not primarily AML instruments, but each supports the regime: some license and govern merchant banks, others give investigators their powers, and others create the predicate offences and proliferation controls a bank screens against.
The Banking Act 1970
The statute that now constitutes the sector. Since 2025, a merchant bank is licensed under section 55S of the Banking Act, and the Act defines the merchant bank, sets what it may and may not do, including the bar on taking retail deposits, and gives MAS its supervisory and enforcement powers over the sector. Holding that licence is what brings a bank within Notice 1014.
The Banking Regulations 2001
Subsidiary legislation under the Banking Act setting out the detailed prudential and conduct requirements for banks, including merchant banks. It is not an AML instrument, but it forms the regulatory frame within which a merchant bank operates and around which its AML/CFT programme and record-keeping discipline are organised.
The Securities and Futures Act 2001
The Securities and Futures Act reaches a merchant bank through its capital markets business, since dealing in capital markets products, fund management and advising on corporate finance are regulated activities under it. It is the source of the cross-border exemptions that the SFA notices refer to, and it marks where a merchant bank’s securities business takes on its own set of obligations.
The Monetary Authority of Singapore Act 1970
MAS’s founding statute, constituting it as the central bank and integrated financial regulator. It is the source of MAS’s power to supervise merchant banks and to issue the AML/CFT notices, and it was this Act under which merchant banks were approved before their move to the Banking Act.
The Prevention of Corruption Act 1960
Singapore’s main anti-corruption law. Because corruption is a predicate offence for money laundering, the proceeds of offences under it are part of what a merchant bank looks for in PEP and source of funds checks, and its presumption on unexplained assets reinforces scrutiny of a client whose wealth does not add up.
The Criminal Procedure Code 2010
The procedural code granting investigators their production, search and seizure powers. On a production order, or an order not to deal with property in an account, a merchant bank must comply, preserve the records and avoid tipping off, which is how an AML investigation reaches into a client account.
The Strategic Goods (Control) Act 2002
Governs the transfer and brokering of strategic and dual-use goods, the proliferation financing nexus a merchant bank screens for. Its brokering controls drop away only where a person’s sole role is to provide financing or a financial service, which flags exposure once a bank does more than simply finance a transaction.
The Biological Agents and Toxins Act 2005
A weapon of mass destruction predicate law banning the non-peaceful use, production, acquisition or transfer of scheduled biological agents and toxins. For a merchant bank, it is among the offences its proliferation financing screening watches for where a client or transaction links to prohibited biological weapon activity.
The Chemical Weapons (Prohibition) Act 2000
Singapore’s domestic implementation of the Chemical Weapons Convention, criminalising the use, development, acquisition or transfer of chemical weapons, directly or through an intermediary. It sits behind the proliferation financing checks a merchant bank applies to its clients and counterparties.
Miscellaneous Laws and Regulations Applicable to Merchant Banks in Singapore
These national strategies, committee reports and typologies set the direction of Singapore’s regime and the public-private partnership a merchant bank operates within. They carry no binding force, but they direct how MAS supervises and supply many of the typologies a bank builds into its screening.
National Anti Money Laundering Strategy 2024
Singapore’s national AML blueprint, built on the pillars of Prevent, Detect and Enforce. A merchant bank sits within the Prevent pillar, where MAS commits to risk-based supervision of financial institutions and to the beneficial ownership transparency the bank relies on for due diligence on corporate clients.
National Strategy for Countering the Financing of Terrorism 2024
Refreshed in 2024 alongside the terrorism financing risk assessment, this five-step strategy spans coordinated risk identification, strong legal and sanctions frameworks, a robust regulatory regime, decisive enforcement and international partnership. It points the way a merchant bank’s terrorism financing controls are expected to move.
National Asset Recovery Strategy 2024
Singapore’s strategy to detect, deprive and deliver on the proceeds of crime, reporting billions recovered in recent years. A merchant bank is an operational partner, since client balances and holdings can be subject to production orders and restraint, and quick cooperation is expected.
Singapore Law Enforcement Strategy to Combat Money Laundering (October 2024)
The joint strategy of Singapore’s money laundering investigation agencies, setting focus areas and key actions and drawing on two-way information flows with financial institutions. It sketches the enforcement backdrop a merchant bank supports through its reporting and its handling of production orders.
Inter Ministerial Committee on Anti Money Laundering Report (October 2024)
The review follows a large money laundering case, with recommendations on curbing the misuse of corporate structures, the duties of gatekeepers and better information sharing. Its findings bear directly on a merchant bank whose clients are frequently corporate vehicles and holding structures, and they mark the firmer supervisory stance the sector now sits under.
