Published: 19 November 2018
1. Mr Deputy Speaker, I beg to move, “That the Bill be now read a second time.”
2. Money laundering and terrorism financing are serious crimes, which can have severe and even devastating consequences for Singapore. Left unchecked, they can destroy our reputation as a trusted global financial centre or lead to terrorist attacks.
3. We are strongly committed to combatting these threats, and making sure they do not take root here. We closely supervise our banking and trading systems to prevent them from being exploited, and have tough legislation and regulations which we strictly enforce.
4. In the last five years, we have seen around 70 convictions annually for money laundering. In 2016, we convicted six foreign nationals for terrorism financing. However, we will need to strengthen our defences.
5. Money laundering and terrorism financing are getting harder to tackle. With banking and financial systems going digital, monies can now be swiftly transferred between persons and across borders with minimum hassle. This opens up more channels to launder illicit funds and support terrorist activities.
6. The growing volume and complexity of financial transactions also make it harder for regulators to detect offences. In particular, we are concerned with several groups exposed to the risk of money laundering and terrorism financing
7. The first group comprises corporations and professional service providers.
8. In one recent case, a foreign national paid a local corporate service provider to set up several ‘shell’ companies in Singapore. The bank account of one of these companies was then used as a pass-through for stolen monies. The service provider should have known better than to be complicit in this scheme, but was overcome by the temptation of easy money.
9. The second group comprises individuals in Singapore, who act as money mules for overseas organised syndicates. This is where an individual is paid to simply accept money transfers into his or her bank account, and then transfer it out again, thus covering the tracks of illicit funds. The syndicates exploit the anonymity and reach of the Internet messaging tools and online banking to recruit locals to their schemes, and to move monies quickly through our financial system.
10. We must get tough on both groups. Although regulations are in place, we need more severe punishments to enhance deterrence, and more effectively deprive the criminals of their illicit assets. We must also enhance our abilities to detect and prosecute these cases.
11. This is the aim of the proposed amendments to the Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act, or CDSA in short, and the Terrorism (Suppression of Financing) Act, or TSOFA.
12. We have benchmarked our proposals against the practices of leading jurisdictions such as Australia, United States, the United Kingdom and Hong Kong.
13. We have also considered international norms set by the Financial Action Task Force, or FATF, of which we are a member. As members know, FATF is an inter-governmental body which develops international standards to fight money laundering and terrorism financing.
Targeting Corporations and Professional Service Providers
14. I will first explain the proposed amendments targeted at corporations and professional service providers, who become involved with money laundering and terrorism financing.
15. To strengthen deterrence, we propose to increase the penalties for these offences, some of which have not changed since 2003.
16. Clauses 7 to 10 amend Sections 43(5), 44(5), 46(6) and 47(6) to raise the maximum penalty for money laundering committed by an entity from $1 million to the higher of $1 million or twice the value of the property involved.
17. Next, we will increase the penalties for not reporting suspicious transactions.
18. Today, a person is required under the CDSA to report to the Suspicious Transaction Reporting Office when he knows or has reason to believe that any property is linked to criminal conduct or drug dealing, and comes across such information in the course of his work.
19. Such reporting is critical to our ability to enforce against money laundering and other crimes, as law enforcement agencies rely heavily on such intelligence to initiate and support investigations.
20. However, the existing penalties for not doing so are manifestly low, with a maximum fine at only $20,000. Given the sums of money involved in such crimes, this is not sufficient as a deterrent.
21. To illustrate, a property agent was fined this year for not filing a Suspicious Transaction Report after finding out that his client was linked to a foreign Ponzi scheme. This is despite the property agent being well aware of his obligations to file the Report through guidelines and checklists issued by the Council for Estate Agencies. For this case, the client had wanted to buy a property at Sentosa Cove. Had the sale gone through, the agent’s commission would have been in the range of hundreds of thousands of dollars. A maximum fine of $20,000 clearly makes it a small risk to take.
22. Clause 5 therefore amends Section 39 to raise the maximum penalty for failing to file a Suspicious Transaction Report under Section 39(2) to a fine not exceeding $250,000 and/or imprisonment not exceeding 3 years if the offender is an individual, and to a fine not exceeding $500,000 for corporations.
