Singapore’s Parliament has passed the Anti-Money Laundering (AML) and Other Matters Bill, a crucial step in enhancing the nation’s defences against financial crimes. The Bill, introduced by Singapore’s Second Minister for Home Affairs, Josephine Teo, is designed to strengthen the country’s anti-money laundering (AML) framework, ensuring it keeps pace with global standards set by the Financial Action Task Force (FATF). Teo explains during her second reading of the Bill, “We have been distilling the learning points through careful studies of the changing modus operandi, as well as the new standards promulgated by FATF.”
Teo also noted in her reading that around US$2 trillion to US$3 trillion of illicit proceeds are channelled through the global financial system every year, according to Interpol. Additionally, she highlighted the significant threat posed by illicit financial flows, which she likened to “toxic waste” in the global financial system.
The Details About the AML and Other Matters Bill
The Bill grants courts the authority to order the sale of properties seized in connection with suspected criminal activities, such as money laundering. Unlike the current requirements, these actions can now occur even without the consent of all involved parties. This enhanced authority aims to ensure the value of such properties is preserved while investigations continue—provided that the property value is likely to decrease, that undue costs may be involved in the maintenance of properties, or that the sale would be in the interests of justice.
Additionally, the Bill will streamline the prosecution of money laundering offences, no longer requiring proof that money laundered in Singapore is derived from criminal conduct or the need to show a complete trail. It will now be enough that individuals involved in the money laundering had “reasonable grounds” to believe that properties in question were gained as a result of criminal activities.
The Bill also seeks to enhance the ability of government agencies to detect and enforce laws against money laundering through improved data sharing and prosecution tools. Singapore has already established inter-agency mechanisms, such as the AML/CFT Steering Committee, co-chaired by the relevant Permanent Secretaries of MHA, MOF, and MAS. With the Bill’s data-sharing enhancements, 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.
Teo noted that jurisdictions such as the United Kingdom, New Zealand and South Korea have similar tax data-sharing arrangements.
How Will the Bill Impact Financial Firms in Singapore?
The Basel AML Index of 2023 ranked 152 regions around the world for money laundering risks. Singapore was placed within the lowest quartile, which means that more than 75% of the regions presented higher AML risks than Singapore, and they include Hong Kong and Japan. Despite being placed in the lowest quartile, Teo stresses the importance of taking a continued, proactive approach to fighting money laundering. She states, “We cannot be competitive if financial services are poorly regulated, or if financial institutions and other gatekeepers here are inadequately supervised. Legitimate investors and asset managers will not feel sufficiently protected to flow their capital through Singapore. On the other hand, poorly designed regulations will not keep out illicit money flows, and may instead turn away legitimate businesses to our detriment.”
While the Bill does not introduce any “additional regulatory requirements in the financial and real estate sectors”, it underscores the critical role of financial firms in maintaining robust policies and controls to mitigate the risk of money laundering going undetected.
What Can Financial Institutions Do to Support Singapore’s Fight Against Money Laundering?
In June 2024, the Monetary Authority of Singapore (MAS) released a summary document of updates to the Money Laundering (ML) National Risk Assessment (NRA). The initiative is part of the regulator’s ongoing efforts to raise awareness and guide all stakeholders to better detect key money laundering risks.
The document provides a timely reminder that financial Institutions (FIs) are required to identify and assess money laundering/terrorism funding (ML/TF) risks on an enterprise-wide level, which should incorporate the findings of Singapore’s ML/TF National Risk Assessments.
MAS suggests that FIs should:
- Ensure risk assessments are duly documented and kept up-to-date.
- Comprise adequate policies, procedures and controls to mitigate the ML risks.
- Guide the allocation of AML/CFT resources within FIs entities (e.g. pay more attention to areas of higher threats/vulnerabilities).
- Assess the effectiveness of risk mitigation procedures and controls on an ongoing basis.
- Develop and deploy the use of data analytics and other advanced detection techniques to identify bad actors.
Financial institutions should also take proactive steps to strengthen their compliance frameworks. MyComplianceOffice (MCO) offers a suite of solutions that can help firms navigate the increasingly complex regulatory landscape.
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Stay ahead of regulatory changes and keep informed about regulation news and updates. Our Regulatory Change Manager (RCM) module, which includes horizon-scanning tools to help your firm understand changes to regulatory obligations.
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MCO has also announced its acquisition of Pythagoras Solutions, a Swiss software firm specialising in Know You Customer (KYC) and Anti-Money Laundering (AML) solutions for financial services firms. Pythagoras Solutions addresses further opportunities in our compliance offering and complements our existing solutions—particularly our KYTP suite.
Now is the time to join the fight against ML/TF and corruption. Learn more about the regulatory technology (RegTech) to help your firm do just that, or connect with us at the upcoming ALB Regulatory Summit in Singapore.
