Singapore Releases Review of Singapore Anti-Money Laundering Framework: 3 Recommendations are Proactive Prevention, Timely Detection & Effective Enforcement, Key Items Include Strengthening AML Standards for Gatekeepers, Supporting Gatekeepers to Enhance Capabilities, Deter Misuse of Companies, Information-Sharing & Coordination Within Government, Enhancing Legislations & Continuously Review Penalty Frameworks to Dissuade Money Laundering
5th October 2024 | Hong Kong
Singapore has released the review of Singapore Anti-Money Laundering (AML) Framework – 3 recommendations are 1) Proactive Prevention, 2) Timely Detection & 3) Effective Enforcement. Key items include strengthening AML standards for gatekeepers, supporting gatekeepers to enhance capabilities, deter misuse of companies, information-sharing & coordination within government, enhancing legislations & continuously review penalty frameworks to dissuade money laundering. The report is published by Monetary Authority of Singapore (MAS), Minister of Home Affairs & Minister of Finance. In 2024 August, Singapore passes Anti-Money Laundering & Other Matters (AMLOM) Bill, with key amendments on the bill including to 1) Allow sharing of data in key government agencies & police, 2) Allowing AML / CFT regulator access to suspicious transactions reports, 3) Prosecutors no longer need to prove money laundered in Singapore is from criminal conduct & complete trail of money, prosecutors only need to prove money launderer knew or had reasonable grounds to believe money from criminal conduct, 4) Foreign environmental crimes such as illegal mining, illegal waste trafficking & illegal logging are designated as money laundering predicate offences, 5) Allowing court to order sale of seized or restrained property without consent if value of property is likely to depreciate, undue costs to maintain property or sale is in interests of justice, 6) Casino operators required to conduct tighter customer due diligence (CDD) checks lowered to threshold of S$5,000 for both cash & deposits and checks on proliferation financing risks (weapons of mass destruction). See below for the Second Reading of the Anti-Money Laundering and Other Matters (AMLOM) Bill: More info below | View Singapore Anti-Money Laundering (AML) Framework report here
“ Singapore Releases Review of Singapore Anti-Money Laundering Framework: 3 Recommendations are Proactive Prevention, Timely Detection & Effective Enforcement, Key Items Include Strengthening AML Standards for Gatekeepers, Supporting Gatekeepers to Enhance Capabilities, Deter Misuse of Companies, Information-Sharing & Coordination Within Government, Enhancing Legislations & Continuously Review Penalty Frameworks to Dissuade Money Laundering “
Monetary Authority of Singapore (MAS) 4/10/24 – The Inter-Ministerial Committee (IMC) released its report today to share the findings and recommendations following a review of Singapore’s Anti-Money Laundering (AML) framework. The overarching strategy is a whole-of-society approach, in which relevant stakeholders, who are part of our frontline of defence, need to work collaboratively with the Government. The IMC review, drawing lessons from the major money laundering (ML) case in August 2023, was convened to ensure that our system remains relevant against increasingly sophisticated criminal tactics. It focused on five key areas:
- a) How to better prevent money launderers from misusing corporate structures;
- b) How financial institutions can enhance their controls and collaborate more effectively with one another and the authorities to guard against and flag suspicious transactions;
- c) How other gatekeepers in the system, like corporate service providers, real estate salespersons and estate agencies, and precious stones and precious metals dealers can better guard against ML risks, including the adequacy of the existing regulatory framework over these players;
- d) How to better centralise and strengthen monitoring and sense-making capabilities across government agencies to detect suspicious activities; and
- e) How to strengthen enforcement levers and capabilities to enable firm and decisive actions against money launderers, including depriving them of ill-gotten proceeds.
Recommendations
The IMC’s recommendations enhance Singapore’s framework to combat money laundering whilst remaining welcoming of the large majority of businesses, which are law-abiding and legitimate.
