Table of Contents
Enhancements to Effective Enforcement Controls
Image Source: Inter-Ministerial Committee (2024). Inter-Ministerial Committee on Anti-Money Laundering: Findings and Recommendations Report. Available at: https://www.mas.gov.sg/news/media-releases/2024/imc-report
Following a comprehensive evaluation of Singapore's Anti-Money Laundering (AML) framework, the Inter-Ministerial Committee (IMC) has published a report outlining its findings and suggestions for strengthening the country’s strategy against increasingly sophisticated criminal methods. This report comes in the wake of the $3 billion money laundering scandal that shocked the nation in late 2023.
In this article, we summarise the key recommendations to help your business navigate the regulatory changes effectively.
Quick Recap of Singapore’s $3 Billion Money Laundering Scandal
In early 2022, a covert intelligence operation by the Singapore Police Force uncovered a network of individuals linked to the laundering of over $3 billion in illegal assets. By August 2023, ten suspects were arrested in coordinated raids, resulting in the seizure of more than $3 billion in illicit assets. By July 2024, all ten individuals had been convicted and sentenced, with more than 90% of the seized properties forfeited to the state.
Singapore’s Current Anti-Money Laundering Framework
Despite a strong legal and institutional framework, the recent scandal exposed weaknesses requiring further improvement. A cooperative, whole-of-society approach that includes financial institutions, corporate service providers, and the public is crucial for strengthening defenses against money laundering. This approach is backed by the principles of Prevent, Detect, and Enforce.
Prevent
The Prevention pillar focuses on enhancing legal and regulatory frameworks to detect and tackle criminal activities before they happen.
Detect
The Detection pillar focuses on strengthening the timely identification of suspicious activities, enabling interventions before illicit funds can be laundered and integrated into the financial system.
Enforce
The Enforcement pillar seeks to hold criminals accountable and discourage future offences through decisive enforcement of administrative, regulatory, and criminal measures.
Key Recommendations from the IMC Report
The IMC report presents several important recommendations aimed at reinforcing these three pillars to improve AML effectiveness, while also ensuring minimal impact on legitimate businesses.
Infographic Reference: Inter-Ministerial Committee (2024). Inter-Ministerial Committee on Anti-Money Laundering: Findings and Recommendations Report. Available at: https://www.mas.gov.sg/news/media-releases/2024/imc-report
Enhancements to Proactive Prevention Controls
The report emphasises strengthening AML standards for gatekeepers, including financial institutions and designated non-financial businesses and professions (DNFBPs). These includes:
Strengthening Customer Due Diligence (CDD) Practices
Precious Stones and Precious Metals Dealers (PSMDs) to conduct CDD on products priced at $20,000 or more regardless of value attribution of the products
CDD threshold for casino operators is reduced from $10,000 for cash transactions and $5,000 for deposits to $4,000 for both cash transactions and deposits
Identification of UBO in Real Estate and Legal Transactions
The real estate and legal sectors are now required to identify the individuals for whom their clients are acting, as clients may not always be the actual beneficial owners
Sector supervisors are also tasked with supporting gatekeepers in enhancing their capabilities to combat money laundering through:
Streamlining AML Practices Across Sectors
Establishing clearer guidelines in conducting client risk assessments, identifying sources of wealth or funds, and timely filing of suspicious transaction reports (STRs)
Providing Proper AML Training
Proper training will be provided to help gatekeepers to identify high-risk circumstances and take necessary and timely action.
