Second Reading of the Anti-Money Laundering and Other Matters (AMLOM) Bill – Closing Speech by Mrs Josephine Teo, Minister for Digital Development and Information and Second Minister for Home Affairs

Mr Speaker,

1. I thank all 16 Members who spoke for their support of the Bill. I will respond to their speeches in two parts. The first part will be on the broad themes that they raised. The second part will be on specific questions.

Singapore’s Approach Towards Money Laundering

2. One broad theme concerns the robustness of Singapore’s anti-money laundering or AML regime. Members acknowledge that the Bill would further strengthen our regime. Some like Ms He Ting Ru advocate for more proactive legislation although it’s not clear how much in advance proactive means. At the same time, members like Mr Edward Chia, Ms Foo Mee Har, Mr Saktiandi Supaat, and even Mr Leong Mun Wai, worry about the signal to legitimate investors and businesses.

3. In astronomy, there is a sweet spot known as the “Goldilocks Zone” where planets are orbiting at a distance from a star that is “just right”. Any closer to the star and water on that planet turns into steam; any further and the water will freeze. Neither scenario will support life as we know it.

4. Though just a character in a children’s story, Goldilocks’ famous approval of things that are “just right” has been applied many times over, including in regulations, to describe the desire to strike a right balance. Is our AML regime within the “Goldilocks Zone” enough to deter criminals but not so much as to drive away legitimate investors?

5. Here are some facts that strongly suggest that we are “in the zone”.

6. Singapore was ranked third in the Global Financial Centre Index last year, behind only New York and London in terms of competitiveness. A broad range of factors was considered, including ‘Political Stability and Rule of Law’ and ‘Institutional and Regulatory Environment’.

7. The financial sector contributes to about 13% of our GDP and employs about 200,000 of our people in good-paying jobs. It is also important for sustaining Singapore’s vibrant business environment, and growth in other sectors such as legal and professional services.

8. In the last Mutual Evaluation of Singapore in 2016, the FATF assessed Singapore to have a strong legal and institutional framework to fight money laundering, with highly sophisticated coordination involving all relevant authorities. While Singapore had achieved strong outcomes in some areas, FATF recommended improvements in others, such as Designated Non-Financial Businesses and Professions (DNFBPs), for example. Notwithstanding its recommendation, FATF’s overall assessment of Singapore puts us in good company. The handout I had circulated earlier contains some further details that shows this clearly.

9. Mr Neil Parekh and Mr Yip Hon Weng asked how our AML regime compares internationally. The Basel AML Index ¹ of 2023 ranked 152 regions around the world for money laundering risks. Singapore was placed within the lowest quartile, which means that more than 75% of the regions presented higher AML risks than Singapore, and they include Hong Kong and Japan.

10. We share Mr Yip’s view that inter-agency coordination is critical for the successful implementation of our AML measures. To achieve this, we have established inter-agency mechanisms, such as the AML/CFT Steering Committee, co-chaired by the relevant Permanent Secretaries of MHA, MOF, and MAS.

11. The fight against money laundering is a journey without end, and our measures cannot come as one burst of fire with no further heat applied to the problem areas. This is, in fact, how we have worked in the past and how we will need to work in the future. To Mr Saktiandi’s question, we did not time this Bill to respond to any specific case. We continually review and tighten our regime in response to new threats. To Mr Dennis Tan’s question on what lessons have been learned from the recent money laundering case, I have dealt with this comprehensively in my Ministerial Statement last year, many further enhancements have been made. I thank Ms Foo for mentioning some of those on our behalf. Members will also recall that:

(a) In April, we launched COSMIC, a digital platform which MAS co-developed with the major banks to allow financial institutions to share information with one another on customers whose behaviours are indicative of financial crimes.

(b) In June, we updated our money laundering National Risk Assessment as part of our ongoing efforts to raise awareness and guide all stakeholders to better detect key money laundering risks. We also launched our inaugural National Asset Recovery Strategy, which sets out Singapore’s comprehensive approach towards the recovery of illicit assets from criminals, for forfeiture and restitution to victims.

(c) We convened an Inter-Ministerial Committee, or IMC, to review our AML regime, which will publish its findings in the fourth quarter of this year.