Legal Persons: Misuse Typologies and Best Practices (2018)
A typologies paper on the ways companies and partnerships get misused, handing a bank the red flags for beneficial ownership and corporate account checks. It is particularly useful for a merchant bank that onboards holding companies, funds and special-purpose vehicles.
IRAS e-Tax Guide: Due Diligence Checks to Avoid Missing Trader Fraud
IRAS guidance on missing trader fraud, a trade-based fraud and laundering typology resting on the knowledge principle. It offers a merchant bank a practical set of red flags where clients trade or finance goods in ways that can mask the fraud.
International Standards Applicable to Merchant Banks in Singapore
Singapore’s regime is built to meet the FATF standards, and Notice 1014 tracks them closely. These instruments are the least sector-specific of all, yet they explain why the domestic rules look the way they do and hand a merchant bank the typologies and methods supervisors expect it to track.
The FATF Recommendations (updated June 2026)
They provide the international AML, CFT and CPF standards that underpin Singapore’s framework. Informs key merchant bank obligations, including risk-based customer due diligence, beneficial ownership, and PEPs, to correspondent banking, the wire transfer rule and targeted financial sanctions.
Mutual Evaluation Report of Singapore (May 2026)
The 2026 assessment by the FATF and the Asia/Pacific Group measures how effectively Singapore’s regime works in practice. It sets the supervisory expectations across the financial sector, including how Singapore oversees its banks for money laundering risk.
Guidance for a Risk Based Approach: The Banking Sector (October 2014)
The FATF’s risk-based-approach guidance written for banks, the most directly applicable international paper for this sector. It works through how a bank identifies and mitigates risk across customers, products and correspondent relationships, and it underpins the enterprise-wide approach Notice 1014 requires.
FATF Guidance on Politically Exposed Persons (2013)
Sets out how a bank should spot politically exposed persons and apply enhanced due diligence to them: sign-off from senior management, establishing source of wealth and funds, and closer ongoing monitoring, which is central to a private banking book.
Guidance on Beneficial Ownership of Legal Persons (March 2023)
Guidance following the revised FATF Recommendation on obtaining, verifying and maintaining beneficial ownership information. It informs how banks identify the natural persons who ultimately own or control corporate customers and distinguish legal ownership from beneficial ownership and control.
Best Practices on Beneficial Ownership for Legal Persons (October 2019)
A collection of country best practices for keeping beneficial ownership information adequate, accurate and up to date, backing a bank’s reliance on registries and multiple sources when it onboards corporate clients and traces their controllers.
Concealment of Beneficial Ownership (July 2018)
A joint FATF and Egmont Group typologies report on how criminals hide beneficial ownership through intermediaries and structures, giving a merchant bank the red flags to detect concealment behind a corporate client or a trust.
Risk Based Approach: Beneficial Ownership and Transparency of Legal Arrangements (March 2024)
Guidance focused on Recommendation 25 and trusts and similar arrangements, helping a bank assess and mitigate risk when a trust or legal arrangement is the client, a routine occurrence in private banking.
FATF Guidance on Counter Proliferation Financing (February 2018)
Guidance on carrying out the financial provisions of Security Council resolutions against weapons of mass destruction proliferation, under which a bank must screen and freeze without delay in line with Recommendation 7.
Guidance on Proliferation Financing Risk Assessment and Mitigation (June 2021)
Sets out how a bank assesses and mitigates proliferation financing risk following the amended Recommendations 1 and 2, which extended risk-assessment duties to proliferation financing.
Guidance on Digital Identity (March 2020)
Helps a bank decide whether a digital identity system is reliable and independent enough for customer due diligence under a risk-based approach, which matters for virtual private client onboarding.
Trade Based Money Laundering (private-sector handout)
A concise handout on trade-based money laundering techniques, relevant to a merchant bank that finances trade or banks trading companies, such as over- and under-invoicing and phantom shipments.
Money Laundering from Environmental Crime (July 2021)
A typologies report on laundering the proceeds of environmental crime, flagging the red flags a bank may see in commodity, resource and forestry linked clients and financing.
Artificial Intelligence and Deepfakes: Impacts on ML/TF/PF
A forward-looking FATF scan of how artificial intelligence and deepfakes threaten preventive systems, for example, synthetic identities defeating remote onboarding, alongside AI’s uses in monitoring and analysis.
