National Risk Assessment of Money Laundering and Terrorist Financing (ML/TF) – Excluded Persons under the Securities Investment Business Law

Summary

This document is CIMA's National Risk Assessment (NRA) report focused specifically on "Excluded Persons" under the Securities Investment Business Law (SIBL-EPs) - a category of securities business operators that, prior to mid-2019, were exempt from SIBL licensing. It explains the background (2015 NRA and 2017 CFATF Mutual Evaluation findings that this sub-sector was under-supervised), the methodology used to assess ML/TF risk (data collected from 2,372 SIBL-EPs on customers, products/services, delivery channels and geographic exposure), and the resulting risk ratings, concluding an overall "medium-high" inherent ML/TF risk for the sub-sector.

Regulatory Response

• SIBL amendment: In June 2019 the SIBL was amended to bring SIBL-EPs under CIMA's authorisation and supervisory regime, with the SIBL-EP exemption ceasing to exist from 15 January 2020.
• Re-registration requirement: Entities previously operating as SIBL-EPs were required to re-register with CIMA and submit ownership/control information by that date, after which they became "registered persons" subject to ongoing AML/CFT supervision like other CIMA-regulated financial service providers.
• Mitigating measures already undertaken: A 2019 AML/CFT questionnaire sent to all SIBL-EPs, mandatory annual declaration forms, and external AML audits required for 88 higher-risk entities under section 17 of the SIBL.

This document is primarily an informational risk assessment rather than a new rule, but it references and summarises binding transitional obligations (re-registration, information provision, annual declarations) that applied to the former SIBL-EP population during the 2019-2020 transition to CIMA's registered persons regime.

Key obligations

• Entities previously operating as SIBL-EPs were required to re-register with CIMA and provide information on their ownership and control structure by the 15 January 2020 deadline.
• Re-registering entities must provide information sufficient for CIMA to assess the fitness and propriety of shareholders, beneficial owners, directors and officers.
• From 15 January 2020 onwards, former SIBL-EPs (now "registered persons") are subject to authorisation and AML/CFT supervisory engagement similar to other CIMA-regulated financial service providers.
• Each SIBL-EP was required to file an annual declaration form providing information on ownership, control structure and business activities conducted.
• Certain SIBL-EPs (88 identified based on risk criteria) were required to conduct an external AML audit under Section 17 of the SIBL and remediate findings identified.

Applies to

Excluded Persons under the Securities Investment Business Law (SIBL-EPs), registered persons (post-transition), securities investment business licensees/registrants regulated by CIMA

Deadlines

• January 15, 2020: Deadline by which entities operating as SIBL-EPs were required to re-register with CIMA and provide ownership/control information; after this date the SIBL-EP category ceased to exist and such entities became 'registered persons' subject to CIMA supervision.