12. We are pushing ahead with this Bill because it has been in the making for about two years and there is no value to hold it back once the work is done. Should the IMC recommend further measures that require legislative updates, we will plan for them to be enacted as soon as practicable.

13. Sir, the Government does not consider it a chore to keep our AML regime effective and robust. In fact, it is critical to our success as an international financial centre. We cannot be competitive if financial services are poorly regulated, or if financial institutions and other gatekeepers here are inadequately supervised. Legitimate investors and asset managers will not feel sufficiently protected to flow their capital through Singapore. On the other hand, poorly designed regulations will not keep out illicit money flows, and may instead turn away legitimate businesses to our detriment. More regulation, and sometimes proactive legislation - does not always equal effective protection – we must be clear about that.

14. In short, we have zero tolerance towards criminals who exploit our financial system and have sought to get our AML regime “just right” by taking a risk-based approach, in line with the FATF standards. This means that we must have a good understanding of the risks we face, including emerging trends and developments that are being exploited by criminals. To prevent, detect, and enforce against their illicit activities, we develop tools and frameworks which are fit-for-purpose, proportionate to the risks, and effective.

15. Guided by the principle of responding appropriately to risk, we have established a strong track record of providing a stable and predictable environment for businesses to thrive, and investors to manage their wealth here. This will not change with the passage of this Bill.

16. Mr Chia, Ms Foo, Mr Parekh and Mr Saktiandi raised concerns about potential increases in compliance costs. To be clear, this Bill does not introduce any additional regulatory requirements in the financial and real estate sectors. The proposed amendments are very targeted and they seek to improve our law enforcement agencies’ abilities to detect and enforce against illicit activities. The amendments will also not impose undue friction nor burden for legitimate businesses. In fact, we made it a priority to ensure that they are reasonable and practicable.

17. Nonetheless, I thank Members for raising concerns about knee-jerk reactions. It is not surprising to see financial intermediaries heighten compliance checks after major cases, especially in the sectors which the money launderers exploited. Such vigilance is not a bad thing in and of themselves. Gatekeepers do have an outsized role in our collective defence against money laundering.

18. However, aligned with our overall approach towards money laundering, these checks need to be sensible and calibrated, and not unduly impede legitimate businesses and investors. Sectoral regulators will continue to engage and work with the gatekeepers in the respective industries to level up compliance capabilities and  strike the right balance. This approach also applies to the sectors which Ms He raised in her speech, namely, single family offices, cryptocurrency, and fine art. While we do not disagree with the need to be vigilant, ultimately, what serves us best is a risk-based approach - which we have taken. This means not viewing all transactions with suspicion, but looking into instances of concern.

Amendments to Prevent and Detect Money Laundering

19. Sir, I will now deal with specific queries about the Bill.

20. Mr Desmond Choo, Mr Don Wee, Mr Saktiandi, and Mr Yip asked about the lowered threshold for customer due diligence checks, or CDD checks and its impact on casino operations.

(a) The FATF stipulates a lower CDD threshold of about SGD 4,000 for casinos, compared to about SGD 20,000 for dealers in precious stones and metals, based on the money laundering risks it has assessed for each sector. Other FATF jurisdictions are similarly expected to impose the same CDD threshold on their casino operators.

(b) While this would increase the number of CDD checks on patrons, it is unlikely to deter bona fide patrons from visiting the two casinos or affect their competitiveness. To Mr Leong’s question, while there are no limits to the amounts that casinos can accept, casino operators will be required to conduct the necessary CDD checks, and be satisfied that the funds are from legitimate sources.

(c) Assoc Prof Razwana Begum also asked about educating and supporting the casinos in tackling proliferation financing. The casino operators have already put in place processes to prevent and detect proliferation financing in line with FATF standards, such as monitoring of patrons for proliferation financing risks.

(d) The Gambling Regulatory Authority had consulted the casino operators on the revised CDD threshold and upcoming requirements to mitigate proliferation financing, and they did not raise any concerns.

21. Mr Choo, Mr Derrick Goh, Ms Foo, Mr Louis Ng, Assoc Prof Razwana, Mr Saktiandi, Ms Sylvia Lim, Mr Wee, and Mr Tan asked about the processes to enhance data sharing and sensemaking by the Suspicious Transaction Reporting Office or STRO.

