A number of things caught our attention recently and we thought it'll be useful to summarise them here.
Companies Act was amended as at 31 Mar 2017. Some notable changes in respect of AML include the need to maintain a Register of Registrable Controllers for companies and LLPs. There is a grace period of 60 days so as to give everyone time to fall in line with the new requirements. We've just gone past this deadline.
There is also now a requirement for nominee director to disclose his nominee status and their nominators to their companies.
These work towards achieving better transparency which in turns should combat money laundering and even terrorism financing.
However, because the Register of Registrable Controllers is not publicly available, it does not help anyone out there (including Banks, FIs, and other DNFBPs) needing to perform CDD to benefit from the potentially good work that has been done in somewhat identifying UBO.
Regardless, there is a provision in the revised Companies Act that at some point in the future, maybe ACRA will make this part of a centralised database that will benefit the greater good of everyone needing to get hold of such information for legitimate CDD reasons.
In the mean time, some useful resources are available in ACRA website. There is also a relevant application of section 7 of the Companies Act on interest in shares to the new regime that CSP should be aware of.
Accountants Act was also amended to perhaps give greater clarity, teeth and effect to ISCA's Ethics Pronouncement 200 and that it will form the basis of regulatory review and inspection of the Accountants industry.
In conjunction to this, EP200 was also revised on 28 March 2017 and effective 1 June 2017.
A number of moving parts in the CSP and Accountants space all in the name of improving AML/CTF standards of the industry - a step towards the right direction.
Corporate Money Mule Case
In setting out the judgement and in accordance with the news article, the Court has established some thresholds for culpability level of "consent or connivance", the upper limit is 10 years' jail, pegged to the maximum prescribed by law; for "recklessness", the limit is four years; and for negligence, two years.
The judge said jail should not ordinarily be imposed for purely negligent breaches. But in this case, the accused culpability "evolved from mere negligence to sheer recklessness" by the time he received the fourth recall notice from the bank, which specifically alerted him to a probable fraudulent transaction.
This then bags the question why was the sentence reduced from original 26 months and 4 weeks to 12 months?? Wouldn't leaving the original sentence as it is and dismissing the appeal be a better message to the public?
On the one hand, the regulators are strengthening everyone's effort to perform proper CDD etc. but on the other hand, the first corporate money mule case in Singapore just had his jail sentence reduced by more than half! A little difficult to comprehend for the less learned ones like me.
In a statement issued on 30 May 2017, MAS noted the completion of a 2-year long review of banks and financial institutions known to be involved with 1MDB transactions. It has also levied financial penalties against Credit Suisse and UOB as well as the issuance of prohibition orders against several individuals.
This appears to have summed up the most extensive supervisory review by the MAS on financial institutions.
In conclusion, Mr Ravi Menon, Managing Director, MAS, said, “The two-year long 1MDB-related review holds key lessons for both MAS and financial institutions in Singapore. MAS has enhanced its AML surveillance and taken unprecedented enforcement actions against errant institutions and individuals. Financial institutions have increased their risk awareness and strengthened their AML controls. Our financial industry is in a better position today than it was when the abuses stemming from the 1MDB-related flows took place. The price for keeping our financial centre clean as it grows in size and inter-connectedness is unstinting vigilance.”
We hope that this sets the regulatory tone and expectation of the industry in taking AML/CTF matters seriously. Besides going through the motion of "doing" AML, it is now clear that regulatory actions including licence revocation, personal criminal liabilities and prohibition orders will be the big "stick" out there if the lessons are not learnt by others. This should form the new norm for financial industry as well as a not-so-distant future landscape of non-financial sectors.
Other AML/CTF News
On 24 April 2017, CAD and MAS issued a statement on the formation of Anti Money Laundering and Countering the Financing of Terrorism Industry Partnership (ACIP).
A great initiative but we hope that this is not centered around large banks only. The industry partnership should extend to the very long tail of smaller FIs, DNFBPs and even NPOs because the risk of ML/TF extends way beyond the big banks who may have the financial strength and resources to implement all sorts of controls while the large number of smaller players struggle with sub-optimum manual and analogue processes.
On 25-26 May 2017, FATF hosted the first global FinTech and RegTech Forum in San Jose. The forum discussed the significant trends and developments of FinTech and RegTech, and how the financial services landscape could look like in the near future, including peer-to-peer transfers, crowdfunding, distributed ledger-technology or blockchain-based services, analytical tools, KYC utilities, and digital identity.
We thought that this is a fantastic example of FATF taking a big leadership role in engaging the industry of FinTech and RegTech directly and working out high level strategies, approaches and ways in addressing ML/TF risks while the world grapples with the huge interest in FinTech applications.
Prime Minister Lee noted during an interview with ABC that Singapore will be psychologically prepared for a terrorist attack, when it happens. He also noted that "lone wolf attack" is probably the hardest to preempt and prevent.
At the back of Ministry of Home Affairs' Singapore Terrorism Threat Assessment Report 2017 issued on 1 June 2017, as well as the release of detention information about a Singaporean self-radicalised lady on 12 June 2017, the threat seems very real. It is no longer something far away.
In this regard, and whilst there is a difference between terrorism and terrorist financing, it is important that Banks, FIs, DNFBPs and NPOs take its regulatory obligations on AML/CTF seriously.