Anti-Money Laundering Regulations and What It Means For Your Business

​Whenever you do business, achieving anti-money laundering (AML) compliance means dealing with financial regulators and understanding legislation that are imposed at the local level, while at the same time maintaining globally recognized standards.
 
Singapore takes a serious view on money laundering, and terrorism financing, where policies enforced by the Ministry of Finance (MOF) include detecting, and deterring money laundering and terrorism financing as well as protecting the integrity of the system from illegal activities.

​If you are a business owner, it is important to be aware of the AML regulations for compliance purposes.

Photo credit: Photo by Freddie Collins on Unsplash

​The AML compliance law for business entities operating in Singapore are set out in the Monetary Authority of Singapore (MAS)’s Notice on Prevention of Money Laundering and Countering the Financing of Terrorism (AML/CFT Notices). 

Types of Offences
The main legislation that governs money laundering related offences is the Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act (CDSA). Section 43 and 44 of the CDSA relate to a person who had assisted others to retain benefits of drug dealing and criminal conduct. Section 43 and 47 of the CDSA involve acquiring, possessing, using, concealing or transferring benefits of drug dealing and criminal conduct. The penalty for such offences include a fine not exceeding S$500,000 or a prison term of up to 10 years or both.
 
The above are some specific activities that would constitute money laundering offences, and business owners should be mindful and careful when entering into agreements or when conducting their business activities.

Reporting Obligations
As stated in Section 39 of the CDSA, failure to disclose any suspicious transactions to the authorities is itself an offence. Therefore, even small businesses are obligated to report any suspicious transactions, if they have reasonable ground for such a belief. Any individual violating section 39 may be liable to a fine not exceeding S$20,000.
 
In addition, there may also be guidelines and notices specific to certain industries. More information can be found in MAS’s website here.

​Generally, it is strongly advisable for any businesses to screen customers against the lists of designated individuals and entities ​before engaging in any business transactions with them.

In the Companies Act
Apart from the existing obligations listed above, there have been certain changes specific to increasing the transparency of businesses and business owners that have already been introduced in recent amendments made to the Companies Act such as:

1. All companies and limited liability partnerships (LLPs) (excluding listed companies and financial institutions) registered in Singapore must maintain register of beneficial owners at their respective company’s registered office or registered filing agent’s registered office;
2. All foreign companies registered in Singapore must maintain register of beneficial owners and public register of shareholders;
3. Liquidators must retain records of companies and LLPs for five years;
4. Companies and LLPs are no longer allowed to destroy any records early if they are wound up by their members, partners or creditors;
5. Company controllers of struck off companies and LLPs must retain accounting records and register of beneficial owners for five years;
6. Issuance and transfer of bearer shares and share warrants by foreign companies registered in Singapore will be voided; and
7. All companies must maintain their register of nominee directors.

 
For more information on the amendments for the Companies Act, please visit MOF’s website here. 

At Inter Group, we take a firm stance towards AML and terrorism financing, that is why we carry out customer due diligence or enhance customer due diligence (when necessary) as part of our client on-boarding process. This is in-line with the regulatory framework introduced by the Accounting and Regulatory Authority for Singapore (ACRA) that aims to protect corporate service providers (CSP) in Singapore. For more information, visit our blog post: KYC Regulations in Singapore. Why and how does it affect you? 

There are a lot of legislations and regulations regarding AML globally, and we strongly encourage you to know which major AML regulations will impact your business. Each of these AML regulations also differ in consequences for non-compliance offences. Moreover AML regulations are constantly modified to adapt and stay relevant to match new techniques for perpetuating financial crimes, therefore it is advisable that business owners stay compliant with these rapidly changing AML laws.