Navigating Compliance in a Rapidly Evolving Payments Landscape

Navigating Compliance in a Rapidly Evolving Payments Landscape

Part 2: Operational Gaps – Lessons from Recent Penalties 

The Monetary Authority of Singapore's (MAS) recent enforcement actions have exposed critical operational failings across multiple financial institutions, offering stark lessons for the payments sector. These aren't minor infractions – they represent fundamental breakdowns in compliance that carry serious business consequences.

What Went Wrong?

The penalised institutions displayed a troubling pattern of basic compliance failures. Some failed to collect essential customer data such as residential addresses, whilst others neglected to verify beneficial ownership or confirm the authority of customer representatives. Perhaps most concerning were cases where customers weren't screened at all, and wire transfer originator information was simply omitted.

Additional operational gaps included failing to verify customer identities using independent sources, neglecting beneficial ownership inquiries, omitting pre-transfer screenings, and lacking ongoing risk screening protocols.

Systemic Weaknesses Exposed

These lapses reveal systemic weaknesses in customer due diligence (CDD), transaction monitoring, and data transparency. The absence of robust controls doesn't just violate MAS Notice PSN01 – it exposes institutions to reputational damage and operational disruptions that can take years to repair.

The Solution: Comprehensive Compliance Operations

Institutions must implement end-to-end compliance processes covering enhanced onboarding procedures, real-time transaction screening, and regular compliance audits. Technology-driven solutions offer practical ways to bridge these gaps: AI-based risk scoring can analyse patterns more accurately than manual reviews, automated KYC systems streamline verification whilst maintaining rigorous standards, and continuous monitoring platforms provide ongoing surveillance of customer activity.

The message is clear: compliance isn't a cost centre but a foundation for sustainable operations. Getting the basics right may not be glamorous work, but in today's regulatory environment, it's non-negotiable.