23. A related issue is tipping off on any investigations under the CDSA or any disclosure made to the Suspicious Transaction Reporting Officer. Such behaviour subverts the course of justice. The penalties should therefore be increased. Clause 13 amends Section 48 to raise the maximum fine for tipping off under Section 48(1) or (2) from $30,000 to $250,000.
24. Clause 20 amends Section 6A of the TSOFA to raise the maximum penalty for non-individuals who commit a terrorism financing offence under Sections 3 to 6 of the TSOFA from $1 million to the higher of $1 million or twice the value of the property, financial service or financial transaction involved in the offence. Again, this is to ensure that higher penalties can be imposed on corporations that finance terrorist activities, for which $1 million may not be a sufficient deterrent.
25. It is also important for us to enhance penalties for not disclosing information related to terrorism financing to the Police.
26. Clause 22 amends Section 8 of the TSOFA to, amongst other things, raise the maximum penalties for failing to inform the Police about transactions relating to a terrorist’s property or whenever one controls or possesses such property.
27. Clause 23 amends Section 10(1) to raise the maximum penalty for failing to disclose to the Police, information which a person knows or believes might assist in preventing a terrorism financing offence or lead to the arrest, prosecution or conviction of another person for terrorism financing. The penalty increase under these offences will be tiered into three categories with differentiated punishments, to reflect the differing culpability of groups that might commit such offences.
28. On a related matter, Clause 24 increases the maximum penalties for disclosing information that might compromise a terrorism financing investigation under Section 10B(1) and (2) to a fine of $250,000 and/or 5 years’ imprisonment. As these offences subvert the course of justice, they should be enhanced for greater deterrence.
Targeting Overseas Syndicates and their Operations involving Money Mules
29. Let me now turn to the proposed CDSA amendments to combat organised overseas syndicates and their money laundering operations involving money mules.
30. As explained earlier, we have observed syndicates targeting locals and using their bank accounts to launder criminal proceeds.
31. Money laundering operations planned by these syndicates are complex, with multiple money mules being used to make it difficult for the crime proceeds to be traced to their original source. Some money mules are even trained not to make any admission during Police investigations, and taught to destroy evidence by deleting handphone messages.
32. Under our current laws, the prosecution must prove that these money mules know the monies are linked to criminal conduct. This is challenging, especially against mules trained to claim ignorance.
33. Clause 11 introduces a new Section 47AA to the CDSA. This criminalises the possession or use by an accused of property which would be suspected by a reasonable person of being benefits from criminal conduct, if the accused cannot satisfactorily explain how he came by the property. With this amendment, the Courts will be able to decide, based on the circumstances of the case, whether the accused could be reasonably expected to suspect that monies are linked to criminal conduct.
34. The maximum penalties for this new offence are a $150,000 fine and/or 3 years’ imprisonment for individuals.
Other CDSA Amendments
35. I will now move on to the other proposed amendments to the CDSA.
36. While we have levers today to prosecute money laundering that is linked to overseas crimes, our law enforcement agencies have highlighted challenges. Today, prosecutors must not only prove that the overseas act amounts to a serious offence if committed in Singapore. In addition, they must also show that the overseas act amounts to an offence in the overseas jurisdiction.
37. This is based on the established principle of dual criminality. Practically, the law today requires prosecutors to obtain a certificate from the foreign government or a testimony from an expert in that foreign law to fulfil the burden of proof. This is not ideal for two reasons.
38. First, we frequently encounter delays to obtain the certificate as the foreign government may not act on our request expeditiously, or in some cases may not be willing to issue it.
39. Second, engaging an expert is costly and may discourage prosecutors from proceeding with enforcement action.
40. Clause 12 amends Section 47A to address these challenges. In effect, Clause 12 will allow the Courts to decide on the basis of evidence presented by the Prosecution that an offence had indeed been committed in the overseas jurisdiction, without having to rely on foreign governments or experts.
41. We will also amend our laws to strengthen our levers against Cross Border Cash Reporting Regime offences, or CBCRR in short.
