Financial Crime World

Singapore’s Financial Regulators Crack Down on Crime: A Look at Insider Dealing, Fraud, Bribery, and Money Laundering

In the global economic climate, financial crime remains a significant threat, with Singapore, as a leading financial hub, not exempted from this trend. This article provides an overview of financial crime in Singapore, the principal agencies involved in combating it, and the specific offenses and penalties related to insider dealing, fraud, bribery, and money laundering.

The Threat of Financial Crime in Singapore

Recent high-profile cases, such as investigations into ties between financiers in Singapore and the troubled Malaysian state fund, 1MDB, have highlighted the need for rigorous enforcement against financial misconduct in Singapore. According to the Monetary Authority of Singapore (MAS), between July 2017 and December 2018:

  • One criminal conviction was meted out
  • S$16.8 million in financial penalties and compositions were imposed
  • S$698,000 in civil penalties were levied

These figures do not include the 19 prohibition orders, 37 reprimands, 223 warnings, and 444 supervisory reminders issued during the same period.

With the increasing volume and complexity of transactions and the growth in cross-border transactions, Singaporean regulatory bodies face challenges in their efforts to curtail financial crime.

Principal Agencies Combating Financial Crime

The Commercial Affairs Department (CAD), a department of the Singapore Police Force, leads the charge against white-collar crime. It features various specialist departments and groups dedicated to areas like commercial fraud and financial fraud.

MAS, Singapore’s central bank, also plays a pivotal role in financial crime investigations, conducting investigations and audits to ensure compliance with laws and regulations under the Securities and Futures Act (Cap. 289).

The Attorney-General’s Chambers, which holds sole prosecution powers, has the Economic Crimes and Governance Division responsible for all prosecutions regarding financial crimes and corruption.

Since 2015, MAS and CAD have collaborated on a joint investigations arrangement. Previous independent investigations have now given way to a streamlined process, ensuring swift detection, investigation, and resolution of market misconduct.

Insider Dealing and Market Abuse

The SFA represents the primary legislation in dealing with insider dealing and market abuse in Singapore. Among the offenses listed under the SFA are:

  • False trading
  • Market rigging
  • Insider trading
  • Employment of manipulative and deceptive devices

Punishments for these offenses include fines of up to S$250,000 and imprisonment for up to seven years.

Fraud and Other Offenses

Singaporean law covers various forms of corporate fraud, such as:

  • Theft
  • Criminal breach of trust
  • Cheating
  • Forgery and falsification of accounts

Officers of a company can also be held personally liable for these offenses. The Companies Act (Cap. 50) also sets out specific corporate fraud offenses, such as making false reports and breaching directors’ duties. Other causes of fraudulent action include fraudulent misrepresentation, breach of fiduciary duties, and breach of trust, dishonest assistance, and conversion.

Bribery and Corruption

In Singapore, the Prevention of Corruption Act (Cap. 241) and Chapter IX of the Penal Code encapsulate the main regulatory provisions against bribery and corruption. The Corrupt Practices Investigation Bureau (CPIB) is responsible for investigating corruption and reports directly to the prime minister to keep investigations independent from other government agencies.

Last year, Keppel Offshore & Marine paid a US$422 million settlement for allegedly bribing Brazilian officials, the largest such settlement involving a Singapore-listed entity.

Money Laundering and Terrorist Financing

Singapore is a member of the Financial Action Task Force and has stringent measures in place to combat money laundering, terrorist financing, and breach of financial or trade sanctions. The CDSA is the primary legislation addressing these offenses, and the Organized Crime Act criminalizes commission by organized criminal groups of serious offenses involving money laundering.

Singapore has taken a stern stance against terrorist financing. The Terrorism (Suppression of Financing) Act increases penalties and enforcement powers to counter the growing volume and complexity of financial transactions.

Recent Enforcement and Developments

MAS has strengthened its measures to protect consumers and maintain trust in financial institutions. In 2019, the agency announced plans to improve timely and adequate disclosure of corporate information, ensure compliant business conduct from financial advisers and their representatives, and enhance surveillance against market manipulation.

MAS has also implemented Project Apollo, an intelligence tool that assists enforcement officers in identifying and investigating cases based on importance.

Despite these efforts, investigations involving criminal prosecutions take an average of 33 months to be completed. Civil penalties and regulatory actions can take anywhere from 30 months to six months, while referrals to external agencies take an average of three months. Across all concluded cases, the average time taken was eight months.

However, the close collaboration between CAD and MAS, along with their determination to enforce financial laws, acts as a significant deterrent to potential perpetrators, making Singapore a less attractive destination for financial crimes.