SINGAPORE will clarify due diligence requirements for real estate deals and flag companies that seem inactive, as part of moves to strengthen the Republic’s anti-money laundering (AML) regime.
These were among recommendations in a report released on Friday (Oct 4) by an inter-ministerial committee chaired by Second Minister for Finance Indranee Rajah.
“This report will strengthen our status as a financial centre and send a strong signal to businesses, both locally as well as internationally, that Singapore is a place where you can do business… but at the same time, this is a place that will be hostile (towards) money launderers,” said Indranee in a press conference.
The committee was announced in October 2023 to review Singapore’s AML regime, in the wake of the Republic’s largest money laundering scandal involving more than S$3 billion in seized assets and the arrests and sentencing of 10 foreign nationals.
The committee’s recommendations fall under three categories: proactive prevention, timely detection and effective enforcement.
Proactive prevention
Some recommendations aim to prevent criminals from laundering their illicit proceeds.
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First, AML standards will be strengthened for gatekeepers such as financial institutions, real estate salespersons, estate agencies and lawyers. This includes clarifying the requirements for them to conduct customer due diligence and ongoing client monitoring.
These gatekeepers must identify the individuals for whom their clients may be acting, and take reasonable measures to verify these identities. This is because a client might not be the ultimate beneficial owner of a transaction or asset, which could lead to potential risks of abuse.
Clarifications for both the legal and real estate sectors will take place over the next few months, said Indranee.
For the legal sector, this will likely be through amendments to the Legal Profession Act and regulations, as well as through the Law Society and engagements with lawyers.
The real estate sector already has clear guidelines and regulations, but work needs to be done to help the industry understand the nature of its AML obligations and carry these out, she added.
For example, real estate salespeople may need training in spotting indicators of a suspicious transaction, and the process of making suspicious transaction reports may need to be refined.
Second, gatekeepers will get more support to enhance their capabilities to combat money laundering.
In the coming months, sector supervisors – that is, government regulatory bodies – will provide more guidance on AML practices, to clarify supervisory expectations and better equip gatekeepers. They will also engage with gatekeepers and enhance their training.
A third recommendation is to engage with non-regulated sectors – specifically high-value goods dealers who are currently unregulated – to raise their awareness of money laundering risks. One example is car dealers, with the government intending to engage them next week, said Minister of State for Home Affairs Sun Xueling.
She added that the government will watch certain sectors and reach out to dealers if they see that high-value items of a certain type are being purchased by money-laundering criminals. The government will also inform dealers of what risks to watch for and how to file timely suspicious transaction reports.
However, the government does not intend to track a specific list of high-value goods, as the value of items will change over time, said Indranee.
Fourth, the government will strengthen mechanisms to deter the misuse of companies. For instance, the Accounting and Corporate Regulatory Authority (Acra) will step up efforts to strike off companies that have been inactive, which could be an indicator of shell companies.
Timely detection
A second prong in the Republic’s strategy against money laundering is enabling supervisors and gatekeepers to detect illicit activities in a timely manner.
One recommendation is to enhance information-sharing within the government.
This includes building data-sharing channels between government agencies, as well as developing a new whole-of-government data-sharing interface called the National AML Verification Interface for Government Agencies Threat Evaluation (Navigate).
The new interface will help government agencies make sense of money laundering risks in a timely and comprehensive manner.
Navigate’s development will be led by the Singapore Police Force. With this interface, law enforcement agencies, sector supervisors and other agencies can check one another’s databases and assess entities for money laundering risks.
The committee will also establish an inter-agency workgroup to keep the government’s operational policies, data-sharing processes and related capabilities up to date and robust against emerging money laundering threats.
In addition, the committee recommended deepening the channels for data sharing among and with private-sector gatekeepers.
The public and private sectors already have partnerships that strengthen their detection abilities. These include the Collaborative Sharing of Money Laundering/Terrorism Financing Information and Cases (Cosmic) platform, which was co-developed by the Monetary Authority of Singapore (MAS) and six major banks to allow financial institutions to share information on customers who have the potential to commit financial crime.
MAS plans to expand Cosmic in phases after the initial two-year period, to cover more financial institutions and focus areas.
Separately, Acra will flag companies in its registry that show signs of inactivity – such as not filing annual returns. This will help alert gatekeepers to potential dangers and support them in risk-profiling. That said, companies will not be struck off for one-off non-compliance incidents.
Acra will also continue to improve its framework for information on beneficial owners of companies. This was earlier enhanced under a law, passed in July, that improves the accuracy of information in the Register of Registrable Controllers.
Effective enforcement
The final set of recommendations focus on effective enforcement actions against criminals.
First, legislative levers should be enhanced so that law enforcement agencies can better pursue and prosecute money laundering offences, said the committee.
This was already done with the passage of the Anti-Money Laundering and Other Matters Act in August 2024, which included changes to how seized properties are dealt with.
Second, penalty frameworks should be continuously reviewed to ensure they remain proportionate and dissuasive.
Penalties were strengthened in the Corporate Service Providers Act passed in July. Other supervisory agencies, such as the Council for Estate Agencies, Urban Redevelopment Authority and Ministry of Law “will also clarify or enhance the AML penalty frameworks for their respective gatekeepers”, added the report.
Third, inter-agency coordination should be strengthened to enable swifter and more effective action against money laundering activities.
Under this, the government’s Inter-Agency Suspicious Transaction Reporting Analytics taskforce will be turned into a new AML Case Coordination and Collaboration Network, to bring in all government agencies involved in combatting money laundering.
Currently, only selected supervisory and law enforcement agencies are under the taskforce, which coordinates actions on priority money laundering cases. The new network will have wider membership and a higher level of oversight.
Staying alert
The committee said that while its recommendations are the “latest salvo” in the battle against financial crime, they are neither exhaustive nor final, as “money laundering is a persistent and evolving challenge to all international financial centres”.
“We will be alert to these tactics, keep our AML framework up to date and bring these criminals to justice when we detect them,” stated the committee in its report.
During the debate on the Anti-Money Laundering and Other Matters Act in August, Second Minister for Home Affairs Josephine Teo had said that Singapore’s anti-money laundering checks need to be sensible and calibrated, and not unduly impede legitimate businesses and investors.
Said Indranee: “Experience has shown that every time financial systems and law enforcement agencies take steps to combat financial crime, criminals will inevitably adjust their tactics and develop new ways to disguise, hide and benefit from their illicit assets.”
“So we, too, have to remain dynamic in any jurisdiction, be it here or elsewhere.”
