Singapore Steps Up its Fight Against Money Laundering with New Legislation

Introduction

The Anti-Money Laundering and Other Matters Bill (Bill), which was introduced for First Reading on 2 July 2024, was passed by Parliament on 6 August 2024 and assented to by the President on 26 August 2024. The Anti-Money Laundering and Other Matters Act 2024 (AML Act) will come into operation on a date that the Minister will appoint by notification in the Gazette.

Significantly, amendments introduced by the AML Act will facilitate more effective prosecution of money laundering offences, enhance inter-agency cooperation, and improve processes relating to seized or restrained properties which are linked to suspected criminal activities.

Key Aspects of the Amendments

The AML Act will, amongst other things, enhance the ability of law enforcement agencies in Singapore to pursue and prosecute money laundering offences as well as enable cross-agency data sharing to augment the detection of money laundering, terrorism financing and proliferation financing.

Prosecution of Money Laundering Offences

Under the current law, the Prosecution is required to show that monies allegedly laundered in Singapore are proceeds directly linked to specific criminal conduct. Such proof is challenging to obtain where the criminal proceeds flowed through different jurisdictions before entering Singapore; it is often the case that tainted funds are routed through many bank accounts and intermediaries in other jurisdictions, so as to obfuscate the origin of the proceeds. The AML Act will amend the Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act 1992 (CDSA) such that the Prosecution need not show a direct link between the criminal conduct and the monies laundered, and need instead prove only that the offender knew or had reasonable grounds to believe that he was dealing with criminal proceeds.

This will be effected by way of amendments to section 56 of the CDSA, which sets out the standards of proof and knowledge required for the prosecution of money laundering offences. When the amendments come into effect, the new section 56(8) of the CDSA, for example, will state as follows in respect of the offence of money laundering in section 54 of the CDSA:

“For the purpose of proving an offence under section 54(1), (2), (3) or (3A) against a person for any act mentioned in those provisions involving property that relates to the benefits from criminal conduct, it is not necessary for the prosecution to prove as a physical element of that offence that the property is in fact the benefits from criminal conduct [emphasis added].”¹

Such amendments have been explained by the Ministry of Home Affairs in its press release of 2 July 2024 as being intended to “facilitate the prosecution of money mules in cases where the monies laundered had passed through bank accounts and intermediaries in foreign jurisdictions, before entering Singapore”.²

In a similar vein, it bears mention that the CDSA was also recently amended³ to introduce significant new offences of rash and negligent money laundering with effect from 8 February 2024. These new offences require proof of a lower level of culpability – instead of having to prove that a money mule (i.e., someone who assists with the transfer of illicit funds on behalf of others) had knowledge or reasonable grounds to believe that the monies transacted through his payment account were linked to criminal activity, a money mule may now be prosecuted for being rash or negligent in this regard; the latter, in particular, only requires proof that the money mule had omitted to do an act which a reasonable person would do, or that he had performed an act which a reasonable person would not do.

Coupled with the amendments introduced by the AML Act, Singapore has taken significant steps to enhance the ability of the Prosecution and law enforcement agencies to take action against those who are involved in or otherwise facilitate money laundering.

Inter-agency Cooperation and Data Sharing

The AML Act will introduce amendments to various existing legislation to allow government agencies such as the Inland Revenue Authority of Singapore and Singapore Customs to share tax data and trade data respectively with the Suspicious Transaction Reporting Office (STRO) of the Commercial Affairs Department, which is Singapore’s Financial Intelligence Unit. Amendments will also be made to the CDSA to allow anti-money laundering and countering the financing of terrorism (AML/CFT) regulators such as the Accounting and Corporate Regulatory Authority and the Council for Estate Agencies to have access to suspicious transaction reports filed by their regulated entities, such as corporate service providers and property agencies.

Such sharing of data will lead to richer financial intelligence, allowing the authorities to carry out more effective investigations and take appropriate AML/CFT enforcement or supervisory action as appropriate. Safeguards for such data sharing will be implemented to protect data confidentiality.

It is noteworthy that these amendments follow the launch of Singapore’s first centralised digital information-sharing platform earlier this year. The platform, known as COSMIC (which stands for “Collaborative Sharing of Money Laundering/Terrorism Financing Information & Cases”), was launched by the Monetary Authority of Singapore (MAS) on 1 April 2024. It seeks to facilitate the sharing of customer information amongst prescribed financial institutions (FIs) to combat money laundering, terrorism financing and proliferation financing, by addressing the information asymmetry between banks which is often exploited by criminal actors. Prescribed FIs may share customer information with other prescribed FIs via the platform if the customer’s profile or behaviour displays certain objectively-defined indicators of suspicion or “red flags”.

