Singapore’s Robust Defense Against Financial Crimes: AML Regulations and Compliance

Singapore, known for its vibrant economy and business-friendly environment, is a global hub for companies. According to the World Bank, Singapore ranks second for doing business worldwide [1]. This open economy, however, makes Singapore susceptible to financial criminals seeking to conceal the origins of their illegitimate income through money laundering or terrorist financing. In response, Singapore has established a strong regulatory framework and several governmental authorities to mitigate this risk.

Singapore’s Strides in AML Regulations

Since 2016, Singapore has strengthened its Anti-Money Laundering (AML) regulatory framework. The Financial Action Task Force (FATF), an international organization focused on combating money laundering and terrorist financing, recognized Singapore’s efforts in its latest review [2].

This article aims to help businesses understand the AML regulations they must comply with when setting up in Singapore. Financial institutions, as well as certain designated non-financial businesses and professions (DNFBPs), are subject to these regulations.

Which Entities are Subject to AML Regulations?

Entities subject to AML regulations in Singapore include but are not limited to:

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

The following transactions fall under AML regulations:

Money transfers (both domestic and international)
E-money issuance
Account issuance
Money exchange
Virtual assets

Who are the Regulators?

The Monetary Authority of Singapore (MAS) is the primary financial regulator in Singapore, responsible for regulating and licensing financial institutions, such as banks, crypto-related businesses, and brokers [3]. Other regulatory bodies include the Casino Regulatory Authority of Singapore and the Council for Estate Agencies.

What are the Regulations?

The primary AML regulation in Singapore is the Corruption, Drug Trafficking, and Other Serious Crimes Act 1992 (CDSA) [4]. The CDSA outlines the roles of government authorities and sets rules for money laundering prevention, including reporting procedures and penalties for criminals.

Additional AML regulations in Singapore include MAS Notices 626, 1014, 824, PSN01, and PSN02 [5]. To learn more about each of these regulations, download our compliance guidelines.

How to Stay Compliant: Obligations under the CDSA

To maintain compliance, businesses must adhere to the following obligations set out by the CDSA:

Establishing internal policies and procedures for AML monitoring and compliance based on a risk-based approach.
Communicating policies and updates to employees.
Training staff to identify and address suspicious activity.
Conducting business risk assessments to determine overall ML/FT risk.
Appointing a compliance officer and defining their roles and responsibilities.
Reporting suspicious transactions to regulatory authorities.

Penalties for non-compliance with AML regulations can be steep, including:

Fines
Official warnings
Reprimands
Prohibition orders
Removal of management
License termination
Fines for financial institutions can reach up to S$1,000,000 (approximately $750,000) [4]

[1] World Bank, “Singapore: Doing Business,” https://www.doingbusiness.org/en/country/singapore [2] Financial Action Task Force, “Singapore: Mutual Evaluation Report,” https://www.fatf-gafi.org/media/4768947/singapore-mutual-evaluation-report-2021.pdf [3] Monetary Authority of Singapore, “MAS Licensed Institutions,” https://www.mas.sg/-/media/MAS/Home/Financial-Sector/MAS-Licensed-Institutions.pdf [4] Ministry of Law, “Corruption, Drug Trafficking, and Other Serious Crimes Act,” https://statutes.agc.gov.sg/document/act/Com/92/A3152012E.pdf%3E/files/A3152012E.pdf [5] Monetary Authority of Singapore, “MAS Notices,” https://www.mas.sg/-/media/MAS/Financial-Sector/MAS-Notices.pdf