Anti-Money Laundering Regulations and Your Business: What You Need to Know
Changes proposed to the Companies Act will take effect come 31 March 2017, and key amendments are targeted towards making ownership of companies more transparent to reduce opportunities for using companies as a front for illegal purposes.
Singapore takes a firm stance towards money laundering and terrorism financing, where policy objectives stated by the Ministry of Finance (MOF) include detecting and deterring money laundering and terrorism financing as well as protecting the integrity of the system from illegal activities.
As a business owner, it is important to be aware of new changes and anti-money laundering regulations for compliance purposes.
Existing anti-money laundering regulations
The main legislation that governs money laundering related offences is the Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act (CDSA). There are several types of money laundering offences, found mainly within Part VI of the CDSA.
Sections 43 and 44 of the CDSA relate to a person who had assisted others to retain benefits of drug dealing and criminal conduct. This refers to a person who knowingly entered into an arrangement to facilitate the retention of benefits from drug dealing or criminal conduct, and includes arrangements to help secure funds and to acquire property. Defences for this type of offence includes proving that there was no knowledge or reasonable grounds to believe that the arrangement was related to proceeds from drug dealing or criminal conduct. The penalty for such offences entails a fine not exceeding $500,000 or to a maximum prison term of 10 years or both (for an individual) or a fine not exceeding $1 million (for a person who is not an individual).
Sections 46 and 47 of the CDSA involve acquiring, possessing, using, concealing or transferring benefits of drug dealing and criminal conduct. This is a more direct means of money laundering, as the offences involve the actions of a person concealing or disguising his own benefits from criminal activities. Aside from concealment, converting or transferring the property or removing it from the jurisdiction as well as acquiring, possessing or using that property are also considered actions which constitute an offence. Similarly, penalties include a fine not exceeding $500,000 or to a maximum prison term of 10 years or both (for an individual) or a fine not exceeding $1 million (for a person who is not an individual).
Section 48 of the CDSA is quite self-explanatory, where a person knows or has reasonable grounds to suspect that an authorised officer is about to or is conducting investigations into another person’s activities and discloses information to that person which may prejudice the investigations. This is more commonly known as “tipping-off”. “Tipping-off” may result in a fine not exceeding $30,000 or to imprisonment for a term not exceeding 3 years or to both.
The above are some specific activities that constitute money laundering offences, and small business owners should be mindful and careful when entering into arrangements or when conducting their business activities.
By virtue of section 39 of the CDSA, failure to disclose any suspicious transactions to the authorities is by itself an offence. This means that any suspicious or illegal activities encountered in the course of “trade, profession, business or employment” should be reported to the Suspicious Transaction Reporting Officer as soon as it is practicable. A person who contravenes section 39 may be liable to a fine not exceeding $20,000.
Therefore, even small businesses have a duty to disclose and report any suspicious transactions, if they have reasonable grounds for such a belief.
Additionally, it should be noted that there may also be guidelines and notices specific to certain industries. For instance, the Monetary Authority of Singapore (MAS) had previously released a notice on the prevention of money laundering for holders of licenses for money changing and remittance services. Such licensees are required to perform customer due diligence, by verifying the identity of the customer and inquire if there are any beneficial owners involved. Further, the licensees are required to monitor their relationships with customers on an ongoing basis.
Other reporting obligations are imposed on certain industries. For instance, Precious Stones and Metals Dealers (PSMDs) are obliged to file a cash transaction report (CTR) with the Suspicious Transaction Reporting Office of the Commercial Affairs Department (CAD) within 15 business days when they conduct any cash transaction exceeding SGD 20,000, or its equivalent in foreign currency. More information on the various reporting obligations can be found on the Commercial Affairs Department (CAD)’s website.
Generally, all legal and natural persons should screen customers against the lists of designated individuals and entities (see MAS website) before engaging in any business transactions with them.
Changes to the Companies Act
Aside from existing obligations, new obligations will arise after 31 March 2017, when key amendments made to the Companies Act come into effect.
There are certain changes specific to increasing the transparency of businesses, and business owners should take note of the following changes to the Companies Act:
- Companies (except listed companies and Singapore financial institutions) and LLPs registered in Singapore are required to maintain registers of beneficial owners at prescribed places (e.g. company’s registered office or the registered filing agent’s registered office);
- Foreign companies registered in Singapore are required to maintain registers of beneficial owners and public registers of shareholders;
- A liquidator is required to retain records of wound up companies and LLPs for five years instead of two;
- Remove the options for companies and LLPs to destroy records early if they are wound up by their members, partners or creditors;
- Officers/ partners/managers of struck off companies and LLPs required to retain accounting records and registers of beneficial owners for five years;
- Void the issuance and transfer of bearer shares and share warrants by foreign companies registered in Singapore; and
- Require nominee directors/managers to disclose their nominee status and nominators to their companies/LLPs
Another amendment related to anti-money laundering is the amendment made to The Accountants Act, which will be amended to clarify that a breach of ethical requirements related to mandatory anti-money laundering and countering the financing of terrorism requirements for professional accountants will be grounds for disciplinary action under the Act.