The IMC’s recommendations and accompanying measures will strengthen the three key prongs underpinning Singapore’s AML framework – “Proactive Prevention, Timely Detection, Effective Enforcement”. The IMC has also reviewed existing and in-progress measures, in identifying the following recommendations:
a) Proactive Prevention: Building on existing AML frameworks to proactively prevent criminals from laundering their illicit proceeds, by:
- i. Strengthening AML standards for gatekeepers
- ii. Further supporting gatekeepers in enhancing their capabilities to combat ML
- iii. Engaging non-regulated sectors to enhance their understanding of ML risks
- iv. Strengthening mechanisms to deter the misuse of companies
b) Timely Detection: Enabling sector supervisors and gatekeepers in the timely detection of illicit activities, through:
- i. Strengthening sensemaking and information-sharing within government
- ii. Deepening channels for data sharing amongst and with gatekeepers
c) Effective Enforcement: Taking effective enforcement actions against criminals who engage in illicit activities, by:
- i. Enhancing legislative levers for law enforcement agencies to better pursue and prosecute ML offences
- ii. Continuously reviewing penalty frameworks to ensure that they remain proportionate and dissuasive
- iii. Strengthening inter-agency coordination to enable swifter and more effective action against illicit ML activities
The IMC’s recommendations are Singapore’s latest measures to combat ML and other financial crimes. Such crimes will continue to evolve and remain a threat to all international financial centres. Singapore will continue to enhance our defences by adopting risk-proportionate measures to detect and deter criminals, safeguard our institutions and systems, while ensuring that we remain welcoming to legitimate investors and businesses.
Singapore Passes Anti-Money Laundering & Other Matters (AMLOM) Bill: Allows Sharing of Data in Key Government Agencies & Police, Allows AML / CFT Regulator Access to Suspicious Transactions Reports, Prosecutors No Longer Need to Prove Money Laundered in Singapore from Criminal Conduct & Complete Trail of Money, Prosecutors Only Need to Prove Money Launderer Knew or Had Reasonable Grounds to Believe Money from Criminal Conduct, Foreign Environmental Crimes Such as Illegal Mining, Illegal Waste Trafficking & Illegal Logging are Designated as Money Laundering Predicate Offences, Allows Court to Order Sale of Seized or Restrained Property Without Consent if Value of Property is Likely to Depreciate, Undue Costs to Maintain Property or Sale is in Interests of Justice, Casino Operators Required to Conduct Tighter Customer Due Diligence (CDD) Checks Lowered to Threshold of S$5,000 for Both Cash & Deposits and Checks on Proliferation Financing Risks (Weapons of Mass Destruction)
9th August 2024 – Singapore passes Anti-Money Laundering & Other Matters (AMLOM) Bill, with key amendments on the bill including to 1) Allow sharing of data in key government agencies & police, 2) Allowing AML / CFT regulator access to suspicious transactions reports, 3) Prosecutors no longer need to prove money laundered in Singapore is from criminal conduct & complete trail of money, prosecutors only need to prove money launderer knew or had reasonable grounds to believe money from criminal conduct, 4) Foreign environmental crimes such as illegal mining, illegal waste trafficking & illegal logging are designated as money laundering predicate offences, 5) Allowing court to order sale of seized or restrained property without consent if value of property is likely to depreciate, undue costs to maintain property or sale is in interests of justice, 6) Casino operators required to conduct tighter customer due diligence (CDD) checks lowered to threshold of S$5,000 for both cash & deposits and checks on proliferation financing risks (weapons of mass destruction). See below for the Second Reading of the Anti-Money Laundering and Other Matters (AMLOM) Bill:
6th August 2024 – Second Reading of the Anti-Money Laundering and Other Matters (AMLOM) Bill – Opening Speech by Mrs Josephine Teo, Minister for Digital Development and Information and Second Minister for Home Affairs
Published: 06 August 2024
Mr Speaker,
1. Sir, I beg to move that the Bill be now read a second time.
Introduction
2. Sir, Singapore has a comprehensive anti-money laundering regime, comprising legal and institutional levers. This regime is well established and highly regarded internationally. But the landscape does not stay static and new risks emerge regularly. Rather than to expect perfection at any point in time, our approach has to stay responsive, and to get ahead of the curve once these risks are identified and assessed. This is what this Bill seeks to do.
3. Mr Speaker, may I have your permission to ask the Clerks to distribute a handout with some details of our regime?
4. Sir, our laws to tackle money laundering include the Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act, or CDSA for short, and the Criminal Procedure Code, or CPC. Like our other laws, we regularly review the CDSA and CPC, to ensure that they remain relevant and effective.
5. Money laundering, in particular, is one crime which has evolved significantly. Money launderers are finding new ways to evade detection, taking advantage of technological innovations meant to facilitate legitimate financial and business transactions. Consequently, international standards against money laundering have been enhanced. This includes those set by the Financial Action Task Force, or FATF, the international body that sets global standards to tackle money laundering, and terrorism and proliferation financing.
