Singapore is set to intensify oversight on nearly 3,000 corporate service providers to bolster anti-money laundering controls. A proposed draft law would impose fines of up to $100,000 per breach on firms and senior management that fail to meet anti-money laundering and counter-terrorism financing obligations.
On March 12, the Ministry of Finance and the Accounting and Corporate Regulatory Authority (Acra) unveiled the proposed Corporate Service Providers (CSP) Bill, which aims to enhance scrutiny of corporate service providers. The Bill also includes amendments to the Companies Act 1967 and Limited Liability Partnerships Act 2005 to increase the transparency of beneficial ownership in companies and limited liability partnerships. Public feedback on these proposals is being sought from March 12 to 25.
Under the proposed CSP Bill, all companies or individuals offering corporate secretarial services in or from Singapore must register with Acra, regardless of whether they file transactions with the authority. These services include company formation, acting as or arranging for nominee directors or shareholders, providing registered office or business addresses, accounting services, and handling transactions with Acra on behalf of others.
The Bill seeks to prevent the misuse of nominee directorships by prohibiting individuals from acting as nominee directors unless their appointment is managed by a registered CSP and they are deemed fit and proper by the CSP.
Acra will also strengthen its supervisory and enforcement efforts against individuals holding an excessive number of directorships. To improve corporate transparency, nominee directors and shareholders will be required to disclose their status and the identities of their nominators to Acra.
This proposed legislation follows a public consultation in 2022 on amendments to Singapore’s regulatory framework for CSPs, aimed at aligning with the Financial Action Task Force’s recommendations and maintaining Singapore’s reputation as a trusted financial hub. The changes also address the risks posed by the misuse of nominee arrangements in the creation of shell companies for money laundering. The new Bill is expected to be introduced in Parliament in the first half of 2024.
This move comes in the wake of a multibillion-dollar money laundering case in August 2023, which involved the arrest of 10 foreign nationals and the seizure of over $3 billion in assets. Several Singapore residents, who were registered as shareholders, directors, or secretaries of firms set up by foreigners, have been implicated in assisting the creation of shell companies used by scammers and money launderers.
On October 3, 2023, Singapore’s Second Minister for Finance, Ms Indranee Rajah, announced in Parliament that she would lead an inter-ministerial committee to update the country’s anti-money laundering framework to combat increasingly sophisticated financial crimes.
The review will focus on four key areas:
- Preventing the abuse of corporate structures by money launderers.
- Enhancing financial institutions’ controls and collaboration to detect and report suspicious transactions.
- Ensuring that other key players, including CSPs, real estate agents, and precious stones and metals dealers, contribute to anti-money laundering efforts.
- Centralizing and strengthening government agencies’ capabilities to detect suspicious activity.
Source: Straits Times