Law passed to allow courts to sell seized properties linked to criminal activities such as money laundering
The new law will ensure that Singapore's anti-money laundering regime "keeps pace with evolving standards and trends", said Second Minister for Home Affairs Josephine Teo.
Cash seized by the police during a series of arrests for forgery and money laundering. (Photo: Singapore Police Force)
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SINGAPORE: To better tackle money laundering offences, parliament on Tuesday (Aug 6) passed a Bill that will give more teeth to the Singapore courts when dealing with properties linked to suspected criminal activities as well as enable more data sharing between government agencies.
The Anti-Money Laundering and Other Matters Bill also sought to tighten the requirements for casino operators when conducting customer due diligence checks during point of transaction.
Due diligence checks will now have to be carried out when casinos receive single cash transactions or deposits involving S$4,000 (US$3,013) or more, down from the previous thresholds of S$10,000 and S$5,000 respectively.
Tabling the Bill for a second reading, Second Minister for Home Affairs Josephine Teo said that around US$2 trillion to US$3 trillion of illicit proceeds are channelled through the global financial system every year, according to Interpol.
"In the ocean of money flows, criminal proceeds are like toxic waste that gets carried along.
"Inevitably, some of them enter pristine waters, polluting rivers and estuaries much against the wishes of local communities," said Mrs Teo, who is also Minister for Digital Development and Information.
Adding that Singapore has a "hard-earned track record and every intention to keep (its) system clean", she said: "This must mean keeping money launderers out of our system, as best as we can."
The Government is pressing on with efforts to keep pace and deal effectively with attempts to launder criminal proceeds in Singapore. It is strengthening its three pillars of prevention, detection and enforcement to empower agencies with the levers and toolkits against money laundering. Firstly, the Bill will align its framework for Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) with the standard of the Financial Action Task Force (FATF) to better prevent and detect money laundering. Secondly, the Bill will enhance the ability of Government agencies to detect and enforce against money laundering through enhanced data sharing and prosecutorial levers. Thirdly, the Bill will clarify and improve the processes to deal with seized or restrained properties linked to suspected criminal activities. On the AML/CFT framework for casino operators, the threshold for customer due diligence (CDD) checks will be lowered. Casino operators, when conducting CDD checks, are required to consider proliferation financing risks. The Bill also wants to designate foreign environmental crimes as money laundering predicate offences. These include illegal logging, land clearing, mining, waste trafficking and wildlife trade. The amendment will allow law enforcement agencies to investigate money laundering offences if it is suspected that the monies in Singapore are derived from such serious environmental crimes committed overseas. The Bill also proposed improving the processes to deal with seized properties, including those linked to money laundering, by allowing the Court to order the sale of a seized or restrained property without the consent of all parties involved. The Court must be satisfied that the value of the property is likely to depreciate, or undue costs are involved in maintaining the property, or the sale would be in the interests of justice. This would reduce the cost of property maintenance and preserve the value of seized or restrained properties to facilitate subsequent asset recovery and restitution to the victims. The amendments will also enable the Government to better deal with absconded suspects, through depriving them of the financial gains of their money laundering and other criminal activities if they refuse to return to Singapore for investigations. Second Minister for Home Affairs Josephine Teo, who highlighted the key proposals in Parliament on Tuesday (Aug 6), said the Bill is another step in strengthening Singapore’s AML/CFT regime and it will not be the last. “Singapore will therefore have to continue to be vigilant and we will not hesitate to further tighten our laws against money laundering where necessary, to ensure that our financial and business ecosystem remains reputable and trusted and continues to thrive,” she said.
WHAT IS THIS BILL ABOUT?
Under this Bill, the court can now order for seized or restrained properties to be sold without the consent of all involved parties - a current requirement - provided that it is satisfied with certain conditions.
These conditions are that the value of the property is likely to depreciate or undue costs are involved in maintaining the property; or that the sale would be in the interests of justice.
This way, law enforcement agencies can cut back on maintenance costs and preserve the value of the seized properties.
In cases involving suspects who have absconded, investigations may be wilfully stalled if they decide to stay out of Singapore to avoid being imprisoned for their crimes.
"If the absconded person refuses to return to Singapore, it may become increasingly difficult for the police over time to justify how the continued seizure of the property remains relevant to the investigations, which are not making headway because they cannot interview the person," said Mrs Teo.
Hence, amendments to the Bill include a requirement for the absconded person to present himself or herself before a law enforcement officer to assist in investigations, before making a claim to a seized property.
Additionally, government agencies such as the Inland Revenue Authority of Singapore (IRAS) and Singapore Customs will also be allowed to share tax and trade data respectively, with the Suspicious Transaction Reporting Office - Singapore’s financial intelligence unit.
Mrs Teo pointed out that jurisdictions such as the United Kingdom, New Zealand and South Korea have similar tax data-sharing arrangements.
Likewise, Hong Kong, the United States and Luxembourg share trade data with their customs agencies, she added.
Additionally, the Bill will also make it easier to effectively tackle money laundering offences. The prosecution will no longer need to prove that money allegedly laundered in Singapore was benefits from criminal conduct or show the complete trail.
