Reliance on third parties
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PSN02 permits a firm to rely on a third party to perform the identification, verification and purpose elements of CDD. Three conditions apply. The third party must itself be subject to and supervised for AML/CFT requirements consistent with the FATF standard. The firm must obtain the CDD information immediately and must be able to obtain the underlying documents on request without delay. The firm remains responsible for the outcome.1 Ongoing monitoring may not be outsourced under the reliance provision, though it may be outsourced as a service under the Guidelines on Outsourcing (Chapter VII). The firm must document the assessment of the third party and review it periodically.
Reliance is most relevant in two configurations. The first is intra-group: a Singapore MPI relying on CDD performed by its Zug affiliate on a shared customer. Here the question is whether the Zug affiliate, as a member of a Swiss self-regulatory organisation under the Anti-Money Laundering Act (AMLA, GwG), satisfies the "subject to and supervised" test. In my view it does, since SRO supervision is recognised by the FATF as adequate supervision of Swiss financial intermediaries, but the Singapore firm must document that view and must still screen and monitor on its own account. Chapter VIII develops the point. The second configuration is reliance on an introducing broker or a licensed trust company that brings a client structure. The Singapore firm must not accept the introducer's summary. It must hold the identification data itself and must be able to produce the documents on inspection.
| CDD element | Standard (PSN02 para. 6) | Simplified (para. 7) | Enhanced (para. 8) |
|---|---|---|---|
| Identify and verify customer | Required before relationship or transaction | Required, reduced depth | Required |
| Beneficial owner | Identify, reasonable verification | Identify, may rely on public register for low-risk entities | Identify and verify, with structure chart |
| Purpose and nature | Required | May be inferred from product | Documented in detail |
| Source of funds | Where risk warrants | Not usually | Required |
| Source of wealth | Not usually | Not required | Required |
| Senior management approval | Not required | Not required | Required to open and to continue |
| Review frequency | 2–3 years, trigger-based | Longer cycle | Annual and trigger-based |
| Screening | Onboarding and periodic | Onboarding and periodic | Onboarding, periodic, enhanced adverse media |
Notes
- MAS Notice PSN02, para. 9 (performance of measures by third parties). ↩
For general information only. This article does not constitute legal or tax advice, does not replace advice on an individual case and creates no lawyer-client relationship. It reflects the legal position as of October 2026.