Navigating the New Era of Corporate Services: Understanding Singapore’s Corporate Service Providers Act 2024

Dear Valued Clients and Prospective Clients,

Raffles Corporate Services works with a panel of experienced Singapore law firms who offer cost-effective and efficient legal service and advice. This article is general information only and is not legal advice.

At Raffles Corporate Services Pte Ltd, we are committed to providing you with efficient, reliable, and compliant corporate services in Singapore. As part of our ongoing commitment to transparency and keeping you informed, we want to highlight an important regulatory development: the enactment of the Corporate Service Providers Act 2024 (CSP Act 2024).

This new legislation, which is tentatively expected to come into effect in May 2025, marks a significant step in strengthening Singapore’s position as a trusted and reputable financial hub. The primary purpose of the CSP Act 2024 is to regulate corporate service providers (CSPs) and qualified individuals who provide or supervise corporate services. Its core objective is to detect and prevent money laundering, proliferation financing, and terrorism financing.

What Does the CSP Act 2024 Mean for Corporate Services?

The CSP Act 2024 introduces several key changes and enhanced requirements for companies like Raffles Corporate Services Pte Ltd. These changes are designed to elevate the standards of compliance and due diligence across the industry. Here are some of the notable aspects:

• Expanded Definition of Corporate Services: The Act broadens the scope of what constitutes “corporate services.” This now explicitly includes services such as forming local and foreign business entities, acting as or arranging for directors and nominee shareholders, transacting with ACRA on behalf of other persons or as a company secretary by way of business, and providing registered office or business addresses for business entities. Notably, this extends to services like providing a registered office, business address, correspondence or administrative address, or other related services for a corporation, partnership, or other legal person. This means even virtual and shared office providers will need to be registered as CSPs if they offer business or correspondence addresses without a fixed physical space.
• Mandatory Registration for CSPs: Under the new Act, a person must be a registered corporate service provider to carry on a business in Singapore of providing any corporate service. This ensures that all entities offering these services meet stringent regulatory standards.
• Enhanced Customer Due Diligence (CDD) Measures: A significant focus of the CSP Act 2024 is on strengthening anti-money laundering and counter-terrorism financing (AML/CFT) measures. Registered CSPs are now required to perform CDD measures before providing any corporate service to a customer. This also applies when there’s a reason to suspect money laundering, proliferation financing, or terrorism financing (ML/TF/PF), or when the veracity or adequacy of previously obtained information is in doubt. These measures include identifying and verifying the identities of customers and their beneficial owners, and obtaining information on the purpose and intended nature of the business relationship. CSPs must also document and retain CDD records for five years and keep them up-to-date as part of ongoing monitoring.Remote Transaction Requirements: For transactions involving the incorporation of companies or the transfer/sale of shelf companies where the customer is not physically present, CSPs are mandated to conduct a live video call with at least one proposed director (excluding a nominee director), or one proposed member holding at least 50% of voting rights, or an authorized representative if the proposed member is a legal person. This live video call cannot be replaced by third-party verification platforms or notarized documents.Nominee Director Fit and Proper Assessments: Registered CSPs are now responsible for conducting “fit and proper” assessments for nominee directors. Factors considered include past convictions for fraud or dishonesty, bankruptcy status, previous compliance history of companies where the person was a director, and their competency and capacity to fulfill nominee director obligations.
• New Requirements for Companies and LLPs: Beyond CSPs, companies and Limited Liability Partnerships (LLPs) will have new obligations, such as maintaining a Register of Registrable Controllers (RORC) from the date of incorporation/registration. They will also be required to file information from their registers of nominee directors and nominee shareholders with ACRA, making the nominee status publicly available.

Why This Means an Adjustment in Our Fees

The implementation of the CSP Act 2024 necessitates a significant increase in our operational processes and compliance checks. To meet the stringent new requirements, Raffles Corporate Services Pte Ltd will be investing in:

• Enhanced Due Diligence Procedures: The expanded CDD measures, particularly for remote transactions and nominee director assessments, require more intensive verification and ongoing monitoring processes.
• Technology and Training: We will be upgrading our systems and providing extensive training to our team to ensure full compliance with the new regulations and best practices.
• Increased Administrative Overhead: The detailed record-keeping and reporting requirements imposed by the Act will result in additional administrative tasks.

These increased operational costs directly impact the resources required to deliver our services. As a result, in order to continue providing you with the highest quality of service and ensure full compliance with the CSP Act 2024, we will need to implement a necessary adjustment to some of our fees.

We understand that fee adjustments can be a concern, and we want to assure you that this decision was made after careful consideration. Our aim is to continue offering you exceptional service while adhering to the robust regulatory framework that safeguards Singapore’s financial integrity.

We will be reaching out to affected clients individually with detailed information regarding the specific fee adjustments. In the meantime, please do not hesitate to contact your dedicated account manager if you have any questions or require further clarification on how the CSP Act 2024 might impact your specific corporate service needs.

Thank you for your continued trust and partnership. We look forward to continuing to serve you in this evolving regulatory landscape.

Yours Sincerely,
The Team at Raffles Corporate Services Pte Ltd