On 26 June 2025, the Monetary Authority of Singapore issued Circular No. IID 04/2025, Governance and Management of Variable Capital Companies (VCCs), addressed to chief executive officers of fund management companies holding a Capital Markets Services licence and to institutions exempt from that licence. The circular set out the findings of a thematic review MAS carried out in 2024, covering the roughly 1,200 VCCs registered in Singapore at the time and the approximately 600 financial institutions that manage them.

Much of the coverage of that circular has focused on board composition and director appointment. Less attention has gone to a section of the circular that carries just as much practical weight for VCC managers and their directors: the anti-money laundering and countering the financing of terrorism observations. This article works through what MAS actually found on the AML/CFT front, what the underlying legal obligations are, and what VCC managers, directors, and their eligible financial institutions need to do differently.

The AML/CFT framework a VCC sits inside

A Variable Capital Company is a corporate structure created under the Variable Capital Companies Act 2018 to hold one or more collective investment schemes. Because a VCC is, by definition, a collective investment scheme in corporate form under section 15(1) of the Act, it is treated for AML/CFT purposes as a financial institution in its own right, not merely as an administrative shell.

The obligations that follow from this are specific and are anchored in two instruments:

  • MAS Notice VCC-N01, issued under section 84 of the Variable Capital Companies Act 2018 and in force since 14 January 2020, which sets out the substantive AML/CFT requirements a VCC must meet, including customer due diligence, screening, and the appointment of an eligible financial institution (EFI) to carry out those checks on the VCC’s behalf.
  • The Variable Capital Companies (Sanctions and Freezing of Assets of Persons) Regulations 2020, which impose targeted financial sanctions screening obligations.

Under section 46 of the Variable Capital Companies Act 2018, a VCC must have a manager regulated by MAS to operate the collective investment scheme, and under section 48(1)(b), at least one director of the VCC must be a director or a qualified representative of that manager. Paragraph 4.1 of MAS Notice VCC-N01 then requires the VCC to appoint an EFI, typically the VCC manager itself or a related entity, to conduct the customer due diligence and ongoing monitoring measures that allow the VCC to meet its AML/CFT obligations. Critically, appointing an EFI does not transfer legal responsibility: the circular is explicit that the VCC itself remains responsible for its AML/CFT compliance at all times.

What the 2024 thematic review found

MAS’ 2024 review drew on lodgement data filed by VCCs and a survey of VCC managers covering investment focus, asset size, governance practices, and management approach. The circular records that a majority of VCCs and their managers met the key regulatory requirements. It also flags several specific gaps that MAS expects managers to close.

On AML/CFT specifically, the circular’s observations centre on three areas:

Director oversight of the EFI. MAS states there should be sufficient oversight exercised by a VCC’s directors over the EFI it has appointed, to ensure the AML/CFT frameworks and controls the EFI applies are robust and effective for mitigating money laundering and terrorism financing risk. In practice, this means a VCC board cannot treat the EFI appointment as a box-ticking exercise and move on. Directors are expected to be able to demonstrate active oversight, not simply delegation.

Core compliance mechanics. The circular reiterates that VCCs must identify and verify the identities of their customers and beneficial owners, maintain an accurate and up-to-date register of beneficial owners, perform screening, and conduct enhanced due diligence on higher-risk customers. VCCs must also be able to produce beneficial ownership information to MAS and law enforcement agencies in a timely manner on request. These are not new obligations, but the review found enough variance in how consistently they were being met that MAS chose to restate them directly to CEOs.

Training. The circular directs that EFIs and directors of VCCs should receive appropriate and regular training on money laundering and terrorism financing risk management, and points managers back to the observations MAS raised in an earlier sector-wide thematic review, Circular No. AMLD 06/2022-1 of September 2022, as a reminder that these are long-running supervisory priorities rather than a one-off exercise.