6. Each new money laundering case uncovered in Singapore or around the world provides useful lessons, and this includes our $3 billion case. We have been distilling the learning points through careful studies of the changing modus operandi, as well as new standards promulgated by the FATF. This Bill is a continuation of our ongoing efforts to ensure that Singapore’s regime keeps pace with evolving standards and trends, so that we can continue to deal effectively with attempts to launder criminal proceeds through Singapore.
7. According to INTERPOL, around US$2 to US$3 trillion of illicit proceeds are channeled through the global financial system every year. Think about it – these numbers are bigger than the GDPs of most countries, Singapore included. In the ocean of money flows, criminal proceeds are like toxic waste that gets carried along. Inevitably, some of them enter pristine waters, polluting rivers and estuaries much against the wishes of local communities.
8. Illicit monies flow through many jurisdictions, but are especially attracted to global financial centres, such as London, Hong Kong, New York, Delaware, Switzerland and Singapore. This is because the open, efficient, and well-connected infrastructure of such centres that makes them attractive to legitimate investors, is also useful for criminals to move and hide their monies.
(a) I shared some examples with Parliament last year. More of such cases have surfaced since.
(b) In February this year, the Hong Kong authorities arrested seven Hong Kong residents suspected of laundering US$1.8 billion of proceeds from online scams in India and the illegal sale of electronics and rare gems. The authorities seized more than US$21 million worth of assets as part of the operation.
(c) In April, two managers of a Saudi oil exploration company went on trial in Switzerland for alleged fraud and money laundering of at least US$1.8 billion.
9. Singapore strives to be a reputable, trusted and thriving financial and business hub. We have a hard-earned track record and every intention to keep our system clean. This must mean keeping money launderers out of our system, as best as we can.
10. Our anti-money laundering regime has three pillars:
(a) Prevention, through a robust legal and regulatory framework to deter such criminals;
(b) Detection, to ensure that illicit activities are picked up early; and
(c) Enforcement. We take firm and prompt enforcement action against money laundering.
11. In this Bill, we have proposed enhancements across all three pillars, to empower our agencies with strengthened levers and toolkits against money laundering.
Key Features of the Bill
12. Sir, allow me to elaborate on the key features of the Bill.
13. This Bill seeks to:
(a) First, align our framework for Anti-Money Laundering and Countering the Financing of Terrorism, or AML/CFT framework, with the FATF standards to better prevent and detect money laundering;
(b) Second, enhance the ability of Government agencies to detect and enforce against money laundering through enhanced data sharing and strengthened prosecutorial levers; and
(c) Third, clarify and improve our processes to deal with seized or restrained properties linked to suspected criminal activities
14. First, on our AML/CFT framework for casino operators.
15. Customer due diligence, or CDD checks, conducted by gatekeepers in various sectors is key to preventing suspicious individuals from sinking roots into our systems, and detecting any illicit activities early. Casino operators are one such gatekeeper.
16. To align with the FATF’s standards, Clause 2 will amend the Casino Control Act to require casino operators to conduct tighter CDD checks on patrons at the point of transaction. The threshold for CDD checks will be lowered from the current threshold of single cash transactions involving S$10,000 or more, or deposits into a deposit account involving S$5,000 or more, to cover single cash transactions or deposits involving S$4,000 or more.
17. Additionally, the Gambling Regulatory Authority of Singapore will be empowered to require casino operators, when conducting CDD checks, to also consider proliferation financing risks. These are the risks of financing the proliferation of weapons of mass destruction.
Enhance the Ability of Government Agencies to Detect and Enforce Against Money Laundering Offences
18. Second, this Bill will enhance the ability of relevant Government agencies to detect and enforce against money laundering through:
(a) enhanced data sharing; and
(b) strengthened prosecutorial levers.
19. On data sharing: very often, money launderers will conduct and layer their activities across different sectors and use different front entities, so as to avoid detection. When interacting with individual Government agencies, they may leave traces of suspicion, which on their own may not raise concern. However, when triangulated and pieced together with information from other agencies and sources, including Suspicious Transaction Reports (STRs), a more revealing picture may emerge. This can then trigger and support investigations by the relevant law enforcement agencies.