For more information on amendments to the Companies Act, please refer to the government’s website at “Public Consultation on Proposed Changes to the Companies Act, Limited Liability Partnerships Act, And Accountants Act”.
If in doubt, please contact one of our corporate lawyers to advise you on regulatory compliance matters.
- What are Annual General Meetings (AGMs) in Singapore?
- Anti-Money Laundering Regulations and Your Business: What You Need to Know
- Price-Fixing, Bid-Rigging and Other Anti-Competitive Practices to Avoid
- Dividend Payments Guide for Singapore Business Owners
- Company Audits in Singapore: Requirements and Exemptions
- Guide to Transferring Shares in a Singapore Private Company
- How to Hold an Extraordinary General Meeting (EGM) in Singapore
- How to Issue Shares in a Singapore Private Company
- How to Reduce the Share Capital of Your Singapore Company
- How Businesses Can Legally Conduct Lucky Draws in Singapore
- Dormant Companies and Their Filing Obligations in Singapore
- How to Hold a Board Meeting in Singapore
- Paid-Up Capital in Singapore: A Complete Guide (Is $1 Enough?)
- Essential Regulatory Compliance Guide for Singapore Companies
- Finding a Suitable Corporate Secretarial Firm in Singapore
- Oppression of Minority Shareholders
- Process Agents in Singapore
- Company Constitutions in Singapore and How to Draft One
- How to Set Up a Register of Controllers
- How to Set Up a Register of Nominee Directors
- How to Change the Name of Your Singapore Company
- Memorandum of Understanding (MOU): Does Your Business Need One?
- Minutes of Company Meeting in Singapore: How to Record
- Guide to Filing Financial Statements for Singapore Business Owners
- Company Resolutions: What are They?
- Board Resolutions in Singapore
- Company Memorandum and Articles of Association
- Filing Annual Returns For Your Business
- Shadow Directors: Who are They and What Duties Do They Owe to the Company?
- Guide to Directors' Remuneration in Singapore
- 3 Types of Insurance Every Singapore Business Needs
- How to Remove a Director from a Company in Singapore
- Appointing Company Directors in Singapore: Eligibility, Process etc.
- Company Loans to Directors/Shareholders (& Vice Versa) in Singapore
- Share Transmission: What Happens If a Shareholder Dies in Singapore?
- Business Will: How to Pass on Your Business to Your Successors in Singapore
- Shareholder Rights in Singapore Private Companies
- Removal and Resignation of Company Auditor in Singapore
- What Responsibilities Do Company Shareholders Have in Singapore?
- Creating and Registering Charges in Singapore: Guide for Companies
- How to Commence a Derivative Action on Behalf of a Company in Singapore
- Managing Director vs CEO in Singapore: Roles and Obligations
- Appointing an Authorised Representative for a Singapore Business
- Business Partnership Disputes in Singapore: How to Resolve
- Appointing a Company Secretary: Roles and Responsibilities
- Directors' Duties in Singapore
- What is Withholding Tax and When to Pay It in Singapore
- Singapore Influencers: Here's How to Calculate Your Income Tax
- Corporate Tax in Singapore: How to Pay, Tax Rate, Exemptions
- When to Register for GST, How and Responsibilities after Registration
- Start-Up Tax Exemption Guide for New Singapore Companies
- Essential PDPA Compliance Guide for Singapore Businesses
- Cloud Storage of Personal Data: Your Business’ Data Protection Obligations
- How Can Companies Dispose of Documents Containing Personal Data?
- Here's a 7-Step Plan for Companies to Prevent Unauthorised Disclosure When Processing and Sending Personal Data
- Appointing a Data Protection Officer For Your Business: All You Need to Know
- Summary: Your Organisation's 9 Main Obligations under the Personal Data Protection Act
- Check the Do-Not-Call Registry Before Marketing to Singapore Phone Numbers
- GDPR Compliance in Singapore: Is it Required and How to Comply
- Is It Legal for Businesses to Ask for Your NRIC in Singapore?
- PDPA Consent Requirements: How Can Your Business Comply?
- Legal Options If Employees Breach Confidentiality in Singapore
- Insolvency: Claw-back of Assets from Unfair Preference and Undervalue Transactions
- Striking Off a Company
- What Should a Creditor Do When a Company Becomes Insolvent?
- Dissolution of partnerships in Singapore
- Validation of Payments Made by Companies Being Wound Up
- Can a Company that Struck Itself Off the Register Later Apply to Restore Itself?
- Are You Closing Your Singapore Business? Have You Settled All of the Following?
- How to File a Proof of Debt against a Company in Liquidation
- Winding Up a Company