Singapore strengthens anti-money laundering laws for corporate service providers, companies

LEGISLATIVE changes to strengthen Singapore’s anti-money laundering regime were made on Tuesday (Jul 2), including higher fines for errant corporate service providers (CSPs) and tighter restrictions for nominee directorships in companies.

Parliament passed two Bills to amend existing laws governing CSPs as well as companies and limited liability partnerships (LLPs).

This was after a debate in which Second Finance Minister Indranee Rajah fielded questions from MPs, including queries on the new requirements for nominee directors.

With the changes, a nominee directorship can only be arranged by a CSP, unless the nominee is the sole proprietor of a registered CSP. Those who breach this can be fined up to S$10,000.

CSPs must also ensure that the individuals they arrange to act as nominee directors are “fit and proper”, or they may be fined up to S$100,000.

Nee Soon GRC MP Louis Ng asked to what extent CSPs must take steps to determine this.

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Indranee replied: “The fit and proper factors... would include assessing an individual’s conduct and compliance history, integrity and whether the person has the competency, capacity and capability to fulfil his obligations as a (nominee) director.”

Once a nominee director is appointed to a company, the company is obliged to ensure that its nominee directors are “fit and proper”, she added.

“However, if the CSP has reasons to believe that this appointed nominee director is no longer fit and proper after the appointment, it should also take appropriate action, such as informing the company involved to replace the individual concerned.”

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As for the suggestion of a cap on nominee directorships, Indranee said this could be a “blunt tool that is unnecessarily restrictive”.

This was in response to Workers’ Party MP Louis Chua, who noted that the proposed changes increase supervision of persons with many nominee directorships, but do not cap the number they can hold.

Indranee said that a cap “would make it difficult for individuals who are capable of fulfilling their obligations, despite holding more than the prescribed number, and who may have legitimate reasons for holding multiple nominee directorships at the same time”.

“At the same time, bad actors can always find ways to get around the prescribed number.”

While money laundering has been a subject of public interest due to the S$3-billion-dollar case from last year, the proposed amendments were in development before the case was uncovered, said Indranee.

The Ministry of Finance and Accounting and Corporate Regulatory Authority (Acra) regularly review the effectiveness of anti-money laundering policies amid “increasingly sophisticated crimes”, she added.

Tightened measures

Under the amendments, any business that provides corporate services must register with Acra as a CSP.

Said Indranee: “The widened coverage of Acra’s regulatory regime will ensure that all entities providing corporate services from Singapore, regardless of whether they serve local or foreign clients, have the same obligations in our fight against financial crime.”

CSPs that do not comply with their obligations to detect and prevent money laundering can be fined up to S$100,000, up from S$25,000. Their senior management can, in certain circumstances, be held liable and fined up to S$100,000.

Companies and LLPs may also be fined up to S$25,000 – up from S$5,000 – if they fail to ensure the information in their registers are accurate and up to date.

It will be an offence to provide false or misleading information about such registers to Acra, with a fine of up to S$25,000.

Companies and LLPs must also provide Acra with information on nominee director arrangements, such as the particulars of the nominees and their nominators.

This will only be available to Acra and other public agencies for the enforcement of laws, said Indranee. However, Acra will disclose which of a company’s directors and shareholders are nominees, though not the identities of nominators.

“This information will be useful to banks, CSPs and other gatekeepers who may, for instance, wish to conduct additional checks on companies with many nominee directors or shareholders,” she said.