Published: 19 November 2018
1. Mr Deputy Speaker, I thank members who have spoken in support of the Bill. Members raised many useful points, which I will address.
Regulation of Non-Financial Sectors
2. Let me first elaborate on the regulation of the non-financial sectors. Assoc Prof Fatimah Lateef asked how we are regulating non-profit organisations, businesses and professions such as law and accountancy. She also asked how Majlis Ugama Islam Singapura (MUIS) is working with the management of mosques to ensure that they do not run afoul of our laws on anti-money laundering and countering terrorism financing. Mr Christopher De Souza asked how we are raising awareness of such laws so that monies donated or provided are not unwittingly used to fund terrorism.
3. Professionals in non-financial sectors that may be at risk of becoming parties to money laundering activities, such as lawyers, accountants, and so on, are collectively known as Designated Non-Financial Business Professionals (or DNFBPs in short). Today, the different DNFBPs are supervised by their respective sector regulators. For example, casinos are supervised by the Casino Regulatory Authority (CRA), and corporate service providers by the Accounting and Corporate Regulatory Authority (ACRA).
4. These regulators develop the control measures to address their sector’s inherent risks against money laundering and terrorism financing, and oversee the implementation of these requirements through education and enforcement. Examples of such requirements include the need for DNFBPs to put in place customer due diligence measures, and to have controls and policies to ensure compliance with UN sanctions obligations. DNFBPs who breach these requirements are liable to a range of penalties including fines or face prosecution.
5. In the non-profit sector, charities are supervised by the Charities Unit, and mosques by MUIS. These agencies work closely with charities and mosques to educate them about their risks and help them to put in place procedures to identify and report suspicious transactions.
6. At the national level, the Ministry of Home Affairs, the Ministry of Finance and Monetary Authority of Singapore have set up the Steering Committee for combatting money laundering and terrorism financing. This Steering Committee formulates our national policies on anti-money laundering and countering the financing of terrorism (AML/CFT) to ensure our mechanisms and controls against money laundering and terrorism financing remain relevant and are consistent with international standards and best practices. It also coordinates the practices of regulatory and law enforcement agencies in different sectors to ensure consistency. Our coordinated approach has strengthened our regime.
7. Ms Sylvia Lim asked for the rate of reporting, detection and prosecution of CDSA and TSOFA cases, and how the setting up of the Anti-money laundering and Countering the financing of terrorism Industry Partnership, or ACIP, has enhanced the detection of such cases.
8. From 2013 to 2017, the number of Suspicious Transaction Reports (STRs) filed increased significantly from 22,000 to 35,000. In the same period, there were about 70 convictions annually for money laundering. In 2016, there were six convictions for terrorism financing.
9. We strive to improve this situation further through ACIP, which brings together stakeholders from industry and government to discuss and raise awareness of transnational financial risks confronting Singapore. Since it began in 2017, it has published two papers highlighting best practices regarding red flag indicators and crime typologies targeted at businesses and professions. The papers guides industries to put in place better controls to detect financial crimes. Police are also sharing case-specific information with ACIP stakeholders to help them better detect and report crime.
10. The increase in STRs filed over the past few years suggests that the different sectors are increasingly aware of their AML and CFT obligations. Sector agencies regulating DNFBPs also observed the improving quality of such reports.
Effectiveness of our regulatory regime to fight money laundering and terrorism financing
11. Let me now address members’ questions on the effectiveness of our regulatory regime. Assoc Prof Fatimah Lateef asked specifically how we stand in the implementation of FATF standards. FATF members, such as Singapore, go through periodic assessments to assess our compliance with the standards, and whether our measures are effective. The last assessment on Singapore in 2016 showed that we have a strong regulatory framework, good understanding of our risks and good international cooperation. Nonetheless, we have to anticipate and strengthen our defences. In areas where there were suggestions for improvement, we have taken firm action.
12. For example, FATF highlighted the need to enhance transparency of information on beneficial ownership for companies, limited liability partnerships and trustees. In 2017, we amended our laws to require such entities to maintain beneficial ownership information. The Ministry of Finance (MOF) and ACRA are exploring the setting up of a central non-public register of such information, where timely access will facilitate law enforcement and supervisory efforts.
13. Another area FATF highlighted was the need to regulate the precious stones and metal dealers (PSMDs). Since then, MinLaw has established a new AML and CFT Division. In addition, MinLaw recently concluded a public consultation on the proposed regulatory regime for PSMDs. A comprehensive regime will be ready by 2019.
14. Mr Deputy Speaker, we take FATF assessment seriously and are following up on the areas for improvement, some of which feature in this round of amendments as well. I thank Members for their suggestions on how we might further improve our regime.
15. Mr Murali Pillai was accurate in characterising this set of amendments as anticipatory in nature, so that we do not find ourselves on the back foot in a dynamic anti-money laundering and counter-terrorism financing landscape. He suggested strengthening our powers of confiscation, and shared a number of practices across international jurisdictions which allows confiscation to take place prior to or apart from criminal proceedings, such as a civil confiscation regime, unexplained wealth orders, and freezing orders.
