SINGAPORE — In the wake of one of the biggest money laundering probes in Singapore, three ministerial statements were delivered in Parliament on Tuesday (Oct 3) to address the numerous parliamentary questions filed by more than 20 Members of Parliament (MPs) on how Singapore’s regulations effectively prevent overseas criminals from laundering their ill-gotten gains here.
The case, which is now before the court, involves 10 foreigners and more than S$2.8 billion in assets that were seized or issued prohibition of disposal orders.
They are alleged to be involved in laundering the proceeds of crime from overseas organised crime activities, including scams and online gambling. In total, 152 properties, 62 vehicles, 294 luxury bags and 546 pieces of jewellery were seized, among others.
Responding to questions about the effectiveness of Singapore’s existing measures to detect and counter money laundering activities, Mrs Josephine Teo, Second Minister for Home Affairs, gave an overview of the country’s anti-money laundering regime, which has been “steadily and systematically built up” over the years, she said.
The existing rules cover real estate professionals, financial institutions, registered businesses, single family offices, as well as precious stone and metal dealers, among others.
Here are how the various anti-money laundering rules prevent “dirty money” from entering Singapore and from being transacted here.
For financial institutions such as banks, the Monetary Authority of Singapore (MAS) requires them to conduct rigorous “know your customer” processes when accounts are opened and they perform customer due diligence for transactions, which are part of Singapore’s defence against money laundering and terrorism financing.
MAS also ensures that financial institutions adhere to the anti-money laundering requirements through “close supervision and surveillance”, Mrs Teo said.
Elaborating on this, Mr Alvin Tan, Minister of State for Trade and Industry, said that MAS requires them to perform “robust due diligence checks” on customers.
If there is something amiss about the customers’ behaviour, financial institutions are required to notify the Suspicious Transaction Reporting Office of the Commercial Affairs Department.
For example, if customers refuse to provide relevant information or intentionally provides false or misleading information to circumvent the checks, the institutions will have to file suspicious transaction reports.
There is no minimum threshold for filing a suspicious transaction report and it should be filed so long as there are reasonable grounds to suspect that any transaction may be connected to criminal conduct. There are also sector-specific requirements to file such reports.
Failure to file such a report is an offence, and the authorities have taken action against commercial entities, including banks, that failed to do so in the past.
A total of 17 financial institutions had been taken to task for breaches of MAS’s requirements in the past five years, Mrs Teo added.
REAL ESTATE AND OTHER SERVICES
Apart from financial institutions, designated non-financial businesses and professions such as real estate agents for property transactions, corporate service providers for company incorporation, and professional services providers such as lawyers and accountants, also have to put in place similar due diligence checks.
For real estate, foreigners are not allowed to buy or own landed residential properties without approval under the Residential Property Act.
Ms Indranee Rajah, Second Minister for Finance and National Development, said that the Government takes “a very strict approach” when granting approvals for foreigners to own landed residential properties in Singapore mainland.
This includes allowing only those who have made “exceptional economic contribution to Singapore” and have a strong Singapore nexus — such as having children who have served National Service — before approving foreigners to buy landed properties. They are allowed to own only one landed residential property here for their stay.
Foreigners who are not permanent residents are allowed to own landed properties only in Sentosa. The eight landed residential properties issued with the prohibition of disposal orders are all Sentosa Cove properties, Ms Indranee said.
Given the high risks of money laundering in the real estate sector, the Government has strengthened its due diligence requirements over the years, she added.
For example, the Council for Estate Agencies and the Urban Redevelopment Authority conduct regular inspections to ensure that property agents, their agencies, as well as real estate developers abide by these rules. Those identified to be of higher risk are prioritised for inspections and subject to more regular inspections, Ms Indranee said.
Likewise, landlords, lawyers and accountants have to take similar checks on their tenants or customers when handling transactions.
Developers and property agents who fail to carry out such measures may be fined up to S$100,000, and property agencies may be fined up to S$200,000.
They may also have their licence or registration revoked or suspended.
To deter the misuse of companies for money laundering, Ms Indranee said that the Accounting and Corporate Regulatory Authority (Acra) screens all officers and shareholders in a company’s registers.
The company also has to appoint at least one director residing in Singapore to be held accountable for any breaches committed by the company.
Non-resident foreigners who wish to set up companies here need to either appoint a resident business partner as a director or appoint a nominee director, she said.
Registered filing agents will also need to verify the identities of their customers and file a report if they fail due diligence checks.
A filing agent is a person who carries transactions with Acra on behalf of their customer.