42. Under Sections 48C(2) and 48E(2) of the CDSA, a person is required to declare to the authorities any sum of monies brought into or out of Singapore exceeding the prescribed amount, which is S$20,000 today. Failure to make a report constitutes a CBCRR offence.
43. Clause 15 introduces a new Section 48FA to empower the Court to make a confiscation order against a defendant convicted of a CBCRR offence on any sum beyond the prescribed amount. This means that for a person who is convicted of bringing in $100,000 into or out of Singapore without declaring it, the Court has the option to confiscate up to $80,000. This gives the Courts greater discretion to impose heavier penalties for CBCRR cases. This will bring our penalties in line with jurisdictions like the United States.
44. For less serious CBCRR cases, Police have the powers to compound in lieu of prosecution. Clause 16 amends Section 60(1) to raise the maximum composition amount for an offence under Section 48C(2) or 48E(2) to $20,000.
45. These proposed amendments allow a wider range of penalties and composition fines to be taken against CBCRR breaches of different severity, and are in line with standards set by FATF.
46. Next, we will also amend the CDSA to enhance the sharing of financial intelligence with financial intelligence units of overseas jurisdictions.
47. As money laundering offences are often transnational, the exchange of financial intelligence between jurisdictions is critical to support the investigation of these cases.
48. Currently, the law only allows us to exchange intelligence with countries with which we have bilateral arrangements. We have around 50 such arrangements today with other countries’ financial intelligence units.
49. Clause 6 amends Section 41 to allow us to exchange information under an international arrangement, provided that there are sufficient safeguards to protect the confidentiality of information shared and control their use.
50. In effect, this will allow us to exchange financial intelligence with more than 150 financial intelligence units of overseas jurisdictions which are members of the Egmont Group of Financial Intelligence Units, thereby tripling the size of our network. We will be able to access more valuable information, while being assured that information shared in return is not abused, through the guidelines that the Egmont Group puts in place for its members.
51. Under the CDSA, we will also make amendments with Clauses 2 and 3 to clarify the powers of the Courts to confiscate criminal proceeds, and an amendment with Clause 4 to expand the types of assets for which charging orders can be imposed on by the Courts to include “capital market products”.
Other TSOFA Amendments
52. I will next touch on the other TSOFA amendments. While cases of terrorism financing in Singapore are few, these proposed amendments are important to strengthen the counter terrorism financing regime.
53. Clause 18 amends Section 4 of the TSOFA to prohibit financing the overseas travel of an individual to any place to provide or receive any training in facilitating or carrying out any terrorist act, when one knows or has reasonable grounds to believe that the involved property or services are used to support the individual’s travel. This gives effect to Resolution 2178 (2014) of the Security Council of the United Nations and is also in line with FATF standards.
54. Next, we will enhance TSOFA penalties for greater deterrence.
55. Clause 21 inserts a new section 6B into the TSOFA to make a person who abets, conspires or attempts to commit a terrorism financing offence under section 3, 4, 5 or 6 of the Act liable to the same punishment as if the person had committed the offence under the applicable section.
56. These acts are no less egregious than the primary terrorism financing offence and should be punished at the same level to create a clear deterrence against anyone from getting involved. This proposed amendment will align how we peg our terrorism financing penalties with jurisdictions like the United Kingdom and Australia.
57. We will also make amendments with Clauses 17, 18 and 19 to protect a person against civil liability when the person complies with TSOFA prohibitions. This will give greater confidence to a person to do the right thing without fear of breaching contractual obligations.
58. Mr Deputy Speaker, Singapore, as a major international trade and financial centre, faces high risks of our systems being exploited by criminals and syndicates to launder monies and finance terrorist activities. These threats are real and can lead to concomitant terrorist attacks, a loss in reputation as a trusted global hub, and a breakdown in law and order. We must do all that we can to obviate these risks.
59. These proposed amendments enhance the effectiveness of our laws to deter corporations and professional service providers against being involved in money laundering and terrorism financing activities. They also demonstrate the commitment that we have towards combatting overseas organised syndicates and dismantling their money laundering operations involving money mules. All in all, the proposed amendments strengthen our frameworks to combat such criminal activities and ensure that we will have even more effective levers and powers to deter, detect and prosecute.
60. Mr Deputy Speaker, I beg to move.