The circular also touches on adjacent governance findings that reinforce the AML/CFT picture: a small number of VCCs lacked the independent custody arrangements required under regulation 13B(1)(c) of the Securities and Futures (Licensing of Business) Regulations for the asset types they held, some VCCs had appointed additional directors without properly licensing them as representatives where those directors carried out regulated activities, and MAS observed VCC managers running VCCs that held no assets or investors for more than a year without winding them down. None of these are AML/CFT findings in the strict sense, but they speak to the same underlying concern: governance that exists on paper but is not being actively exercised.

What this means for VCC boards in practice

For a VCC board, the circular translates into a concrete set of questions directors should be asking at their next meeting, and documenting the answers to:

Is the EFI appointment properly evidenced and actively overseen?

An EFI appointment letter alone is not oversight. Boards should expect to see periodic reporting from the EFI on customer due diligence completed, screening hits investigated, and enhanced due diligence carried out on higher-risk relationships, and should be recording board-level review of that reporting in minutes.

Is the beneficial owner register current?

Because a VCC must be able to produce accurate beneficial ownership information to MAS or law enforcement on request, the register cannot be treated as a one-time incorporation task. It needs a defined update cadence, particularly where the VCC’s investor base changes or where sub-funds are added.

Have directors and the EFI had recent AML/CFT training?

The circular expects this to be regular, not a one-off induction. Boards should be able to point to a training record covering the current year for every director and for relevant EFI staff.

Are custody arrangements in place where required?

Unless the VCC’s holdings are private equity or venture capital investments offered only to accredited or institutional investors, MAS expects an independent custody arrangement. This should be checked at the point new asset classes are added to a sub-fund, not only at incorporation.

Is the VCC still substantively active?

A VCC that has held no assets and no investors for over a year is now a specific supervisory flag. Managers running multiple VCCs should periodically review dormant structures and wind down those that no longer serve a purpose, rather than leaving them in the register.

What happens if the gaps are not closed

The circular states that MAS is conducting supervisory reviews of specific managers based on the survey findings and engaging them to determine whether supervisory interventions or regulatory action are warranted. More broadly, it puts every VCC manager on notice to review its own management of its VCCs against the observations in the circular and to take appropriate remedial steps, including putting formal custody arrangements in place where needed, ensuring individuals carrying out regulated activities for a VCC are properly appointed as representatives of the manager, and winding down VCCs assessed as dormant and unviable. Where the VCC manager is itself acting as the EFI, it must ensure the required AML/CFT measures are actually being carried out on the VCC’s behalf, not merely documented as a matter of form.

For managers running several VCCs or umbrella structures with multiple sub-funds, this is a reasonable moment to run an internal gap assessment against each of the points above before MAS’ supervisory engagement reaches your structure, rather than after.

Where this fits with the rest of your VCC compliance calendar

AML/CFT oversight does not sit in isolation from the rest of a VCC’s governance and filing obligations. If you are setting up a new VCC or adding a sub-fund, our guide on VCC sub-fund compliance and MAS governance updates covers the ACRA registration mechanics alongside the governance expectations that accompany Circular IID 04/2025. For the corporate secretarial obligations that shift when your client is a fund rather than an operating company, see our article on corporate secretarial duties for a VCC or family office SPV.

Beneficial ownership record-keeping under MAS Notice VCC-N01 also has a parallel obligation under the Corporate Service Providers Act 2024 for the wider register of registrable controllers; our piece on the register of registrable controllers and beneficial owner register under the CSP Act 2024 sets out where the two regimes overlap and where they diverge. For a broader look at AML/CFT expectations that apply to Singapore companies generally, not just VCCs, see our guide on AML and CFT compliance for Singapore companies.

If you are still weighing whether a VCC is the right structure for a new fund, our comparison of VCC against the Cayman Islands SPC sets out how the governance and compliance burden compares across jurisdictions. For the statutory text of the Variable Capital Companies Act 2018 itself, including the sections on directors and manager appointment referenced above, consult Variable Capital Companies Act, and for the circular and notice discussed in this article, the primary sources are published directly by the Monetary Authority of Singapore.

To speak with the team at Raffles Corporate Services, you can email [email protected] or call, SMS, or WhatsApp +65 8501 7133. We are happy to assist with any queries.

The Editorial Team, Raffles Corporate Services