16. Let me assure the House that our current regime already has in place several mechanisms to seize, restrain and confiscate the property of criminals.
17. During investigations, Police can seize the property under Section 35 of the Criminal Procedure Code if it is suspected to be linked to a criminal offence. In addition, Section 16 of the CDSA allows the High Court to make a restraint order on the property of an accused involved in these crimes even if the property might not be directly linked to these crimes. These levers allow the Court to subsequently confiscate the property once the accused is convicted, minimising the risk of dissipation.
18. In determining the confiscation amount upon conviction, law enforcement agencies will consider the criminal’s known income. Similar to the unexplained wealth order regime in the UK, any amount that is disproportionate to his known income will be presumed to have been derived benefits from criminal conduct, and confiscated.
19. In response to Mr Murali’s question on whether we can confiscate criminal proceeds parked in Singapore even though the perpetrator is not physically here, the answer is yes, we can. Section 27 of CDSA allows for a confiscation order where the person has absconded and cannot be brought back to Singapore.
20. Mr Murali also had specific questions about how confiscation works. Regarding his question on whether we should have punitive measures against the criminal if the confiscation order made against him is not satisfied. Section 14 of the CDSA allows us to do that. In effect, it converts the outstanding amount into equivalent fines and allows the Court to imprison the person in default for not paying the fine. He also asked how confiscation orders would work in the context of a co-accused. Confiscation is pursued against an individual, and not jointly. With the above measures in place, we assessed that there is currently no need for a civil confiscation regime under the CDSA, but let me assure Mr Muralli that this is a matter that we will continue to review.
21. On international benchmarks, Mr Christopher De Souza asked how our penalties compare with other jurisdictions. The increased penalties allow for greater deterrence against such offences and are benchmarked to international standards.
22. For the amendment cited by Mr De Souza in which we are raising the penalty for an individual failing to file STRs, from a fine of $20,000 to a maximum penalty of a fine of $250,000 and/or imprisonment of up to 3 years, the revised penalties are comparable with jurisdictions such as New Zealand and the US, where fines can go up to S$300,000 and imprisonment in the range of 2 to 5 years.
23. In most cases, including the case of failing to file STR, we have increased or tiered the penalties to allow a calibrated response according to the severity of the offence and the nature of the offender. For example, the maximum penalty imposed on a corporation is higher than an individual.
24. We also sought to achieve parity across the penalties in CDSA and TSOFA based on the nature of the offence. For example, the penalties for persons failing to report information on terrorism-financing, is pegged to the penalties for failing to file an STR. This is because in both cases, there is a similar obligation on persons to report suspicious information or transactions to the authorities.
Effectiveness of International Cooperation
25. Next, let me address international cooperation and its effectiveness, which Assoc Prof Fatimah Lateef and Ms Sylvia Lim asked about. Assoc Prof Fatimah Lateef also asked about the role and training of officers from the Suspicious Transaction Reporting Office, or STRO.
26. STRO is a specialised unit in the Commercial Affairs Department (CAD) of the Police. STRO officers gather intelligence from a variety of sources to detect financial crime and support investigations. As STRO manages sensitive information, all its officers are security-vetted and undergo comprehensive training on their responsibilities in managing such information. Besides the STRs as mentioned in my earlier speech, STRO officers also work closely with foreign counterparts to exchange intelligence.
27. Cooperation with overseas jurisdictions has led us to detect transnational crime and prevent our financial systems from being abused.
28. For example, in one recent case, we detected irregular money flows, and shared the information with another country. This led to joint investigations that uncovered more than $27 million, which had been transferred to Singapore from one of the largest ever overseas Ponzi schemes. We were able to seize the criminal proceeds and successfully return the monies to the country of origin.
29. Depriving overseas syndicates of their criminal proceeds deters them from using Singapore to launder their ill-gotten gains.
30. The growing volume and complexity of financial transactions across borders points to the increasing importance of international cooperation.
31. In my earlier opening speech, I shared with Members how our proposed amendments will allow us to exchange financial intelligence, including information on Terrorism Financing. The proposed amendments will allow STRO to exchange information with more than 150 countries under the Egmont Group, compared to just 50 countries today. This will open up new channels of information and allow us to more effectively target overseas organised syndicates and their money mule operations. To Mr Murali’s question on whether the government is contemplating other international arrangements, we are always open to possibilities but have no firm plans for now.
32. Mr Deputy Speaker, I thank Members once again for their support of the Bill. I hope I have addressed their concerns adequately. Money laundering and terrorism financing are serious crimes.
33. As an international financial hub, Singapore is a potential transit point for illicit funds. There are serious consequences on Singapore if such risks are not addressed.
34. The proposed amendments allow us to get tougher on corporations and professional service providers involved in money laundering and terrorism financing activities, and target overseas organised syndicates and their money laundering operations involving money mules and other perpetrators. With the support of the House, I beg to move.