Best Practices for Managing Risks in Wealth Management

This document is a best practices paper produced by the ACIP Legal Persons and Arrangements Working Group, aimed at addressing risks in the wealth management (WM) sector in Singapore. It outlines the inherent risks associated with wealth management structures, including issues related to money laundering and terrorist financing (ML/TF). The paper emphasizes the complexity of WM clients' needs, which often involve multiple jurisdictions and sophisticated asset management strategies. It identifies various risk areas, such as the use of non-face-to-face onboarding processes and the challenges posed by clients' nationality and residence. The document also discusses the engagement with External Asset Managers (EAMs) and Financial Intermediaries (FIMs), highlighting the necessity for robust risk identification and mitigation practices. The paper consolidates industry knowledge and shares case studies to provide clarity on the risks faced by financial institutions and suggests best practices for managing these risks effectively.