Financial Crime World

Singapore: Rising Tide of Financial Crime and Economic Challenges

Singapore, as a leading financial hub in Asia, faces escalating challenges from financial crime. High-profile cases, such as financiers in Singapore being linked to the troubled Malaysian state fund, 1MDB, have brought the issue to the forefront. These cases have resulted in the shutting down of banks, large fines, and regulatory action.

Mounting Challenges for the Authorities

According to the Monetary Authority of Singapore (MAS), there was a significant increase in regulatory actions against financial crime between July 2017 and December 2018. The following statistics were issued:

  • One criminal conviction
  • S$16.8 million in financial penalties and compositions
  • S$698,000 in civil penalties
  • 19 prohibition orders
  • 37 reprimands
  • 223 warnings
  • 444 supervisory reminders

These statistics represent the mounting challenges the authorities face due to the complex and increasing volume of financial transactions and cross-border activities.

Singapore’s Regulatory Bodies and Authorities

Two primary agencies are responsible for investigating financial crime in Singapore:

Commercial Affairs Department (CAD)

The Commercial Affairs Department (CAD), a department under the Singapore Police Force, is in charge of investigating white-collar crimes, including commercial fraud and financial fraud.

Monetary Authority of Singapore (MAS)

The Monetary Authority of Singapore (MAS), on the other hand, conducts investigations and audits to ensure compliance with statutes such as the Securities and Futures Act (Cap. 289). MAS is also Singapore’s central bank and oversees the regulation and supervision of financial institutions.

The Attorney General exercises sole prosecution powers and has control over the direction and discretion of prosecution of offenses in Singapore. The Economic Crimes and Governance Division under the Attorney General’s Chambers is in charge of all prosecutions related to financial crimes and corruption.

Major Enforcement Collaboration

Since March 2015, MAS and CAD have collaborated on joint investigations. This joint arrangement streamlines the investigation process, allowing for the efficient detection, investigation, and resolution of market misconduct.

Major Market Manipulation Case

The largest market manipulation case in Singapore occurred in October 2013 with Asiasons Capital Ltd, Blumont Group Ltd, and LionGold Corp Ltd. The joint investigations arrangement was formed to address offenses such as insider trading and market manipulation, enabling a more coordinated response from both agencies.

Insider Dealing and Market Abuse

The Securities and Futures Act (Cap. 289) serves as the primary legislation to tackle insider dealing and market abuse. Offenses under this Act include:

  • False trading
  • Market manipulation
  • Making false statements
  • Fraudulently inducing persons to deal with capital market products
  • Insider trading
  • Employing manipulative and deceptive devices

Punishment for these offenses includes a fine of up to S$250,000 and imprisonment of up to seven years.

Fraud and Offenses

Corporate fraud in Singapore encompasses:

  • Theft
  • Dishonest misappropriation
  • Criminal breach of trust
  • Cheating
  • Fraudulent disposition of property and payments of debts
  • Fraudulent execution of deeds of transfer
  • Forgery and falsification of accounts

Persons in their personal capacities or companies can be held responsible for these offenses.

The Companies Act (Cap. 50) outlines specific corporate fraud offenses, such as:

  • Making false and misleading statements
  • Making false reports
  • Fraud by officers
  • Breaching directors’ duties

Other causes of fraudulent actions include:

  • Fraudulent misrepresentation
  • Breach of fiduciary duties
  • Breach of trust, dishonest assistance, and conversion

Bribery and Corruption

The Prevention of Corruption Act (Cap. 241) deals with bribery and corruption in Singapore. Chapter IX of the Penal Code covers offenses by or relating to public servants. The Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act (Cap. 65A) provides for the seizure of the fruits of corruption.

The Corrupt Practices Investigation Bureau (CPIB) is Singapore’s dedicated agency responsible for investigating corruption, reporting directly to the prime minister to prevent undue interference.

Money Laundering and Terrorist Financing

Singapore has a robust stance against money laundering, terrorist financing, and other financial threats, as demonstrated by its membership in the Financial Action Task Force (FATF). Singapore has adopted strict legal and regulatory frameworks to detect and deter these illicit activities, aligning its anti-money laundering and terrorism financing regime with international standards.

Despite these efforts, the growing volume and complexity of financial transactions make such crimes harder to detect and address. Notably, the Terrorism (Suppression of Financing) Act (Cap. 325) sets out harsher penalties and increased enforcement powers. Additionally, the Organised Crime Act 2015 criminalizes the commission of serious offenses by organised criminal groups, involving money laundering.

On 19 March 2018, the MAS imposed penalties of S$5.2 million on Standard Chartered Bank, Singapore Branch, and S$1.2 million on Standard Chartered Trust (Singapore) Limited for breaches of anti-money laundering (AML) and counter-financing of terrorism (CFT) requirements.

MAS has outlined several measures to strengthen consumer protection and public trust in financial institutions, including:

  • Timely and adequate disclosure of corporate information
  • Business conduct of financial advisers and their representatives
  • Financial institutions’ compliance with AML/CFT requirements
  • Brokerage houses’ internal controls to detect and deter market abuse
  • Surveillance and investigations into suspected insider trading

MAS has also harnessed data analytics and augmented intelligence through ‘Project Apollo’ to increase the precision of AML/CFT monitoring and detect market manipulation, respectively.

In conclusion, Singapore’s financial climate is under constant pressure from financial crime. With the strengthened collaboration between CAD and MAS, the authorities can respond faster and more effectively to these challenges.

Debby Lim is a partner at Shook Lin & Bok LLP and can be reached at +65 6439 0633 or debby.lim@shooklin.com.