Thursday, February 29, 2024
HomesingaporeNew inter-ministerial committee to review and strengthen Singapore’s anti-money laundering regime

New inter-ministerial committee to review and strengthen Singapore’s anti-money laundering regime

SINGAPORE: The government will set up a new inter-ministerial committee to review Singapore’s anti-money laundering regime and ensure it stays up to date with increasingly sophisticated crimes, said Second Minister for Finance and National Development Indranee Rajah in parliament on Tuesday (Oct 3).

Ms Indranee will chair the new committee, comprising political office holders from the Monetary Authority of Singapore (MAS) and four ministries: Home Affairs, Law, Manpower, and Trade and Industry.

The committee will focus on four areas:

How to better prevent corporate structures from being abused by money launderersHow financial institutions can enhance their controls and collaborate more effectively with each other and authorities to guard against and flag suspicious transactionsHow other players in the system, like corporate service providers, real estate agents and precious stones and metals dealers, can help to better guard against money laundering risksWhat can be done to centralise and strengthen monitoring and sense-making capabilities across government agencies to better detect suspicious activities

Ms Indranee was delivering a ministerial statement in response to questions filed by Members of Parliament (MPs) about the recent billion-dollar money laundering case.

In one of Singapore’s biggest money laundering probes, 10 foreigners were arrested in August when the Singapore police raided multiple locations, including Good Class Bungalows and condominiums, across the island.

In an update given in an earlier ministerial statement by Second Minister for Home Affairs Josephine Teo, the value of assets seized or frozen now stands at over S$2.8 billion (US$2.04 billion), close to triple the original S$1 billion figure when the case was first made public on Aug 16.

“As this case has shown, criminals are becoming increasingly sophisticated. Even as we identify new areas to tighten, criminals will invariably find new loopholes to exploit,” said Ms Indranee.

With that, government agencies and relevant industry players “must become ever more coordinated” to uncover and arrest money laundering activities, she added.

“To this end, we must strengthen our information-gathering and intel-sharing capabilities so that we can better detect illicit activities conducted by companies incorporated in Singapore.”

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Singapore has said it adopts a “whole-of-government approach” to combat money laundering and terrorism financing. This is currently led by a high-level steering committee comprising top officials from the Home Affairs Ministry, Finance Ministry and the MAS.

Ms Indranee said this inter-agency steering committee will continue to oversee “whole-of-government” efforts, while the newly-announced inter-ministerial committee will look at reviewing the system “with the benefit” of what is being learned from the billion-dollar money laundering case and keep Singapore’s regime up-to-date.

“Where gaps are identified, we will tighten our regulations and enforcement to prevent exploitation by criminals. The committee will share its progress and findings in due time,” she said.

The minister added that Singapore is determined to preserve its hard-earned reputation as a clean and trusted business hub.

“We will continue to hold our zero-tolerance approach towards money laundering, and do our best to ensure a strong and robust regulatory regime,” Ms Indranee told the House.

ACRA TO PROPOSE ADDITIONAL RULES 

Already, stricter rules are being considered by the Accounting and Corporate Regulatory Authority (ACRA) in the areas of professionals and firms that help businesses with corporate filings, as well as directorships.

Currently, non-residents looking to set up companies in Singapore must engage ACRA-authorised corporate service providers, also known as registered filing agents, to incorporate a company. 

Such agents are required to conduct customer due diligence and inquire into the purpose and legitimacy of a company structure, among others. They provide “another layer of scrutiny, which is particularly useful for foreign-owned or controlled companies”, said Ms Indranee.

Last year, ACRA launched a public consultation to propose increasing the penalties on errant agents with the aim of strengthening the effectiveness of Singapore’s anti-money laundering regime.

It also proposed a new Corporate Service Provider Bill that will require all entities or people providing corporate secretarial services in and from Singapore to register with ACRA.

Also on ACRA’s wishlist is a requirement for corporate service providers to ensure that individuals they appoint to act as nominee directors are fit and proper, and satisfy certain training requirements if they hold more than a legally prescribed number of nominee directorships.

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Under the Companies Act, every company in Singapore must have at least one company director who is an ordinary resident of Singapore.

This is to “ensure that we will be able to hold someone accountable for any breaches committed by the company in Singapore”, said Ms Indranee, noting that this goes beyond the requirements of many other jurisdictions.

As such, foreigners based overseas often look for local nominee directors to act on their behalf on matters relating to their company. To address this need, corporate service providers can help to provide services for nominee directors to be appointed, she added.

“As some individuals take on nominee directorships as a business service, it is understandable for them to hold multiple directorships, to support their clients in due diligence checks and incorporating their business”, the minister said, stressing that nominee directors have the “same legal obligations” as other directors and are required to discharge their duties “responsibly”.

She added that those who fail to do so can face sanctions, including disqualification and debarment.

In response to MP Melvin Yong’s (PAP-Radin Mas) question about the number of individuals who have held a large number of directorships here, Ms Indranee responded that there are currently no limits to the number of companies that a director can be involved in. This is in line with international benchmarks like those in the United Kingdom, the United States and Australia. 

That said, “99 per cent of directors hold fewer than 10 directorships”, she added.

Ms Indranee noted that ACRA has been studying restrictions on directorships to ensure that nominee directors are fit and proper for the role, as well as whether it would be useful to limit the number of nominee directorships for each individual.

“We will take into account risk factors and business needs, in deciding whether to introduce additional measures,” she said.

These additional measures proposed by ACRA will be tabled in parliament early next year.

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