Financial Crime World

Singapore’s AML/CFT Regime: A Guide for Professional Accountants

Understanding Your Obligations and Reporting Requirements

Singapore’s financial industry is fortified by stringent and comprehensive anti-money laundering (AML) and countering the financing of terrorism (CFT) regulations. This guide will discuss the key elements of Singapore’s AML/CFT regime for professional accountants, focusing on reporting requirements, customer due diligence, and record keeping.

Suspicious Activity Reporting and Tipping-Off

Under Singapore’s AML/CFT legislation, professional accountants are required to report any knowledge or suspicion of money laundering or terrorism financing. Failure to report can result in criminal offenses and penalties. It is also important to note that disclosing information related to a suspected investigation may be an offense.

Key Regulations and Criminal Offenses

  • The Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Property) Act, Cap. 63A
  • The Penal Code (Cap. 224, 2008 Rev. Ed.)
  • The Banking Act (Cap. 19, 2016 Rev. Ed.)

Reporting Procedures

  1. Submit a Suspicious Transaction Report (STR) as soon as possible.
  2. Provide complete and accurate information in the STR.
  3. Report to the Commissioner of Police or the Central Narcotics Bureau.
  4. Submit the STR to the Suspicious Transaction Reporting Office (STR Office).

Customer Due Diligence, Record Keeping, and Systems and Controls

Professional accountants in Singapore must adhere to specific measures regarding customer due diligence and records keeping when conducting transactions involving real estate, managing client money or securities, organizing company contributions, or managing legal persons or arrangements.

Customer Due Diligence

Customer due diligence (CDD) is the process of confirming the identity of the client and assessing their risk.

Importance of CDD

  • Prevent financial crime and maintain a reputation as a trusted financial institution.
  • Comply with international and local regulations.

Performance of CDD

  • Perform CDD when opening a new account, and on an ongoing basis, as necessary.
  • Identify and verify identity documents.
  • Evaluate the purpose of the business relationship, taking into consideration the nature and size of the transactions.
  • Regularly assess risk through ongoing monitoring.

Risk-Based Approach to CDD

  • Implement a risk assessment based on the client’s country, products, and services offered.
  • Apply simplified or enhanced due diligence measures based on the identified risk level.
  • Prohibited relationships include specified persons, politically exposed persons (PEPs), and high-risk jurisdictions.

Reporting, Training, Compliance, Hiring, and Audit

Reporting

  • Ongoing reporting of transactions, as required by the AML/CFT regulations.
  • Periodic reporting of specific types of transactions, such as large value or complex transactions.

Training

  • Regularly provide training to staff on the latest AML/CFT requirements and procedures.

Compliance Management

  • Establish and maintain effective AML/CFT policies and procedures.
  • Designate a Compliance Officer to manage and enforce these policies.

Hiring

  • Conduct thorough and proper background checks during the hiring process.

Audit

  • Conduct regular AML/CFT audits to ensure compliance.

Conclusion

Understanding and adhering to Singapore’s AML/CFT regulations is crucial for professional accountants in maintaining a reputable financial institution and avoiding potential criminal offenses. Regularly reviewing and updating your knowledge of these regulations is essential for staying compliant and providing the best services to your clients.