Common MAS Licensing & Operational Pitfalls (and How to Avoid Them)

MAS Is Pragmatic — but Unforgiving of Weak Execution

The Monetary Authority of Singapore is widely regarded as one of the most sophisticated and commercially pragmatic regulators in the world.

However, MAS is also:

• Highly data-driven
• Detail-oriented
• Consistent in enforcement
• Increasingly focused on operational substance and controls

Many fund managers fail not because their strategy is weak — but because their licensing preparation, operational setup, or ongoing controls fall short.

This article outlines the most common MAS licensing and operational pitfalls, and how to avoid them.

1. Choosing the Wrong Licence Type (RFMC vs LFMC)

The Pitfall

Managers often apply for:

• an RFMC when they actually need an LFMC (A/I), or an LFMC when their business model does not justify it

This leads to:

• Delays
• Follow-up questions
• Forced restructuring
• Re-application

How to Avoid It

Before applying, clearly define:

• Target investor base
• Expected AUM growth
• Fund structures
• Distribution strategy
• 3–5 year roadmap

If you expect to exceed S$250m AUM or 30 investors, plan for LFMC from day one.

2. Weak or Artificial “Substance” in Singapore

The Pitfall

MAS increasingly challenges firms that:

• Rely heavily on overseas teams
• Have nominal local staff
• Lack real decision-making in Singapore

“Mailbox” or “light-touch” setups are no longer acceptable.

How to Avoid It

Ensure:

• At least two senior decision-makers
• One resident director
• Investment professionals based in Singapore
• Local oversight of risk and compliance
• Real office presence

MAS wants real operational substance, not formality.

3. Underestimating Post-License Operational Readiness

The Pitfall

Firms assume:

“Once we’re licensed, we’ll figure operations out later.”

This leads to:

• Delayed go-live
• Regulatory scrutiny
• Control gaps
• Higher compliance risk

How to Avoid It

Before approval, ensure:

• Technology stack selected
• AML onboarding workflows tested
• Portfolio systems ready
• Reporting templates built
• Compliance monitoring plan operational

MAS expects firms to be operationally ready immediately after licensing.

4. Inadequate Risk Management Framework

The Pitfall

Common mistakes include:

• Generic risk policies copied from templates
• No real risk monitoring tools
• No escalation or breach handling
• No board-level risk visibility

How to Avoid It

Implement:

• Live risk dashboards
• Exposure and concentration monitoring
• Stress testing (especially for alternatives)
• Clear escalation workflows
• Regular risk reporting to management

MAS assesses how risk is managed in practice, not how it’s described on paper.

5. Treating AML/CFT as a Compliance Checkbox

The Pitfall

MAS enforcement actions frequently cite:

• Incomplete KYC
• Weak source-of-wealth checks
• No ongoing monitoring
• Over-reliance on outsourced AML providers

How to Avoid It

Ensure:

• Digital onboarding with audit trails
• PEP/sanctions screening
• Risk scoring and periodic reviews
• Clear STR escalation workflows
• Internal oversight of outsourced AML

AML/CFT is one of MAS’s highest enforcement priorities.

6. Poor Data Quality & Fragmented Systems

The Pitfall

Using:

• Multiple disconnected tools
• Manual spreadsheets
• Inconsistent data sources

Results in:

• Reporting errors
• Risk blind spots
• Operational inefficiency
• Poor MAS responsiveness

How to Avoid It

Build a single source of truth with:

• ‍Portfolio management system
• Multi-custodian aggregation
• Automated reconciliation
• Integrated risk and reporting

MAS expects accurate, consistent, and timely data.

7. Weak Governance & Board Oversight

The Pitfall

Typical issues include:

• Infrequent board meetings
• Poor documentation of decisions
• No compliance or risk reporting to the board
• Passive directors

How to Avoid It

Implement:

• Regular board & committee meetings
• Structured agendas and minutes
• Risk and compliance reporting
• Clear accountability

MAS views governance as a core control mechanism, not a formality.

8. Inadequate Compliance Monitoring

The Pitfall

Firms often:

• Rely solely on policies
• Lack active compliance testing
• Fail to document reviews
• Miss regulatory changes

How to Avoid It

Establish:

• A compliance monitoring plan
• Regular testing and reviews
• Registers (conflicts, complaints, breaches)
• Regulatory change tracking
• Evidence of follow-up actions

MAS expects ongoing, demonstrable compliance activity.

9. Weak IT Governance & Cybersecurity

The Pitfall

MAS has flagged firms for:

• Weak access controls
• No disaster recovery testing
• Poor vendor oversight
• No cyber incident response plan

How to Avoid It

Implement:

• IT governance framework
• Access management & segregation
• Data encryption and backups
• DR and BCP testing
• Vendor due diligence

Technology risk is treated as enterprise risk by MAS.

10. Delayed or Inaccurate Regulatory Reporting

The Pitfall

Common issues:

• Manual reporting
• Data inconsistencies
• Late submissions
• Poor response to MAS queries

How to Avoid It

Ensure:

• Reporting workflows are automated
• Data is reconciled
• Templates are pre-built
• Responsibilities are clearly assigned

MAS expects firms to respond quickly and accurately to information requests.

11. Scaling Without Re-Assessing the Operating Model

The Pitfall

Firms grow AUM or complexity without upgrading:

• Systems
• Controls
• Staffing
• Governance

This creates regulatory exposure.

How to Avoid It

Regularly reassess:

• Licence suitability (RFMC → LFMC)
• Risk and compliance capacity
• Technology scalability
• Governance structure

MAS expects operating models to evolve with the business.

12. How Reluna Helps Firms Avoid These Pitfalls

Reluna is designed specifically to address the most common MAS licensing and operational failure points.

Reluna helps firms:

• Build operational readiness pre-license
• Implement real risk & compliance workflows
• Centralise portfolio and investor data
• Automate reconciliation and reporting
• Strengthen AML onboarding & monitoring
• Maintain governance evidence and audit trails
• Scale smoothly from RFMC to LFMC

Why this matters

Firms using integrated platforms are:

• Faster to go live
• More resilient under MAS supervision
• Less exposed to operational errors
• Better prepared for audits and inspections

Reluna provides a MAS-aligned operating backbone, not just software.

MAS Success Is About Execution, Not Just Approval

MAS licensing is achievable — but sustainable success depends on:

• Correct licence selection
• Real substance
• Robust operations
• Strong governance
• Integrated technology

Avoiding the pitfalls above can mean the difference between:

• smooth regulatory engagement and costly remediation or enforcement

👉 Request a Reluna demo to see how we help MAS-regulated fund managers avoid common pitfalls and operate with confidence from day one.