Countering money laundering

Friday, 01 February 2013
An outline of measures taken to counter money laundering in Singapore.

As more bank scandals are surfacing in the financial capitals of the world, Singapore seeks to implement tougher rules and strengthen existing standards as regulators move to safeguard and reinforce the reputation of Singapore’s fast-growing financial service sector.

The Monetary Authority of Singapore (MAS) is designating a broad range of serious tax crimes as money laundering predicate offences. A predicate offence is a crime that, as a matter of logic or statutory provision, is or must be part of another offence.

Not falling behind the other key jurisdictions such as Australia, Hong Kong, the Netherlands and the UK, this designation will be the latest addition to the list of more than 400 other money laundering predicate offences designated by Singapore. With effect from 1 July 2013, laundering money from tax offences will become a criminal offence. This is in view of the effort to protect Singapore’s reputation as a trusted international financial centre and the authorities’ intention to have a ‘tougher penalty regime’ for people caught laundering money or financing terrorist activities.

Financial institutions (FIs) in Singapore must apply the full suite of anti-money laundering and countering-financing-of-terrorism measures in the relevant MAS notices, to prevent the laundering of proceeds from serious tax crimes. Failure to comply could mean fines of up to SGD1 million and a further fine of SGD100,000 for each day during which the offence continues after conviction. It is imperative for FIs to conduct rigorous customer due diligence and transaction monitoring, as well as proper reporting of suspicious transactions to manage and mitigate them.

To discourage the entry of tax evasion monies into the financial system, FIs have to remain vigilant against suspicious inflows in anticipation of agreements between foreign jurisdictions to resolve outstanding tax issues.

There will be severe penalties on private banks that accept such clients. The Private Banking Industry Group, which looks at initiatives to spur the sector’s growth, has been developing a framework for implementing the new requirements to ensure that proceeds from serious tax crimes are not booked in Singapore and that they are also not being used as a conduit for laundering proceeds from serious tax crimes.

According to the managing director of the MAS, Ravi Menon, these measures are taken to increase the resources used to deal with suspicious banking activity and stepping up MAS supervision. Singapore will align its regime with the approach taken by Paris-based watchdog the Financial Action Task Force.

In conclusion, Singapore seeks to maintain strong competencies through such institutional initiatives promoted by the Institute of Banking and Finance and the new requirements set by the MAS. With the recent uproar in the global financial crisis, the financial industry has earned a bad name. This need not be the case. As Menon said: ‘With trust, Singapore must bring back to the centre of finance the notion of ethics – doing the right thing for customers, dealing fairly and acting with integrity at all times.’

Maintaining strict policies for the protection of the confidentiality of customer information will continue; it is a basic right and underpins confidence in Singapore as a wealth management centre. But confidentiality cannot and will not be used to conceal financial crime or the flow of illicit funds. Neither will confidentiality stand in the way of cross-border exchange of information for investigating crimes. There is no conflict between high standards of financial integrity and Singapore’s attractiveness as a centre for managing wealth. The MAS intends Singapore to continue to be a vibrant wealth management centre by having a clean regime that safeguards legitimate funds and eliminates tainted money.

Measures taken to counter money laundering to maintain Singapore’s reputation as a secure, clean and well-managed financial centre will put Singapore ahead of the global regulatory curve.

Author block
Dr Angelo Venardos

Dr Angelo Venardos TEP is CEO, Heritage Trust Group, Singapore.

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