It will be sufficient to prove that the money launderer knew or had "reasonable grounds" to believe the property they were dealing with was gains from criminal conduct.
Lastly, foreign environmental crimes will also be designated as money laundering predicate offences.
Environmental crimes such as illegal mining, illegal waste trafficking and illegal logging are "not applicable in our domestic context" and thus not considered serious offences in Singapore, said Mrs Teo.
Hence, with the designation, law enforcement agencies can now investigate money laundering offences if it is suspected that the money in Singapore is derived from such serious environmental crimes committed overseas.
WHY IT MATTERS
Mrs Teo said Singapore has a "comprehensive" regime to tackle money laundering crimes, but the landscape "does not stay static and new risks emerge regularly".
Money launderers are finding many new ways to evade detection by, for example, taking advantage of technological innovations meant for legitimate financial and business transactions.
Enhancements have also been made to global standards against money laundering, such as those set by the Financial Action Task Force (FATF), a global money laundering and terrorism financing watchdog, she noted.
Mrs Teo added that there are "useful lessons" from each new money laundering case uncovered in Singapore or around the world.
This included Singapore's largest money laundering case that saw 10 foreign nationals nabbed in an islandwide blitz last year. Assets that were seized or issued with prohibition of disposal orders have ballooned to S$3 billion.
"We have been distilling the learning points through careful studies of the changing modus operandi, as well as the new standards promulgated by FATF," said Mrs Teo.
The Bill and its proposed amendments will ensure that "Singapore’s regime keeps pace with evolving standards and trends".
The inter-ministerial committee reviewing Singapore’s anti-money laundering (AML) regime is due to give its findings and recommendations in the fourth quarter of the year. Why then is the Anti-Money Laundering and Other Matters Bill being tabled before that, asked MP Saktiandi Supaat in Parliament on Tuesday (Aug 6). He said Singapore must avoid “a knee-jerk reaction” to the S$3 billion money laundering case and balance responsive measures with the consideration that there are legitimate businesses and fund flows which must not be unduly impeded. Considering its AML strategy after the committee’s report would enable a more holistic update of the regime and allow investors to review their operations and compliance policies more efficiently and cost-effectively, he said. Mr Saktiandi asked if the Government could give assurances that the new laws will not deter legitimate investments or lead to higher compliance costs and layers in the financial sector. He also spoke about proposals for wider sharing of tax and trade data with law enforcement agencies, and of Suspicious Transaction Reports with sectoral regulators. He asked if there is merit in setting up a central coordination point similar to the Anti-Scam Centre for scam-fighting efforts.
QUESTIONS RAISED
Members of Parliament (MPs) supported the Bill but raised concerns about the enhanced data sharing among government agencies, as well as possible impact on local casino operators and Singapore’s standing as a business and financial hub.
Mr Don Wee (PAP-Chua Chu Kang) asked about the risk of data misuse and whether there are preventive measures in place.
In her closing speech, Mrs Teo said the STRO has "strong" legal safeguards and information security protocols in place to prevent unauthorised data access.
In addition, only selected personnel can request for relevant tax or trade data from IRAS or the Singapore customs. STRO can only share the results of its analysis of the tax and trade data.
Agencies that require the data for their investigation or prosecution will have to "separately request them from the data owner", said Mrs Teo.
In Parliament on Tuesday (Aug 6), Second Minister for Home Affairs Josephine Teo responded to clarifications sought by Members on the Anti-Money Laundering and Other Matters Bill. The Bill was passed in the House.
Several MPs questioned if the Bill could translate into additional compliance burden for businesses and in turn deter legitimate investments.
Mrs Teo responded that the proposed amendments are "very targeted" and are aimed at improving the ability of law enforcement agencies to detect illicit activities. The amendments will "not impose undue friction or burden for legitimate businesses".
But she acknowledged the concerns about "knee-jerk reactions". While it is "not surprising" to see financial intermediaries step up on compliance checks after major cases, she also stressed that checks "need to be sensible … and not unduly impede legitimate businesses and investors".
Sectoral regulators will continue to engage and work with those involved to "strike the right balance", the minister added.
Specifically on casinos, the proposed lower threshold for customer due diligence checks is set to increase the frequency of such checks by operators on their patrons. But Mrs Teo reckoned that it is unlikely to deter bonafide patrons.
MP Saktiandi Supaat (PAP-Bishan Toa Payoh) asked about the timing of this Bill given how an inter-ministerial committee set up to review Singapore's anti-money laundering regime is due to share its full findings and recommendations in the fourth quarter.
Mrs Teo said this Bill is not done in response "to any specific case" and that the government "continually tightens (its) regime in response to new threats".
MP He Ting Ru (WP-Sengkang) suggested expanding the country’s anti-money laundering efforts to include single family offices, fine art and cryptocurrencies. For example, single family offices could be required to provide detailed information about their trades and portfolios.
"Given the rapid pace of financial innovation and the increasing complexity of corporate structures, we cannot realistically stay ahead of all asset classes unless we legislate proactively," the opposition MP said.
While authorities do not disagree with the need to be vigilant, Mrs Teo noted that a "risk-based approach" might be preferred.
"This means not viewing all transactions with suspicion, but looking into instances of concern," said the minister.
