RESOURCES
5. Singapore
Current Compliance Landscape
Singapore has been a member of the FATF since 1992 and was taken off the list of countries needing to be monitored for AML /CFT progress in 2011. The Monetary Authority of Singapore (MAS) issued a statement in July 2015 citing that its systems of regulatory supervision had been ranked as “among the best globally” by the International Monetary Fund.
MAS requires money changers to go for regular AML/CFT courses and to put in place robust systems against abuses. The MAS had revoked the license of 6 money changers for weak AML/CFT practices from the year 2010 to 2013. Since 2006, MAS has instituted the practice of hiring external mystery shoppers to test the robustness of KYC practices at money changers. For example, money changers who value their licenses, should not do business with any customer who wants to exchange more than SGD$5,000 but has ‘forgotten’ to bring along his identity card. Money changers who carry on with business after having their license revoked can face penalties of $100,000 and $10,000 for every day that they are in business. The failure of money changers to conduct proper customer due diligence, record keeping, audits and detect suspicious transactions would also constitute offenses, and money changers can be fined amounts of up to $100,000.
MAS had showed its resolve to take action against compliance violations as seen by its recent move against government owned brokerages such as DBS Vickers on 22 April 2016. Earlier in the year in May 2016, it had also served a notice to BSI Bank Limited to withdraw its status as a merchant bank, due to blatant disregard for compliance regulations. Six senior members of the bank were referred to the Prosecutor’s Office. This is in line with MAS earlier statement that the country has “no tolerance for its financial system to be used as a refuge or conduit for illicit fund flows”.
Singapore Law Highlights
1. MONEY-CHANGING AND REMITTANCE BUSINESSES ACT (CHAPTER 187)
Section 27 states that:
(1) Every licensee shall at his or its own expense appoint annually an auditor to carry out an audit of the transactions in his or its money-changing business or remittance business, as the case may be.
(2) The Authority may require an auditor appointed under subsection (1) —
(a) to submit to the Authority such information as it may require in relation to the audit carried out by him;
(b) to enlarge or extend the scope of his audit of the business and affairs of the licensee;
(c) to carry out any examination or establish any procedure in any particular case; or
(d) to submit to the Authority a report of his audit or a report on any matters referred to in paragraphs (b) and (c).
The licensee shall be responsible for the remuneration of the auditor for the services referred to in subsection (2).
(6) Any licensee who contravenes subsection (1), (4) or (5) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $50,000.
(2) The Authority may require an auditor appointed under subsection (1) —
(a) to submit to the Authority such information as it may require in relation to the audit carried out by him;
(b) to enlarge or extend the scope of his audit of the business and affairs of the licensee;
(c) to carry out any examination or establish any procedure in any particular case; or
(d) to submit to the Authority a report of his audit or a report on any matters referred to in paragraphs (b) and (c).
The licensee shall be responsible for the remuneration of the auditor for the services referred to in subsection (2).
(6) Any licensee who contravenes subsection (1), (4) or (5) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $50,000.
Singapore money changers have to keep a proper record of their business transactions for legal purposes. Next, they have to hire an auditor that does a proper job (covered in subsection 3) or re-appoint a new auditor (covered in subsection 4) under government instructions. If they fail to do so, they will be fined up to $50,000. An important thing for Singapore money changers to consider is to implement a proper electronic system where every single transaction is recorded properly and an immediate electronic audit trail can be furnished to the government upon request.
2. TERRORISM (SUPPRESSION OF FINANCING) ACT(CHAPTER 325)
Part II Section 4 states that
Every person who directly or indirectly, collects property, provides or invites a person to provide, or makes available property or financial or other related services —
(a) intending that they be used, or knowing or having reasonable grounds to believe that they will be used, in whole or in part, for the purpose of facilitating or carrying out any terrorist act, or for benefiting any person who is facilitating or carrying out such an activity; or
(b) knowing or having reasonable grounds to believe that, in whole or in part, they will be used by or will benefit any terrorist or terrorist entity, shall be guilty of an offence.
(a) intending that they be used, or knowing or having reasonable grounds to believe that they will be used, in whole or in part, for the purpose of facilitating or carrying out any terrorist act, or for benefiting any person who is facilitating or carrying out such an activity; or
(b) knowing or having reasonable grounds to believe that, in whole or in part, they will be used by or will benefit any terrorist or terrorist entity, shall be guilty of an offence.
This act is used to prevent terrorists from financing their activities in Singapore. Money changers have to screen their clients properly to avoid financing terrorists indirectly for their operations in Singapore. Otherwise, they can be jailed for 10 years and fined up to $1 million under Section 6A.
Part VII Section 35 states that:
Where an offence under this Act has been committed by a company, firm, society or other body of persons, any person who, at the time of the commission of the offence, was a director, manager, secretary or other similar officer or a partner of the company, firm, society or other body of persons or was purporting to act in any such capacity, shall be guilty of that offence and shall be liable to be proceeded against and punished accordingly unless he proves that —
(a) the offence was committed without his consent or connivance; and
(b) he had exercised all such due diligence to prevent the commission of the offence as he ought to have exercised, having regard to the nature of his functions in that capacity and to all the circumstances.
(a) the offence was committed without his consent or connivance; and
(b) he had exercised all such due diligence to prevent the commission of the offence as he ought to have exercised, having regard to the nature of his functions in that capacity and to all the circumstances.
This section protects money changers if they have done the appropriate due diligence with the appropriate tool. Otherwise, the Public Prosecutor can apply to seize the money changer’s property under Section 21.