Companies that remain inactive after a period of time, or are flagged via intelligence provided by other agencies such as the Commercial Affairs Department, will be struck off by Acra.
Ms Indranee said that in the S$2.8 billion money laundering case, the companies have “largely been filing” annual returns with Acra and have thus remained on the register.
All single-family offices applying for MAS’ tax incentives are required to show proof that they have opened accounts with financial institutions in Singapore.
MAS defines a single-family office as an entity that manages assets for or on behalf of only one family and is “wholly owned or controlled by members of the same family”.
Besides due diligence checks by the financial institutions, MAS screens the individuals and entities involved in such offices before granting tax incentives.
Mr Tan said that ongoing investigations and supervisory engagements suggested that one or more of the accused persons in the present case may have been linked to single-family offices that were awarded tax incentives. “At the point of application, no adverse information of note related to the individuals and entities had surfaced,” he added.
As for strengthening anti-money-laundering rules for these offices, Mr Tan said that MAS had announced plans in July to bolster its surveillance and defence against potential risks in this sector.
Among the proposed requirements is ensuring that all single-family offices are subject to stringent anti-money laundering controls, regardless of whether they apply for tax incentives, such as by maintaining a business relationship with an MAS-regulated financial institution.
These proposed enhancements go beyond most other leading jurisdictions and financial centres, Mr Tan said.
PRECIOUS STONES AND METALS
Customer due diligence rules are also in place to prevent money laundering involving “precious products”, which refers to any jewellery, watch or other finished product where at least 50 per cent of its value is attributable to precious stones or metals.
Under the Precious Stones and Precious Metals Act, dealers are required to perform such checks before they conduct transactions involving cash exceeding S$20,000 or if they suspect there is money laundering involved.
They are also required to file cash transaction reports with the Suspicious Transaction Reporting Office if transactions involve cash of more than S$20,000. This is different from suspicious transaction reports, as dealers need to file reports so long as the threshold is crossed regardless of whether they observe any suspicious behaviour from customers.
Since 2021, 96 enforcement actions have been taken against precious stones and precious metals dealers for failure to comply with these requirements.
As for high-value assets such as luxury cars and bags, these are not regulated, Mrs Teo said. This is in line with international practices recommended by the Financial Action Task Force.
The Financial Action Task Force is the global money laundering and terrorist financing watchdog that sets international standards aimed at preventing these illegal activities.
“We will examine if Singapore needs to extend anti-money laundering requirements to new classes of assets, beyond what has been recommended,” Mrs Teo said.
This has to be evaluated carefully so that the Government does not end up “unduly inconveniencing legitimate businesses and customers”, she added.
FOREIGNERS AND IMMIGRATION
To sieve out individuals involved in money laundering, the authorities scrutinise applications for work passes and other immigration facilities, and step up checks on high-risk individuals such as those with criminal records or who are wanted in foreign jurisdictions, or who may have used false identities.
To this end, Singapore has put in place frameworks that incorporate information from multiple sources and agencies to assess work pass applications and other long-term immigration facilities.
Mrs Teo said that applicants are screened against a database of blacklisted individuals, with data analytics being used to identify and assess higher-risk applications.
Foreigners convicted of an offence here may be deported from Singapore, and in some cases, banned permanently, she added.
However, no screening process is foolproof and the public should be careful about “knee-jerk reactions” that may cause Singapore’s business environment to be unfriendly to foreigners, Mrs Teo cautioned.
“We should be sensible. Most people are not illegal money launderers or criminals. If we make the rules too tight, then it is the vast majority of innocent applicants who will be unnecessarily penalised. The crooks will still try to find a way around the rules.”
FOREIGNERS AND IMMIGRATION
To sieve out individuals involved in money laundering, the authorities also scrutinise applications for work passes and other immigration facilities and step up checks on high-risk individuals, such as those with criminal records or who are wanted in foreign jurisdictions, or who may have used false identities.
To this end, Singapore has put in place frameworks that incorporate information from multiple sources and agencies to assess work pass applications and other long term immigration facilities.
Mrs Teo added that applicants are also screened against a database of blacklisted individuals, with data analytics being used to identify and assess higher-risk applications.
Foreigners convicted of an offence in Singapore may be deported from Singapore, and in some cases, banned permanently, she added.
Nevertheless, no screening process is foolproof and the public should also be careful about “knee jerk reactions” that may cause Singapore’s business environment to be unfriendly to foreigners, said Mrs Teo.
“We should be sensible. Most people are not illegal money launderers or criminals. If we make the rules too tight, then it is the vast majority of innocent applicants who will be unnecessarily penalised. The crooks will still try to find a way around the rules,” she said.