Financial Crime World

Money Laundering Overview in Singapore: Ensuring Compliance for Businesses in the Lion City

Singapore, with its vibrant economy and pro-business regulations, has become an attractive destination for businesses worldwide. According to the World Bank, it is the second-best country for doing business globally. However, Singapore’s open economy also makes it a potential target for financial criminals seeking to launder money or fund terrorism. In this article, we provide a comprehensive overview of Singapore’s Anti-Money Laundering (AML) regulations and requirements.

Who’s Affected?

Financial institutions and certain designated non-financial businesses in sectors such as:

  • Banking
  • Casinos
  • Exchange companies
  • Brokers
  • Financial advisers
  • Real estate agents
  • Dealers of precious metals
  • Payment service providers

and more are subject to AML regulations.

What are the Regulations?

Singapore’s primary AML regulation is the Corruption, Drug Trafficking and Other Serious Crimes Act 1992 (CDSA), which outlines roles for government authorities and imposes rules for money laundering prevention, including reporting procedures and penalties for criminals. [Other significant regulations include:

  • MAS Notice 626
  • MAS Notice 1014
  • MAS Notice 824
  • MAS Notice PSN01
  • MAS Notice PSN02
  • Singapore Payment Services Act (PSA)](#psa)

PSA and VASPs

[The PSA, in particular, regulates payment service providers and Virtual Asset Service Providers (VASPs) dealing with digital tokens/cryptocurrencies.]

How to Stay Compliant?

To maintain compliance, companies must follow the obligations set out by the CDSA:

  1. Establishing internal policies and procedures based on a risk-based approach.
  2. Communicating policies to all employees and updating them annually.
  3. Providing adequate training for staff to identify and tackle suspicious activities.
  4. Conducting business risk assessments to evaluate overall money laundering and terrorism financing risks.
  5. Appointing a compliance officer and specifying their roles and responsibilities.
  6. Reporting suspicious transactions to regulatory authorities.

[Financial institutions must also enable regulators to access and inspect the methodologies used by outsourced parties to perform Customer Due Diligence (CDD), as well as any reports produced on detected suspicious activity.]

When dealing with legal persons:

  1. Conduct background checks on directors, shareholders, and ultimate beneficial owners.
  2. Inquire about the regulatory body that binds the legal person or legal arrangement.

[Records of customer and transaction data must be retained for at least five years following the end of a business relationship or final transaction.]

Penalties for Non-Compliance

Under the CDSA, individuals convicted of money laundering activities face a fine of up to S$500,000 or up to ten years imprisonment. Companies can be fined up to S$1,000,000 or double the amount of goods acquired through illegal activities, whichever is higher.

Failure to comply with AML regulations can result in official warnings, reprimands, prohibition orders, removal of management from their positions, or license termination, as well as monetary penalties.

Conclusion

Singapore’s commitment to maintaining a robust AML regulatory framework is essential for its business environment. By understanding and adhering to these regulations, companies can establish a strong foundation for their operations while reducing the risk of engaging in illicit activities.

For more information on Singapore’s AML regulations, visit Sumsub’s dedicated knowledge base. Stay informed and stay compliant.