20. Clauses 18 to 21 introduce amendments to the Income Tax Act, Goods and Services Tax Act, Regulation of Imports and Exports Act, and the Free Trade Zones Act. The amendments will allow the Inland Revenue Authority of Singapore and Singapore Customs to share tax data and trade data respectively, with Singapore’s Financial Intelligence Unit. This will allow the Suspicious Transaction Reporting Office of the Singapore Police Force to augment its analyses of money laundering risks, and in turn provide richer financial intelligence to law enforcement agencies and AML/CFT regulators for appropriate enforcement action.
21. The UK, New Zealand, and South Korea have similar tax data sharing arrangements. Likewise, Hong Kong, the US, and Luxembourg have trade data sharing arrangements with their Customs agencies.
22. Additionally, Clause 10 introduces amendments to the CDSA to allow any AML/CFT regulator, such as the Council for Estate Agencies and the Accounting and Corporate Regulatory Authority, to have access to suspicious transactions reports filed by their respective regulated entities. Regulators will then have greater insight into the risks and trends relating to their sectors, and be able to take more effective supervisory and regulatory actions. Guardrails for the data sharing will be implemented, to protect data confidentiality.
23. Next, we will amend and enhance levers for prosecution of money laundering cases arising from criminal conduct abroad. After our investigators painstakingly turn over the stones, and uncover the suspects and their activities, the next big challenge is navigating the legal hurdles to successfully prosecute them.
24. To do so, the Prosecution needs to show that the monies allegedly laundered in Singapore are benefits derived from criminal conduct. In cases where the criminal conduct is committed outside Singapore, the authorities are currently required to show the complete trail of the monies from the point the crime was committed overseas to the point the monies were deposited with the money launderer in Singapore.
25. In many cases, law enforcement agencies face enormous challenges in obtaining the necessary evidence from foreign victims, entities, and authorities. This is especially so if the criminal proceeds had flowed through many jurisdictions before entering Singapore, which is often the case. Criminals do this to conceal the origin of their proceeds, and exploit such legal requirements to their advantage.
26. To enhance our abilities to effectively prosecute money laundering offences, Clause 11 of the Bill amends Section 56 of the CDSA, such that the Prosecution will no longer need to prove that the monies allegedly laundered in Singapore were benefits from criminal conduct, nor show the complete trail. It will be sufficient for the Prosecution to prove that the money launderer knew or had reasonable grounds to believe that the property he was dealing with were the gains from criminal conduct.
27. This amendment will significantly alleviate the challenges faced by the Prosecution today when dealing with money laundering offences, in cases where the monies laundered had passed through many bank accounts and intermediaries in foreign jurisdictions before entering Singapore.
28. We also propose to designate foreign environmental crimes as money laundering predicate offences. Currently, law enforcement agencies are only able to investigate money laundering offences arising from the commission of an offence outside Singapore if the foreign offence is also a serious offence under Singapore’s laws. Environmental crimes such as illegal mining, illegal waste trafficking, and illegal logging are not applicable in our domestic context, and hence, not considered serious offences in Singapore. This limits our ability to investigate money laundering associated with such foreign offences.
29. However, these crimes are one of the largest contributors to transnational organised criminal activities in the East Asia and Pacific region. There is a high propensity for funds arising from such crimes to flow into Singapore, given that we are a well-connected international financial, trading and transit hub. This was highlighted in Singapore’s Environmental Crime Money Laundering National Risk Assessment, which we recently published.
30. Clause 13 therefore introduces a Third Schedule to the CDSA, which will designate serious foreign environmental crimes as money laundering predicate offences. We have taken a risk-based approach, aligned with the FATF’s recommendations, and propose to designate specific foreign environmental crimes which have been assessed to pose a higher risk of their proceeds being laundered in Singapore. These are illegal logging, land clearing, mining, waste trafficking, and wildlife trade.
31. The amendment will allow the law enforcement agencies to investigate money laundering offences if it is suspected that the monies in Singapore are derived from such serious environmental crimes committed overseas.
Clarify and Improve Our Processes to Deal With Seized or Restrained Properties Linked to Suspected Criminal Activities
32. Third, this Bill introduces three proposals to improve the processes to deal with seized properties in general, including those linked to money laundering.
