Singapore passes Bill to strengthen laws against financing of weapons of mass destruction

SINGAPORE: Singapore on Tuesday (Feb 6) passed amendments to existing laws to strengthen controls against proliferation financing, or financing aimed at evading sanctions and proliferating weapons of mass destruction.

The changes, proposed under the Prevention of Proliferation Financing and Other Matters Bill, would allow Singapore to adhere to updated requirements set out by the Financial Action Task Force (FATF), a global money laundering and terrorism financing watchdog. Singapore has been an FATF member since 1992 and currently holds the task force’s presidency.

The FATF defines proliferation financing as the act of providing funds or financial services for the manufacture, acquisition, possession, development, export, transshipment, brokering, transport, transfer, stockpiling or use of nuclear, chemical or biological weapons and their means of delivery and related materials, in contravention of national laws or international obligations.

Under the new standards set out by the FATF in 2020, countries and the private sector must assess and mitigate proliferation financing risks related to the “potential breaches, non-implementation or evasion” of targeted financial sanctions.

Apart from the financial sector, the FATF also noted the important role played by other non-financial sectors in combatting flows of dirty money, said the Law Ministry’s (MinLaw) Senior Parliamentary Secretary Rahayu Mahzam as she tabled the Bill for a second reading.

Business activities in these sectors include dealing in precious stones and metals, moneylending, pawnbroking and providing legal services.

“As a regulator of these sectors, MinLaw regularly reviews our laws to ensure that they remain relevant, effective and fully in line with the latest international standards set by the FATF,” said Ms Rahayu.

Hence, the Bill covered changes to four Acts, namely the Precious Stones and Precious Metals (Prevention of Money Laundering and Terrorism Financing) Act, the Moneylenders Act, the Pawnbrokers Act and the Legal Profession Act.

The Bill proposed updating the regulatory regimes of these sectors and requiring businesses or persons covered by the Acts to implement adequate measures to combat proliferation financing.

Examples of the measures include performing risk assessment, as well as developing and implementing internal policies, procedures and controls.

Among others, the Bill included amendments to prevent people from obtaining licences or holding management roles in moneylending and pawnbroking businesses if they were previously convicted of offences relating to the prevention of financial crimes.

There were further changes to the Precious Stones and Precious Metals (Prevention of Money Laundering and Terrorism Financing) Act to strengthen the sector’s regulatory regime.

For one thing, the definition of a precious product will be updated.

Under the current definition, a precious product refers to any jewellery, watch, apparel, accessory, ornament or other finished product that contains or is made of any precious metals or stones. Such a product must also have at least 50 per cent of its value attributable to the precious metals or stones.

Ms Rahayu noted that the current definition does not cover products with the majority of their value attributed to other factors, such as branding or workmanship, even though such products can also be linked with financial crimes.

To close this gap, the Bill will amend the definition to also cover any precious product priced at more than S$20,000 (US$14,900), regardless of value attributable to precious metals or stones.

The prescribed threshold value of S$20,000 is aligned with FATF standards and international best practices, Ms Rahayu said in a speech delivered on Monday evening before parliament was adjourned.

QUESTIONS ON COMPLIANCE COSTS, MONEY-LAUNDERING GAPS 

The debate on the Bill continued on Tuesday. Members of Parliament supported the Bill, although they also raised questions about possible increased compliance costs, especially for small- and medium-sized enterprises.

In her response, Ms Rahayu noted that the new requirements are not expected to result in significant compliance implications, as the measures to counter proliferation financing are similar to those already in place to counter money laundering and terrorism financing.

Nominated MP Neil Parekh wanted to know how long businesses will be given to comply with the new rules and if assistance programmes will be available for those who need help with understanding and abiding by them.

Ms Rahayu replied that the Law Ministry will continue to engage the relevant sectors and provide guidance while the rule changes are being rolled out.

“Should MinLaw come across regulated entities that are not complying with the requirement after the amendments are imposed, we will assess and follow up with them to rectify the situation,” she added.

“We will take into consideration the time that regulated entities may reasonably need to implement these measures.”

MPs also had questions related to the massive money laundering case uncovered last year.

On Aug 15 last year, 10 foreigners suspected to be involved in the money laundering case were arrested in simultaneous raids across Singapore. The raids took place at Good Class Bungalows, condominiums and a landed property.

Since it first emerged in the public eye, the value of assets seized or frozen in relation to the case has snowballed, and is now triple the original S$1 billion worth of luxury cars, houses, cash and other assets that was initially thrown up.

Mr Dennis Tan (WP-Hougang) asked if there were lessons learned from the recent crackdown and whether these were applied to the proposed amendments in the Bill. He also wanted to know if the government has started reviewing existing laws to better prevent money laundering.

Ms Rahayu said the review of issues laid out in this Bill started prior to the arrest of suspects involved in the recent money laundering crackdown.

“This is part of MinLaw’s regular reviews to ensure that our laws remain relevant, effective and fully in line with the latest international standards set by the FATF,” she told the House. 

Investigations by the police into the massive money laundering case are still ongoing, alongside probes by various sectoral regulators, including government agencies overseeing corporate service providers, real estate agents, precious stones and metals dealers, lawyers, financial institutions and others. 

A new inter-ministerial committee, tasked with reviewing the country’s anti-money laundering regime, is “currently reviewing the adequacy of the laws and controls in the entire anti-money laundering ecosystem to assess whether there are areas of enhancements to be made”, said Ms Rahayu.

The committee, chaired by Second Minister for Finance and National Development Indranee Rajah, “will put forward its (recommendations) when ready”, she added.