There are six FIs in the initial phase of COSMIC’s launch as well as a focus on three key financial crime risks – the misuse of legal persons, misuse of trade finance for illicit purposes, and proliferation financing. MAS plans to expand COSMIC’s coverage to more focus areas and FIs in subsequent phases. Participant FIs are required to comply with various requirements in respect of the risk information shared through COSMIC, including the need to implement safeguards to protect such information from unauthorised use or disclosure.

Significantly, the STRO will also have access to information shared on COSMIC. Viewed holistically with the abovementioned amendments introduced by the AML Act, there is undoubtedly a clear focus on ensuring that relevant data and information is shared with the authorities to bolster Singapore’s AML/CFT efforts.

Alignment of Singapore’s AML/CFT Framework with FATF Standards

Through the AML Act, Singapore will align its AML/CFT framework with the standards of the Financial Action Task Force (FATF) to prevent and detect money laundering more effectively.

To this end, the Casino Control Act 2006 will be amended to tighten customer due diligence checks conducted by casino operators, with the threshold for such checks being lowered from the current threshold of single cash transactions involving S$10,000 or more or deposits into a deposit account involving S$5,000 or more, to cover single cash transactions or deposits involving S$4,000 or more. 

Designation of Serious Foreign Environmental Crimes as Predicate Offences

The AML Act will also introduce a Third Schedule to the CDSA designating serious foreign environmental crimes as money laundering predicate offences. Such crimes include illegal mining, illegal wildlife trade, illegal logging, and illegal waste trafficking. This will allow law enforcement agencies to investigate money laundering offences if it is suspected that the relevant monies in Singapore are derived from such crimes committed overseas.

During the Second Reading of the Bill in Parliament, it was highlighted that environmental crimes are one of the largest contributors to transnational organised criminal activities in the region, and there is a high propensity for illicit proceeds from such crimes to flow into Singapore.⁴ This was similarly noted in Singapore’s Environmental Crimes Money Laundering National Risk Assessment,⁵ which was published earlier this year on 29 May 2024.

Processes Relating to Seized or Restrained Properties

The AML Act seeks to improve the processes in place for dealing with seized or restrained properties. Under the current law, enforcement agencies are required to secure the consent of all parties involved if they want to obtain a court order for the sale of the properties. Where such consent is not secured, the enforcement agencies are required to continue to manage and maintain the properties – which poses challenges such as significant maintenance costs being incurred (in the case of, for example, vehicles or vessels) and/or depreciation in value of the properties.

Following the amendments to the law, the Court will be able to order the sale of seized or restrained properties where it is satisfied that (a) the value of the property is likely to depreciate, or retaining custody or maintenance of the property would be dangerous, unduly costly or not reasonably practicable; or (b) the sale would be in the interests of justice. The Court is, however, not to order such sale unless notice of the proceedings concerning the sale has been given to every party known to have a prima facie interest in the property, and the Court is satisfied that the costs of the sale are, or are likely to be, reasonable in the circumstances.

Separately, the AML Act also introduces amendments to clarify processes for dealing with the seizure of property linked to suspected offenders who have absconded. The amendments provide that where law enforcement agencies apply to the Court for continued seizure of the property, the Court must not dispose of the property if it is satisfied that there are ongoing investigations into the absconded person who is reasonably suspected of having committed a relevant offence (in connection with which the property was seized). The Court must also be satisfied that continued seizure will not cause injustice to any person entitled to possession of the property. The amendments further provide that the person who has absconded will be required to personally present himself to the law enforcement agency for investigations before he can make a claim to the seized property.

Conclusion

Singapore has actively sought to enhance its AML/CFT regime in recent years, and has continuously reaffirmed its commitment to combatting money laundering, terrorism financing and proliferation financing across different sectors and industries.

The AML Act is but one example of the latest steps taken to strengthen Singapore’s AML/CFT landscape; it sits amongst a swathe of recent legislative and regulatory changes and developments targeted at tightening the city-state’s AML/CFT laws and controls while, at the same time, not being unduly restrictive towards business. As highlighted by Prime Minister Lawrence Wong (PM Wong) at the FATF Plenary earlier this year in June 2024, Singapore has, in the past few years, “tightened [its] regulations to increase transparency on beneficial ownership; introduced new regulations; and strengthened existing laws to address risks related to virtual assets, as well as precious stones and metals dealers”.⁶ PM Wong further highlighted Singapore’s commitment to making asset recovery a priority in its anti-money laundering regime – as set out in the first ever National Asset Recovery Strategy⁷ published on 26 June 2024.

Singapore’s efforts to ensure that its AML/CFT regime keeps pace with evolving trends, standards and typologies are ongoing and continuous. Relevant stakeholders should therefore actively monitor and be attuned to key developments in this space.