33. Currently, when seized or restrained property is no longer required for investigations or court proceedings, law enforcement agencies must obtain the consent of all parties involved if they want to obtain a court order to sell the property. This is highly impractical, because if there is no consensus amongst the parties, law enforcement agencies will need to continue to manage and maintain the property. These properties can include vehicles, liquor, luxury watches, and livestock. Not only are they costly to maintain, they also tend to depreciate in value. The costs of maintenance are borne by the State.
34. Clauses 14 to 16 will amend the CPC and the CDSA to allow the Court to order the sale of a seized or restrained property without the consent of all parties involved, provided the Court is satisfied that:
(a) The value of the property is likely to depreciate, or undue costs are involved in maintaining the property; or
(b) The sale would be in the interests of justice.
35. These amendments will allow law enforcement agencies to reduce the cost of property maintenance and preserve the value of seized or restrained properties, to facilitate subsequent asset recovery and restitution to the victims.
36. We will also make amendments to deal with properties in cases where the suspect has absconded.
37. In the course of investigations, law enforcement agencies may seize properties linked to persons who are suspected of having committed offences under Singapore’s laws, but cannot be found despite efforts to reach out to them. In some cases, the persons may have left Singapore and cannot be extradited or refuse to return. This is not uncommon in cross-border financial crimes, such as money laundering and scams. Investigations can be wilfully stalled by such absconded persons if they decide to stay out of Singapore, in order to avoid being imprisoned for their crimes. But law enforcement agencies need to interview them, for the investigations.
38. Today, the CPC prohibits the Court from releasing a seized property if the property is required for any investigation, inquiry, trial, or any proceeding under the law. However, if the law enforcement agencies fail to satisfy the Court that any of these grounds for continued seizure of the property applies, the Court may order the property’s release or disposal. If the absconded person refuses to return to Singapore, it may become increasingly difficult for the Police over time to justify how the continued seizure of the property remains relevant to the investigations, which are not making headway because they cannot interview the person. This presents an opportunity for absconded persons to frustrate due process. By staying out of Singapore, and hence stymying investigations, they have hope that the seized property would eventually be released back to them.
39. Clause 16 amends the CPC such that the Court must not dispose of the seized property, if there is any pending investigation in relation to an absconded person who is reasonably suspected of having committed an offence in respect of the property, regardless of the progress of the investigation. Law enforcement agencies can lawfully seize property only where they have reason to suspect that an offence has been committed, or the property has some nexus to the offence. Further, the Court will also have to determine that the continued seizure will not cause injustice to any person entitled to the possession of the property. This ensures due process in the proceedings.
40. Next, Section 372 of the CPC currently provides that if the person entitled to a seized property is unknown or cannot be found, the property will be vested in the Government if no one establishes a claim to it within six months of a public notice. However, an absconded person can lay a claim to the property through a legal counsel, while refusing to return to Singapore to cooperate with the investigations.
41. Moreover, absconded persons could try to find creative means to insulate their properties from forfeiture or confiscation. For example, they could vest the legal title to the properties in other individuals, who may not have committed offences in Singapore. These individuals may then present themselves as innocent claimants to the property.
42. Clauses 16 and 17 amend Sections 370 and 372 of the CPC, to include a requirement that an absconded person who is suspected of having committed an arrestable offence under our laws or serious offence under the CDSA, must personally present himself before a law enforcement officer to assist in the investigations, prior to making a claim to the property seized in respect of the offence.
43. Additionally, Clause 16 amends the CPC to provide that the Court may consider whether the property was obtained through legitimate sources, such as income or investments, before the seized property may be released to a third party, even if that party has not committed any crimes. That party cannot prove his entitlement to the property simply because it was a gift from the absconded person.
44. Taken together, these amendments will enable the Government to better deal with absconded suspects, through depriving them of the financial gains of their money laundering and other criminal activities, if they refuse to return to Singapore for investigations.
45. To be clear, these amendments continue to be subject to judicial oversight, and only affect persons who are suspected to have committed offences in Singapore and have absconded, as well as properties seized in relation to these offences. The proposal does not change the existing law or procedures for persons who are not “absconded persons”.
Conclusion
46. Sir, today’s Bill is another step in strengthening our AML/CFT regime. It will not be the last. Criminals will continue to explore other ways to circumvent even the most stringent of measures, in the fast-changing money laundering landscape.
47. Singapore will therefore have to continue to be vigilant, and we will not hesitate to further tighten our laws against money laundering where necessary, to ensure that our financial and business ecosystem remains reputable and trusted, and continues to thrive.
48. Sir, I beg to move.
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