Annual Compliance Review Under MAS Guidelines: What It Should Cover

For fund managers and other financial institutions licensed by the Monetary Authority of Singapore (MAS), compliance is not a once-off box to tick at the point of licensing. MAS expects licensed entities to maintain a compliance function that continuously monitors regulatory obligations and periodically reviews the adequacy of internal policies and procedures. In practice, most firms meet this expectation through a structured annual compliance review – a systematic look back over the year to confirm the firm is still operating within its licence conditions and regulatory obligations, and to catch gaps before MAS does.

A well-run annual review is not simply a re-read of the compliance manual. It should be a documented, evidence-based exercise covering the areas below.

1. Licensing Conditions and Capital Requirements

Confirm the firm continues to meet the base capital and financial resources requirements attached to its licence type – for example, S$250,000 for an Accredited/Institutional Licensed Fund Management Company (A/I LFMC), or the S$1,000,000 threshold applicable to Retail LFMCs. Review any licence conditions imposed by MAS specifically, including investor-type restrictions and professional indemnity insurance (PII) disclosure obligations, and confirm these are still being met and disclosed correctly.

2. AML/CFT Programme Effectiveness

Review the effectiveness of the firm’s AML/CFT policies and procedures, including customer due diligence records, ongoing monitoring, sanctions screening coverage, and suspicious transaction report (STR) filing history. Confirm STRs were filed without delay (as soon as practicable) upon suspicion being established, and that immediate reporting and freezing actions were taken where sanctioned or designated parties were involved. Screening against the UN and MAS consolidated lists should be confirmed as mandatory and current; screening against other lists such as OFAC, EU, or UK OFSI should be reviewed based on the firm’s actual investor base and counterparty exposure.

3. Fit and Proper Reassessment

MAS’s fit and proper criteria apply on an ongoing basis, not just at the point a director, CEO, or representative is appointed. An annual review should reconfirm that all directors, key personnel, and registered Relevant Professionals or representatives continue to meet the fit and proper standard, and that any changes in circumstance (such as new directorships elsewhere, disciplinary findings, or financial difficulties) have been assessed and, where required, disclosed to MAS.

4. Outsourcing Arrangements Register

Where the firm outsources functions – compliance, fund administration, IT, or other operational activities – the annual review should confirm the outsourcing register is current, that risk assessments for each arrangement have been refreshed, and that service level agreements and audit rights remain adequate.

5. Business Continuity Plan (BCP) Testing

Confirm the firm’s BCP has been tested within the review period, that test results and any remediation actions are documented, and that the plan reflects the firm’s current operating structure, staff, and systems – not an outdated version from a prior year.

6. Regulatory Returns Reconciliation

Cross-check that all periodic regulatory returns submitted to MAS during the year reconcile with the firm’s internal records and financial statements, and that submission deadlines were consistently met.

7. Client Money and Asset Segregation

Where applicable, confirm client money and assets have been correctly segregated throughout the year, with no unresolved reconciliation breaks.

8. PDPA Compliance

Review the firm’s personal data protection practices, including its data protection policy, Data Protection Officer appointment, and any updates needed to reflect new PDPC guidance including, most recently, the PDPC’s finalised Advisory Guidelines on the Use of Personal Data in Generative AI.

Training Records

Confirm AML/CFT and PDPA training has been delivered to relevant staff during the year, and that attendance and content are documented – this is frequently one of the first items MAS inspectors ask to see.

Why This Matters Beyond the Paperwork

A thorough annual compliance review does more than generate a file for the drawer. It gives the board and senior management a clear, evidenced picture of the firm’s compliance health, surfaces issues while they are still manageable, and puts the firm in a materially stronger position if MAS does initiate a supervisory inspection. Firms that only assess their compliance framework once an inspection notice arrives are, by definition, assessing it too late to fix anything quietly.

Conclusion

An annual compliance review should be treated as a core governance activity, not a compliance-team-only exercise. Scoping it properly and resourcing it with the right expertise is often the difference between a review that genuinely reduces regulatory risk and one that simply confirms what the firm already suspected.

Alder’s outsourced compliance team runs structured annual compliance review programmes for Singapore-licensed fund managers, scaled to licence type, size, and regulatory calendar. Contact Alder to scope your firm’s next annual compliance review.