(a) To Mr Tan’s question on whether STRs were filed for the recent money laundering case - financial institutions and other companies had indeed filed STRs. Police had looked into these alerts, as I shared in my Ministerial Statement last year.

(b) Where possible offences are detected, STRO disseminates financial intelligence to law enforcement agencies or regulators for further investigations and appropriate actions. In response to Mr Tan’s and Mr Leong’s queries, supervisory follow-ups and investigations had been conducted against the regulated entities and individuals relevant to the recent money laundering case. The amendments will allow STRO to develop richer financial intelligence.

(c) STRO regularly engages gatekeepers and their regulators, to discuss ways to enhance the quality of STRs filed, and the efficiency of the processes.

(d) The amendments will further enhance upstream detection, by allowing regulators to access the STRs filed by their regulated entities. This is already the case for regulators such as MAS, MinLaw, and the Gambling Regulatory Authority. After the Bill is passed, other prescribed regulators such as the Accounting and Corporate Regulatory Authority and the Council for Estate Agencies will also have such access.

(e) The amendments do not change the existing process of how entities like the banks handle assets after filing an STR. The STRO is not an approving authority. There is also no obligation for filers to withhold transactions, unless of course they assess the risk to be unacceptable. Likewise, any tipping off or disclosure of information relating to the filing of STRs, continues to be an offence under section 57 of the CDSA.

(f) Like Mr Choo, Ms Foo, and Assoc Prof Razwana, we recognise the need to leverage technology and optimise resources, as we connect the dots in the sea of financial information. I shared previously that in February 2022, STRO commissioned an enhanced data analytics and management system to strengthen its ability to process large volumes of STRs and other data, to be translated into richer financial intelligence. STRO will continue to update its capabilities to keep pace with the evolving operational needs and share relevant intelligence with the community of regulators and gatekeepers.

22. We agree with Mr Choo, Mr Ng, Mr Parekh, Mr Wee, and Mr Yip on the importance of data safeguards.

(a) There are strong legal safeguards and information security protocols within STRO to protect and prevent unauthorised access to all data received by STRO, including tax and trade data.

(b) Only selected STRO personnel are authorised to request relevant tax or trade data from IRAS or Singapore Customs. They are strictly prohibited from onward sharing of the data. Furthermore, STRO can only share the results of its analyses of tax and trade data.

(c) Where law enforcement agencies need tax or trade data for investigation or prosecution, they have to separately request them from the data owner. This is regulated under the legislation relevant to that data.

Amendments to Pursue and Prosecute Money Laundering

23. Next, I will touch on the amendments to section 56 of the CDSA. Mr Choo, Mr Goh, Mr Leong, Ms Lim, Mr Ng, Assoc Prof Razwana, Mr Saktiandi, Mr Sharael Taha, Mr Wee, and Mr Zhulkarnain asked about the elements of proof, impact on victim restitution and international cooperation. This amendment will allow us to better act against money laundering cases, and to pursue persons who exploit our financial system, whether the subject is a money mule or kingpin. This would in turn facilitate confiscation of illicit monies and any subsequent restitution to victims.

(a) To clarify, the Prosecution would still have to prove the physical element of the offence, namely that there was transferring, converting, receiving, or acquiring of the property by the accused. What is no longer required?  Only the need to prove, as a physical element of the offence, that the property is in fact, the benefits of the criminal conduct. The Prosecution would also have to prove the necessary fault element – that the person dealing with the monies knew, or had reasonable grounds to believe, that he was dealing with benefits of criminal conduct. Other jurisdictions such as Hong Kong and Australia already have similar laws, where there is no need to prove a direct link between the property and criminal conduct.

(b) A few members have questions on reasonableness; both what the Prosecution must do to show reasonable grounds and defendants can do to demonstrate reasonable doubt. Members will appreciate that we are unable to provide examples of how a defendant might show reasonable doubt to counter the Prosecution’s assertion of reasonable grounds. Explicitly spelling this out may also unwittingly benefit criminals. Such a determination would be made by the Courts based on the specifics of the case. These are not matters unfamiliar to the Courts. Proof of reasonableness is something that they deal with all the time.

