Singapore Introduces Tougher Regulations for Corporate Service Providers to Combat Financial Crimes
In an effort to strengthen its anti-money laundering (AML) and counter-terrorism financing (CFT) regime, Singapore’s government has proposed new regulations for corporate service providers (CSPs). The proposed Corporate Service Providers (CSP) Bill aims to prevent CSPs from being exploited by criminals and ensure compliance with AML/CFT regulations.
Preventing Breaches: Criminal Liability and Due Diligence Requirements
The bill proposes criminal liability for breaches of AML/CFT requirements, making it essential for CSPs to implement robust measures to mitigate the risks of money laundering, terrorism financing, and proliferation financing. To achieve this, CSPs must register with the Accounting and Corporate Regulatory Authority (ACRA) and adhere to stricter due diligence requirements.
Identifying Red Flags: A Key to Effective Risk Management
To effectively mitigate these risks, CSPs must identify and scrutinize red flags, including:
- Complex ownership structures
- Unusual or large cash transactions
- Suspicions of money laundering or terrorist financing activities
By adopting a risk-based approach, CSPs can prioritize their efforts on high-risk customers and transactions, ensuring that resources are allocated efficiently.
Enhanced Customer Due Diligence: A Critical Component
Conducting thorough customer due diligence is crucial to verifying the identity of customers, understanding their business, and assessing potential risks. This includes:
- Background checks against sanction lists, politically exposed persons (PEPs), and special interest persons and entities
- Enhanced verification procedures for high-risk customers or complex ownership structures
- Ongoing monitoring and reporting of suspicious transactions
Staying Informed: The Key to Regulatory Compliance
To stay ahead of evolving regulations and guidelines, CSPs must prioritize staying informed about future developments and publications by international standard setters, such as the Financial Action Task Force (FATF), and local regulators.
By implementing robust customer due diligence measures, adopting a risk-based approach, and prioritizing ongoing monitoring and reporting, CSPs can effectively mitigate the risks of financial crimes and contribute to a stronger and more resilient financial system.