Targeted Update on Stablecoins and Unhosted Wallets, Peer-to-Peer Transactions (March 2026)
A FATF paper examining the risks of stablecoins, unhosted wallets and peer-to-peer transfers. It applies where a merchant bank deals in digital tokens, or banks’ clients who do, and it informs the enhanced measures for token transfers that cross outside the regulated perimeter.
Summary of Key Instruments
The table below distils the instruments a merchant bank relies on most, what each type is, whom it binds, and the core obligation it places on the merchant bank. It is a fast reference point, not a substitute for the fuller sections above.
Instrument | Type | Who it binds | Core obligation for a merchant bank |
CDSA 1992 | Statute | All persons and banks | Report suspicions (STR), do not tip off, keep records |
Terrorism (Suppression of Financing) Act 2002 | Statute | All persons and banks | Freeze terrorist property; inform the authorities |
FSM Sanctions Regulations (DPRK, Iran) 2023 | Regulations | All financial institutions | Freeze designated persons’ assets; report to MAS |
MAS Notice 1014 | Notice (FSM Act s16) | All merchant banks | Risk-based CDD, EDD, correspondent, wire transfer, STR |
Guidelines to Notice 1014 | Guidelines | All merchant banks | How to meet the Notice; observance affects MAS assessment |
Banking Act 1970 | Statute | Merchant banks (s 55S) | Licenses and governs the sector |
Securities and Futures Act 2001 | Statute | Capital markets business | Governs a bank’s securities and fund activities |
MAS Act 1970 | Statute | MAS and banks | Source of MAS supervisory authority |
ML, TF and PF NRAs 2024 | Risk assessments | Whole system | Feed the bank’s enterprise-wide risk assessment |
FATF Recommendations | International standard | Global baseline | Underpin the domestic rules the bank follows |
Conclusion
Singapore’s AML, CFT and CPF framework for merchant banks is comprehensive and interconnected. The criminal laws establish the offences and suspicious transaction reporting duties, sanctions legislation requires the identification and freezing of designated assets, and MAS Notice 1014, together with its guidelines, translates these requirements into operational controls covering risk assessment, CDD and EDD, beneficial ownership identification, ongoing monitoring and suspicious transaction reporting.
These requirements operate within the broader supervisory framework of the Banking Act, the Securities and Futures Act for capital markets activities, and the FSM Act and related sanctions regulations. Merchant banks must therefore build their controls around the risk identified in Singapore’s national and sectoral risk assessments, particularly complex ownership structures, private wealth relationships and cross-border transactions. The strength of the framework lies in how these instruments work together to create a defensible, risk-based compliance system.
Frequently Asked Questions
MAS Notice 1014 is the anti-money laundering and countering the financing of terrorism notice for merchant banks, issued under section 16 of the Financial Services and Markets Act 2022. It is read together with the Guidelines to Notice 1014, which explain how to meet each requirement.
A merchant bank is a bank in Singapore licensed under section 55S of the Banking Act 1970. They carry on wholesale and investment banking, corporate finance, capital markets and often private banking and wealth management, but they do not take retail deposits from the general public in the way a full bank does.
From 2025, merchant banks moved from approval under the Monetary Authority of Singapore Act to a licence under section 55S of the Banking Act 1970, and MAS reissued their AML/CFT notice as Notice 1014 with effect from 30 June 2025. The change consolidated merchant bank regulation within the Banking Act framework.
Singapore’s 2024 money laundering assessment rates the banking sector, including wealth management, as the highest money laundering risk in the country, driven by high-net-worth and PEP clients, complex structures and cross-border flows. A merchant bank sits within that sector, so its private banking and cross-border business carry the sharpest exposure.
Whenever it has reasonable grounds to suspect money laundering or terrorism financing. The report is made to the Suspicious Transaction Reporting Office, as a rule within five business days of forming the suspicion, and within one business day in sanctions cases. Our guide to STR red flags explains common triggers.
Yes, according to what the bank does. PS N01 and PSN 10 apply where it provides payment services, PSM N01 where it deals in precious stones or metals, and SFA 04-N19, SFA 04-N20 and FAA N25 where it relies on the cross-border arrangements those notices govern. Notice 1014 covers the rest of its business.
About the Author
Pathik Shah
FCA, CAMS, CISA, CS, DISA (ICAI), FAFP (ICAI)
Pathik is a Chartered Accountant with more than 26 years of experience in governance, risk, and compliance. He helps companies with end-to-end AML compliance services, from conducting Enterprise- Wide Risk Assessments to implementing the robust AML Compliance framework. He has played a pivotal role as a functional expert in developing and implementing RegTech solutions for streamlined compliance.