(c) An innocent person engaged in legitimate business should easily be able to show that the monies received were not benefits from criminal conduct, and that he did not have the necessary fault element. Legitimate businesses that do not break the laws in Singapore therefore need not worry about this amendment. The police will continue to raise awareness on the consequences of being unwittingly involved as money mules or in other criminal activities through advisories and  public education campaigns.

(d) On international cooperation, Singapore actively leverages Mutual Legal Assistance (MLA) arrangements with bilateral counterparts and multilateral platforms such as INTERPOL’s Global Rapid Intervention of Payments, Egmont Group, and the Asset Recovery Interagency Network Asia Pacific, to trace, intercept, and freeze criminal proceeds. We will strengthen our partnership with international colleagues when there are good opportunities to do so.

(e) To Ms Lim’s question, Singapore received MLA requests from 53 foreign jurisdictions in 2022 and 56 foreign jurisdictions in 2023. The Government does not disclose the foreign jurisdictions from which we have received MLA requests, so as not to prejudice ongoing foreign criminal matters.

24. Mr Goh, Mr Ng, Assoc Prof Razwana, and Mr Wee also spoke on the introduction of the Third Schedule to CDSA, including its intent, impact on Police training and resourcing, and whether it would apply retrospectively.

(a) The introduction of a Third Schedule to the CDSA will allow law enforcement agencies to investigate money laundering offences arising from foreign serious environmental crimes, which they were previously not able to do.

(b) This Schedule will be reviewed periodically, in tandem with evolving money laundering risks. We will also regularly review the training and resourcing of law enforcement agencies to equip them with the capabilities to deal with these risks.

(c) This amendment will not be applied retrospectively.

Amendments to Deal With Seized Properties Linked to Criminal Activities

25. Ms Foo, Mr Ng, and Mr Saktiandi, Mr Sharael Taha, Mr Wee, and Mr Zhulkarnain sought clarifications on the processes involved in the early sale of seized property, including how law enforcement agencies assess whether a property is likely to depreciate, how the Court would determine whether the sale would be in the interests of justice, how the sale process would secure competitive prices, as well as the safeguards to ensure fairness.

(a) The underlying intent of these amendments is to preserve the value of seized or restrained properties, at reasonable costs. Examples of assets which may be eligible to be sold under the amendments include vessels and vehicles. It might not be practical or desirable to set a standard threshold for the costs of maintenance or depreciation beyond which the seized assets will be sold. The timeframe for assessment of the value of a seized property will depend on factors such as the estimated length of the investigations or court proceedings, and the expected rate and extent of depreciation of the value of the property. Agencies will generally look at open-source market value trends or seek expert opinion. Mere fluctuations in valuation will not be sufficient for the Court to order an early sale.

(b) Seized properties will only be put up for early sale when there is no evidential value from the actual property that is necessary for investigations or court proceedings. Before the application to the Court for the sale, law enforcement agencies will notify all known parties by delivering the notice personally, through registered post, or other prescribed modes of delivery under the CPC.  If any person objects to the sale, he can raise this for the Court’s consideration.

(c) Furthermore, the Court can only order the sale of the property if it is satisfied that the costs of sale are, or are likely to be reasonable. There are also established protocols on the conduct of the sale of seized property. In general, law enforcement agencies would follow established industry practice for the sale of particular properties, which can include public auctions or direct sale.

(d) The Court will also have the flexibility to order the early sale of a property if the sale would be in the interests of justice. In determining so, the Court may take into account various factors, such as the interests of the parties involved, and whether there would be any injustice caused by the sale.

(e) To Mr Ng’s and Assoc Prof Razwana’s question on victim restitution process, this Bill does not change the current process.  Victims with an interest in the property will be duly notified, and the Court will assess what they are entitled to.

(f) As Ms Foo, Mr Saktiandi, and Mr Zhulkarnain have pointed out, the Police have incurred over $600,000 in the last financial year, to maintain the seized assets in the recent case. This is the latest we have, as the Police track the consolidated expenses on an annual basis. They also do not track the costs of asset depreciation. Seized assets will only be appropriated to the consolidated fund after the Court has ordered their disposal and they have been converted into cash. Of the $3 billion in seized assets, $944 million have been forfeited, and are in the process of being converted and appropriated into the Consolidated Fund. Investigations are still ongoing for the remaining assets.

