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Singapore Tightens Controls on Proliferation Financing to Combat Terrorism Funding
The Singapore government has passed amendments to existing laws to strengthen controls against proliferation financing, aimed at evading sanctions and proliferating weapons of mass destruction.
Strengthening Regulations
The changes, proposed under the Prevention of Proliferation Financing and Other Matters Bill, are designed to bring Singapore’s regulations in line with updated requirements set by the Financial Action Task Force (FATF), a global money laundering and terrorism financing watchdog. The FATF defines proliferation financing as providing funds or financial services for the manufacture, acquisition, possession, development, export, transshipment, brokering, transport, transfer, stockpiling, or use of nuclear, chemical, or biological weapons and their means of delivery and related materials.
Broadening Regulatory Scope
Apart from the financial sector, non-financial sectors such as dealing in precious stones and metals, moneylending, pawnbroking, and providing legal services are also crucial in combating flows of dirty money. The Bill proposes updating regulatory regimes for these sectors to require businesses or persons covered by the Acts to implement adequate measures to combat proliferation financing.
Measures to Combat Proliferation Financing
Examples of these measures include:
- Performing risk assessments
- Developing internal policies, procedures, and controls
The Bill also includes amendments to prevent individuals with a history of financial crimes from obtaining licenses or holding management roles in moneylending and pawnbroking businesses.
Affecting Four Acts
The proposed changes will affect four Acts: the Precious Stones and Precious Metals (Prevention of Money Laundering and Terrorism Financing) Act, the Moneylenders Act, the Pawnbrokers Act, and the Legal Profession Act. The amendments aim to strengthen Singapore’s regulatory regime in line with international best practices and standards.
Debate and Discussion
Law Ministry Senior Parliamentary Secretary Rahayu Mahzam tabled the Bill for a second reading, noting that the new requirements are not expected to result in significant compliance implications, as the measures to counter proliferation financing are similar to those already in place to counter money laundering and terrorism financing. Members of Parliament raised questions about possible increased compliance costs, especially for small- and medium-sized enterprises.
Lessons Learned
MPs asked if there were lessons learned from a massive money laundering case uncovered last year, which led to the arrest of 10 foreigners suspected of being involved in the crime. The value of assets seized or frozen in relation to the case has snowballed, now triple the original S$1 billion worth of luxury cars, houses, cash, and other assets initially seized.
Rahayu replied that the review of issues laid out in this Bill started prior to the arrest of suspects involved in the recent money laundering crackdown, part of the Law Ministry’s regular reviews to ensure laws remain relevant, effective, and fully in line with international standards. The police investigation into the massive money laundering case is still ongoing, alongside probes by various sectoral regulators.
Conclusion
The proposed amendments aim to strengthen Singapore’s regulatory regime against proliferation financing and other forms of financial crime. With the review process ongoing, it is expected that the new rules will be implemented in a way that balances the need for effective regulation with the need to minimize compliance costs for small- and medium-sized enterprises.