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Singapore Introduces New Regulation for Beneficial Ownership Determination

In an effort to enhance transparency and combat money laundering and terrorism financing, Singapore has introduced new regulations requiring companies and limited liability partnerships (LLPs) to maintain a register of controllers.

Background

The Financial Action Task Force’s (FATF) evaluation report in 2016 highlighted the need for greater transparency in beneficial ownership determination. The new regulation is aimed at addressing this issue and ensuring that Singapore complies with international standards on combating money laundering and terrorism financing.

Beneficial Ownership Defined

According to FATF, beneficial ownership refers to the natural person who ultimately owns or controls a customer, or exercises ultimate effective control over a legal person or arrangement. In Singapore, significant control is defined as the right to appoint or remove a majority of directors, while significant interest refers to having an interest in more than 25% of shares or voting rights.

Obligations Under the New Regime

Companies and LLPs required to maintain a register of controllers must:

  • Take reasonable steps to identify their controllers and obtain information on them
  • Maintain registers at prescribed places
  • Ensure registers are up-to-date within two days of receiving information on controllers
  • Declare in annual returns that registers are kept up-to-date
  • Make registers available to the Accounting and Corporate Regulatory Authority (ACRA) and law enforcement authorities upon request

International Scenario

Several countries have implemented similar regulations, including:

  • Hong Kong
  • United States
  • Germany
  • United Kingdom
  • France
  • Netherlands
  • Nigeria
  • Australia
  • New Zealand
  • Indonesia
  • Ireland

The British Virgin Islands has also introduced a central database of beneficial owners.

Conclusion

Singapore’s new regulation enhances transparency in beneficial ownership determination without compromising on confidentiality. Investors must be aware of this evolving landscape when considering jurisdictions for wealth parking or company establishment. It is essential to understand the regulations and their implications on business operations.