26. Mr Chia, Mr Tan, Mr Goh, Mr Saktiandi and Mr Zhulkarnain asked about the amendments to deal with seized properties linked to absconded persons, including their impact on foreign investors and the relevant safeguards.

(a) We thank Ms Foo for recognising that the amendments here “strike at the heart of criminal networks and reinforce the principle that crime does not pay”.

(b) To be clear, the proposed amendments do not change our existing  thresholds  for  the seizure of properties, as expressly provided under the CPC – they concern the procedure for the disposal of seized property.

(c) Law enforcement agencies are empowered to seize properties only in certain circumstances, as expressly provided for under sections 35 and 78 of the CPC. One such circumstance is when the law enforcement agency suspects that the properties are evidence of an offence.

(d) Under the proposed amendments, the seized properties will continue to be dealt with in accordance with the CPC and subject to judicial oversight. Interested persons can make their claims to the relevant Court, and the Court will determine their entitlement to the properties and deal with it as appropriate.

(e) The mere fact that the seized property was a gift will not be sufficient, without other evidence, to prove a person’s entitlement to the property. This will similarly apply to any donations by absconded persons that may have been seized.

(f) There have been cases where persons, who were under investigation here but remained overseas, appointed counsel to apply for the release of their funds while investigations were ongoing. While there have been no successful claims by absconded persons thus far, the scenario of an absconded person remaining overseas to frustrate investigations while making a claim for his seized properties is a real possibility. Thus, we act proactively.

(g) As to whether this has been observed with the absconded persons in the recent money-laundering case, investigations are still ongoing and I can only say that none of them have returned to Singapore so far.

(h) I reiterate these proposals are targeted at absconded persons, as well as properties linked to them. Legitimate investors have nothing to worry about.

Clarifications Outside the Scope of the Bill

27. I will now deal briefly with the other questions and suggestions which are outside the scope of this Bill.

28. Mr Leong asked about the adequacy of our sentencing regime. This issue was dealt with during the Parliament Sitting last month, and there is nothing more to add. But allow me to reiterate the key points, for the benefit of Members who may not have seen the written reply.

29. First, the maximum penalties for money laundering under the CDSA are comparable with the sentencing regime in other jurisdictions, such as Japan, Switzerland, New Zealand, Germany, and France.

30. Second, the sentences meted out for money laundering would depend on the nature of the offence. The penalties for money laundering offences in the CDSA are comparable to those for other serious offences that are similar in nature, like cheating and forgery. The penalties meted out to convicted subjects can only be for the offences committed in our jurisdiction, and not for the offences they may have committed outside of our jurisdiction.

31. Third, the Courts independently consider the facts of the case, to decide on the appropriate sentence. Generally, the Courts consider factors such as the length of the offending conduct, the culpability of the accused person, as well as mitigating factors such as the accused person’s plea of guilt and whether he has shown any remorse, such as by voluntarily disgorging his illicit proceeds of crime.

32. Mr Ng has suggested that wildlife crimes will be prescribed as a serious offence under the Organised Crime Act. The Government is studying his suggestion carefully, and will respond on this matter separately.

33. On Mr Goh’s , Assoc Prof Razawans’s and Mr Saktiandi’s questions about COSMIC, MAS will be providing updates in due course.

34. To Ms He’s suggestion on a whistleblower programme, we will look into all leads that are worth investigating, whoever provides the information. On Ms He’s suggestion for an omnibus Bill for AML, it may be ideal, but there is a trade-off between tidiness and timeliness. We have to be practical because there are existing laws, and it is easier said than done to try and put everything together. What is most important, is whether together, our laws help us prevent, detect, and enforce against money laundering effectively. And I believe the answer is that, as we continue to update these laws through amendments such as those that are proposed today, we can keep our anti-money laundering regime robust and effective, whilst ensuring that our interest in promoting and strengthening our financial ecosystem is not compromised.

Conclusion

35. Mr Speaker, once again, I thank Members for their support of the Bill.

36. I beg to move.

[1] The Basel AML Index is a composite index that uses data from publicly available sources such as the FATF, World Bank, and the World Economic Forum. It also considers the quality of a country’s AML/CFT framework, and bribery and corruption indices, among others.