Measures Proposed to Enhance Singapore’s Anti-Money Laundering Controls

To strengthen the anti-money laundering (AML) controls in Singapore, and in line with the recommendations of the Financial Action Task Force (FATF) and comments garnered from a public consultation, a series of measures have been proposed to refine Singapore's AML framework.

These measures encompass the introduction of new legislation, the Corporate Service Providers Bill (the CSP Bill), revisions to the Accounting and Corporate Regulatory Authority (ACRA) Act of 2004 in Singapore (the ACRA Act), and proposed amendments to the Companies Act of 1967 in Singapore (the Companies Act).

Additionally, in light of the recent billion-dollar money laundering case that took place in Singapore, a new inter-ministerial committee will be formed to review Singapore’s AML regime to ensure that the country’s AML framework remains current in combatting increasingly sophisticated financial crimes (the Inter-Ministerial Committee).

CSP BILL

The CSP Bill has been proposed by ACRA to improve Singapore’s compliance with the FATF’s recommendations relating to, among other things, combatting money laundering and terrorism financing. The CSP Bill will

• require all companies or individuals providing corporate secretarial services in and from Singapore to register with ACRA as a CSP regardless of whether they need to transact with ACRA;
• require all CSPs to ensure that the individuals they appoint to act as nominee directors are fit and proper and satisfy prescribed training requirements should they hold more than a legally prescribed number of nominee directorships by way of business (unless they are qualified persons [1]);
• introduce a fine not exceeding SGD 100,000 on directors, owners, or partners of CSPs for breaches of anti-money laundering/countering the financing of terrorism (AML/CFT) obligations;
• provide for AML/CFT obligations to also cover financing of proliferation of weapons of mass destruction, where CSPs are required to perform screening against the relevant regulations under the United Nations Act 2001 of Singapore and are not to conduct business with individuals or entities from countries that have been sanctioned; and
• require CSPs to implement groupwide AML/CFT policies for their branches and subsidiaries in Singapore or elsewhere to have a group policy for mitigating their AML/CFT risks.

The above are nonexhaustive examples of provisions to be part of the CSP Bill and are still subject to finalization by ACRA. It is envisaged that the CSP Bill will be tabled in the Parliament of Singapore in early 2024.

REVISIONS TO ACRA ACT

To ensure that the financial penalties are effective, proportionate, and deterrent (taking into consideration sanctions imposed on other service providers in Singapore and on CSPs in other jurisdictions), revisions have been proposed to the ACRA Act, including increasing the maximum financial penalty from SGD 25,000 per breach [2] to SGD 50,000 per breach for registered filing agents (RFAs) that are found to have breached the terms and conditions of their registration and imposing an equivalent financial penalty for CSPs.

AMENDMENTS TO COMPANIES ACT

To increase transparency, the Companies Act will be amended to require nominee directors and shareholders to disclose their nominee status and identify their nominators to ACRA. [3] Additionally, ACRA will maintain this information and make the nominee status of the director or shareholder publicly available. This proposed change will be in line with the recommendations of the FATF.

INTER-MINISTERIAL COMMITTEE

The Inter-Ministerial Committee will be chaired by Minister Indranee Rajah and composed of political office holders from the Monetary Authority of Singapore, the Ministry of Home Affairs, the Ministry of Law, the Ministry of Manpower, and the Ministry of Trade and Industry. It is intended for the Inter-Ministerial Committee to focus on the following areas:

• Measures to prevent corporate structures from being abused by money launderers
• Enhancement of controls by financial institutions and effective collaboration with each other and authorities to guard against and flag suspicious transactions
• Better safeguards against money laundering risks by other entities such as corporate service providers and real estate agents
• Centralization and strengthening of monitoring and sense-making capabilities across government agencies to better detect suspicious activities

These proposals will ensure that Singapore’s AML/CFT safeguards remain up to date as financial crimes in Singapore become more sophisticated and enhance the effectiveness of its regulatory framework for CSPs by enforcing individual accountability.

While the measures outlined above are designed to uphold Singapore’s standing as a global financial center, it is essential to establish a delicate balance. This balance should not only safeguard against excessive compliance costs that might hinder the seamless operation of legitimate business activities and dissuade foreign investments, but also provide a framework that encourages service providers, including CSPs, to diligently adhere to the AML processes.