Singapore Corporate Service Providers Act Now in Effect as of 9 June

The Accounting and Corporate Regulatory Authority of Singapore announced on 9 May 2025 that the Corporate Service Providers Act 2024 (CSP Act) and the Corporate Service Provider Regulations 2025 (CSP Regulations), providing further details on the requirements under the act, will enter into force on 9 June 2025.

The CSP Act, together with the Companies and Limited Liability Partnerships (Miscellaneous Amendments) Act, were passed by the Parliament of Singapore on 2 July 2024 to enhance the regulatory regime for corporate service providers (CSPs) and the transparency of companies and limited liability partnerships and are intended to strengthen Singapore’s anti-money laundering regime.

KEY PROPOSALS

• All business entities carrying on a business of providing corporate services in and from Singapore must register as registered CSPs with ACRA.
• All registered CSPs must comply with the obligations under the CSP Act and CSP Regulations, including those on anti-money laundering, countering the financing of proliferation of weapons of mass destruction and countering the financing of terrorism (together, AML/CPF/CFT obligations).
• Persons acting as nominee directors by way of business will need to be arranged by registered CSPs after they have been assessed as fit and proper by the registered CSPs.
• Fines will be introduced for breaches of AML/CPF/CFT obligations by registered CSPs and their senior management.

KEY LEGISLATIVE CHANGES

Registration of CSPs

The CSP Act requires all business entities that carry on a business in Singapore of providing any corporate service to be registered with ACRA as registered CSPs even if they do not file transactions on behalf of their customers.

These corporate services include forming of corporations on behalf of other persons, acting or arranging for other persons to act as directors or nominee shareholders, providing registered office or business addresses, carrying out designated activities in relation to the provision of accounting services, and carrying out transactions with ACRA on behalf of other persons or as a secretary of a company by way of business.

Failure to comply with the registration requirement is an offence and may result on conviction in a fine not exceeding S$50,000 or imprisonment for a term not exceeding two years, or both, and, in the case of a continuing offence, a further fine not exceeding S$2,500 for every day or part of a day during which the offence continues after conviction.

AML/CPF/CFT Obligations

Registered CSPs are required under the CSP Act to comply with obligations relating to the financing of the proliferation of weapons of mass destruction in addition to existing obligations relating to anti-money laundering and countering the financing of terrorism.

A registered CSP must perform customer due diligence measures (1) before providing any corporate service to a customer, (2) where the registered CSP has reason to suspect money laundering, proliferation financing or terrorism financing, (3) where the registered CSP has reason to doubt the veracity or adequacy of information obtained from earlier customer due diligence measures, and (4) under other circumstances prescribed (subject to certain exceptions).

The CSP Act provides that “customer due diligence measures” means the prescribed measures for identifying a customer of the registered CSP and the customer’s agent (if any) and verifying their identities; identifying every beneficial owner of the customer and verifying the identity of the beneficial owner; obtaining information on the purpose and intended nature of the business relationship between the registered CSP and the customer; and any other measures for detecting or preventing money laundering, proliferation financing or terrorism financing.

The CSP Regulations further provide that a registered CSP must perform the following:

• Develop, implement and maintain adequate internal policies, procedures and controls to prevent money laundering, proliferation financing and terrorism financing relating to matters such as customer due diligence measures, reporting, recordkeeping, risk assessment and management as well as audit of the internal policies, procedures and controls, the monitoring and management of compliance with, and the internal communication of, the internal policies, procedures and control, and hiring and training of employees and customer screening
• Regularly assess (and demonstrate to the Registrar if required) the effectiveness of the internal policies, procedures and controls
• Implement and maintain an audit function that is independent and able to assess the effectiveness of the registered CSP’s internal policies, procedures and controls and its compliance with the CSP Regulations
• Implement screening procedures for the hiring of fit and proper persons as employees and ensure that its employees are trained on the laws for the prevention of money laundering, proliferation financing and terrorism financing, amongst others, as well as the registered CSP’s internal policies, procedures and controls for the same

The CSP Act, read together with the CSP Regulations, provides that a registered CSP must keep all records that the registered CSP obtains through the customer due diligence measures for five years from the date that the registered CSP stops providing corporate services to the customer.

Criminal Liability and Fines for Noncompliance

The CSP Act imposes criminal liability on registered CSPs and their senior management for breaches of AML/CPF/CFT obligations.

A registered CSP who breaches the AML/CPF/CFT obligations is guilty of an offence and shall be liable on conviction to a fine not exceeding S$100,000 for each breach. The senior management of a registered CSP who fails to ensure that the registered CSP complies with its AML/CPF/CFT obligations is also guilty of an offence and liable on conviction to a fine not exceeding S$100,000 for each breach.

Nominee Director Requirements

Under the CSP Act, a person can only act as a nominee director of a company by way of business if the appointment is arranged by a registered CSP. A person who breaches this requirement is guilty of an offence and shall be liable on conviction to a fine not exceeding S$10,000.

A registered CSP must not arrange for a person to act as a nominee director of a company unless it is satisfied that the person is fit and proper. A registered CSP who breaches this requirement is guilty of an offence and shall be liable on conviction to a fine not exceeding S$100,000.

The CSP Act provides that in determining whether a person is a fit and proper person to act as a nominee director the registered CSP must take all reasonable steps to satisfy itself that the person is not disqualified from acting as a director of a company under any written law and consider such factors as may be prescribed.

The CSP Regulations further set out the prescribed factors that a registered CSP must consider in determining whether a person arranged to act as a nominee director is fit and proper:

• Whether the person has been convicted (whether in Singapore or elsewhere) of any offence involving fraud or dishonesty or any relevant offence;
• Whether the person is an undischarged bankrupt (whether in Singapore or elsewhere);
• Whether the person’s previous conduct and compliance history of the companies of which the person was a director (if applicable) has been satisfactory; and
• Whether the person has the competency, capacity and capability to properly fulfil the obligations of a nominee director, taking into account the person’s experience and existing commitments, including the person’s number of existing directorships.

KEY TAKEAWAYS

• Companies that carry on a business in Singapore of providing any corporate service and that are not currently registered as a CSP will need to register with ACRA by 9 June 2025.
• Registered CSPs should review, and if necessary update, their existing customer due diligence measures, internal policies, procedures and controls (including recordkeeping policies) and audit function to ensure they are compliant with the CSP Act and CSP Regulations.
• Registered CSPs should review, and if necessary enhance, their existing screening procedures for employees to ensure compliance with the fit and proper requirements under the CSP Act and CSP Regulations. They should also refresh training for their employees to ensure their familiarity with AML/CPF/CFT requirements and the registered CSP’s internal policies, procedures and controls.
• Registered CSPs that provide nominee director services should review, and if necessary update, their existing screening procedures for nominee directors to take into account the fit and proper considerations prescribed in the CSP Regulations.
• Registered CSPs should also take guidance from the Guidelines For Registered Corporate Service Providers, the latest version of which was issued on 9 May 2025, which is intended to aid registered CSPs in their understanding of their obligations under the CSP Act and CSP Regulations.