Non-regulated sectors that handle high-value goods are also vulnerable to exploitation by criminals for money laundering. Recommendations for these non-regulated sectors include:
Engaging and Educating Unregulated High-Value Goods Sector
Engaging high-value goods dealers to raise awareness of money laundering risks and educate them on strategies like avoiding large cash payments and filing suspicious transaction reports to hinder criminal transactions
Companies that play a crucial role in facilitating economic activities can also be exploited for money laundering through the use of shell and front companies. To prevent this misuse, the IMC recommends:
Enhancements to Corporate Service Provider Act
CSPs operating in Singapore are now mandated to register with ACRA, or face fines of up to $100,000 for both the CSP and their senior management for non-compliance
Nominee directors can only act through a CSP, which must ensure these individuals fulfil the 'fit and proper' requirements
Strengthening of Measures to Deter Misuse of Corporations
ACRA in collaboration with other agencies will continue to supervise suspicious companies and intensify efforts to strike off inactive companies to mitigate money laundering risks
Infographic Reference: Inter-Ministerial Committee (2024). Inter-Ministerial Committee on Anti-Money Laundering: Findings and Recommendations Report. Available at: https://www.mas.gov.sg/news/media-releases/2024/imc-report
Enhancements to Timely Detection Controls
The report highlights the need to address information gaps exploited by criminals to conceal the illicit nature of their activities. The recommendations are focused at improving information-sharing within the government and with gatekeepers, they include:
Granting Information Access to Key Parties
Amendments to the CDSA now grant supervisors access to gatekeepers' STR and allow the IRAS and Customs to share tax and trade data with the STRO for improved intelligence sharing
Bilateral Data Sharing Across Government Agencies
Structured bilateral data exchange accelerates the detection of money laundering risks by sharing early risk indicators, enabling prompt action against infringing entities
Development Whole-of-Government (WOG) Interface for Data Sharing
To facilitate timely and more complete analysis of money laundering risks across agencies, the National AML Verification Interface for Government Agencies Threat Evaluation (NAVIGATE) platform will be developed
Establishment of an Inter-Agency Workgroup for Best Practices
An inter-agency workgroup led by MHA and SPF will be established to keep the government’s operation policies, data sharing process and capabilities up-to-date
Information sharing within the government alone is not enough, initiatives to expand data sharing among and with gatekeepers are also crucial given their role in dealing with clients directly. Recommendations here include:
Potential Expansion of Scope of COSMIC
The Collaborative Sharing of Money Laundering / Terrorism Financing Information and Cases (COSMIC) platform may expand its coverage to include more focus areas and financial institutions following evaluations by MAS after its initial phase
Flagging of Non-compliant Companies
Inactive companies will be flagged to alert gatekeepers to potential risks and inform them in taking the appropriate CDD actions
Enhancements to Beneficial Ownership Framework
All new companies are required to maintain and annually verify beneficial owner information, with penalties for non-compliance increasing from $5,000 to $25,000 for stronger deterrence
Infographic Reference: Inter-Ministerial Committee (2024). Inter-Ministerial Committee on Anti-Money Laundering: Findings and Recommendations Report. Available at: https://www.mas.gov.sg/news/media-releases/2024/imc-report
Enhancements to Effective Enforcement Controls
The transnational nature of money laundering coupled with the evolving typologies frustrates global efforts by law enforcement agencies (LEAs) to act against AML breaches. Recommendations under this pillar focuses on enhancing measures to take effective enforcement action against criminals, they include:
Enhancing Prosecution Levers for Foreign Crimes
New amendments to the CDSA allow LEAs to prosecute money laundering cases if they can demonstrate that individuals knew or had reasonable grounds to believe the property was derived from foreign criminal conducts
Stronger Measures for Seizing Properties of Absconded Suspects
Amendments to CPC now require absconded person(s) reasonably suspected of committing and offence to be present in front of law enforcement to assist in investigations if they want to claim entitlement to the seized property
Publication of National Asset Recovery Strategy (NARS)
NARS enhances LEA’s operational capabilities in pursuing asset recovery to remove the financial incentives for criminals to engage in money laundering.
Apart from enhancing legislative levers, deterrence through enhanced penalty frameworks is also key. The recommendations include:
Enhanced Sanction for Obligation Breaches
CSPs and their senior management will face stricter sanctions for breaches, with fines up to $100,000
Enhancement to Cross Border Movement of Cash
Fines for Cross Border Cash Reporting Regime (CBCRR) offences to increase in alignment with international standards, along with mandatory electronic submissions for CBCRR declarations for travellers for more timely detection
To address cases that still manage to evade our safeguards, strengthening inter-agency coordination aims to facilitate quicker and more effective action against illicit money laundering activities. The recommendations include:
Establishment of AML Case Coordination and Collaboration Network (AC3N)
AC3N unites government agencies for coordinated enforcement against money laundering, linking various sectors and enhancing measures against criminals and negligent gatekeepers
Concluding Thoughts
The IMC report outlines comprehensive recommendations to strengthen Singapore’s AML framework. By focusing on enhancements to the prevention, detection, and enforcement pillars, the recommendations aim to create a more robust system for combating money laundering while supporting legitimate businesses. All stakeholders must stay watchful and engaged in combating money laundering while welcoming legitimate investors and businesses.
References
Inter-Ministerial Committee (2024). Inter-Ministerial Committee on Anti-Money Laundering: Findings and Recommendations Report. Available at: https://www.mas.gov.sg/news/media-releases/2024/imc-report