Anti-money laundering regulations’ financial impact on advisors

In a perfect world, you could take every client at their word. Every transaction involved in your practice, without any attention to detail, would be guaranteed to be spotless. It goes without saying that we do not live in that world, and it results in changes that affect advisors.

In Singapore, part of the way advisors are held accountable is through a balanced approach to remuneration, introduced in 2015. As it relates to anti-money laundering regulations, if an advisor fails to include certain required info on a policy, it would be considered a non-disclosure, resulting in an investigation about why that item was not declared and a lower rating on the advisor’s Balanced Scorecard.

Before the implementation of the scorecard, said Chee Hong Gan, ChFC, CLU, a nine-year MDRT member from Singapore, advisors were paid only based on the business they generated, not the quality of the advice and fact-finding. Now, the company makes calls to clients to ask about their experience with their advisor and ensure the client’s input matches what was done and reported by the advisor. A low scorecard means part of the advisor’s payment is taken away.

If a client insists on not declaring a piece of information, Gan said, advisors can make a note to indicate that the client was asked and they declined.

“It doesn’t mean the end of the business,” he said. “You can still protect your interests and say this was done and the client still wants to proceed with the business.” At that point, the company will take over to request the necessary disclosures. If the client still believes it is not necessary even when receiving an official letter, business would likely have to stop.

Read more in the Round the Table article “Combating money laundering.”

Written by Matt Pais, MDRT Content Specialist