Anti-Money Laundering 2017 Anti-Money Laundering 2017

2017

Contributing editors Ann and Lamia R Matta Sultan

Laundering Anti-Money Anti-Money

GETTING THE DEAL THROUGH Anti-Money Laundering 2017 Anti-Money Laundering 2017

Contributing editors Lamia R Matta and Ann Sultan Miller & Chevalier Chartered

Publisher Law The information provided in this publication is Gideon Roberton general and may not apply in a specific situation. [email protected] Business Legal advice should always be sought before taking Research any legal action based on the information provided. Subscriptions This information is not intended to create, nor does Sophie Pallier Published by receipt of it constitute, a lawyer–client relationship. [email protected] Law Business Research Ltd The publishers and authors accept no responsibility 87 Lancaster Road for any acts or omissions contained herein. The Senior business development managers London, W11 1QQ, UK information provided was verified between April Alan Lee Tel: +44 20 3708 4199 and May 2017. Be advised that this is a developing [email protected] Fax: +44 20 7229 6910 area.

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Global overview 5 Luxembourg 63 Lamia R Matta and Ann Sultan Laurent Lenert, Nathalie Steffen Miller & Chevalier Chartered Kayser, Lenert and Becker, Avocats à la Cour

Argentina 7 Mexico 69 Pedro H Serrano Espelta and Francisco Abeal Juan Carlos Partida Poblador and Alejandro Montes Jacob Marval, O’Farrell & Mairal Rubio Villegas y Asociados, SC

Brazil 13 Nigeria 74 Rafael Mendes Loureiro, Marcela Grezes, Luís Carlos Torres and Babajide O Ogundipe and Chukwuma Ezediaro Andrea Vainer Sofunde, Osakwe, Ogundipe & Belgore Hogan Lovells and Torres Falavigna Advogados Peru 78 Cayman Islands 18 Doris Alvaro Rob Jackson and Sandra Edun-Watler Barrios & Fuentes/Universidad Peruana de Ciencias Aplicadas Walkers Russia 82 France 22 Vasily Torkanovskiy Arut Kannan, Jean-Baptiste Poulle and Rudolf Efremov Ivanyan & Partners Spitz & Poulle AARPI Singapore 89 Germany 27 Eric Chan and Agnes Lim Simone Weber Shook Lin & Bok LLP Knierim & Krug Rechtsanwälte Switzerland 95 Greece 34 Flavio Romerio and Katrin Ivell Ilias G Anagnostopoulos and Jerina (Gerasimoula) Zapanti Homburger Anagnostopoulos Criminal Law & Litigation United Arab Emirates 101 India 39 Ibtissem Lassoued Aditya Bhat, Rhea Mathew and Pankhuri Govil Al Tamimi & Co AZB & Partners United Kingdom 106 Italy 49 Barry Vitou, Anne-Marie Ottaway, Michael Ruck and Elena Elia Roberto Pisano, Valeria Acca and Chiara Cimino Pinsent Masons LLP Studio Legale Pisano United States 113 Japan 58 Lamia R Matta and Ann Sultan Yoshihiro Kai Miller & Chevalier Chartered Anderson Mōri & Tomotsune

2 Getting the Deal Through – Anti-Money Laundering 2017 © Law Business Research 2017 SINGAPORE Shook Lin & Bok LLP

Singapore

Eric Chan and Agnes Lim Shook Lin & Bok LLP

Domestic legislation 4 The offence of money laundering 1 Domestic law What constitutes money laundering? Identify your jurisdiction’s money laundering and anti-money The term ‘money laundering’ is not used as such within the CDSA. laundering (AML) laws and regulations. Describe the main Part VI of the CDSA criminalises the laundering of proceeds gener- elements of these laws. ated by criminal conduct and drug trafficking via the following offences: • The assistance of another person in retaining, controlling or using Singapore’s legal framework for combating money laundering is con- the benefits of drug dealing or criminal conduct under an arrange- tained in a patchwork of legal instruments, the main elements of ment (whether by concealment, removal from jurisdiction, transfer which are: to nominees or otherwise) (section 43(1)/44(1)). • The Corruption, Drug Trafficking and Other Serious Crimes • The concealment, conversion, transfer or removal from the juris- (Confiscation of Benefits) Act (CDSA). This statute criminalises diction, or the acquisition, possession or use of benefits of drug money laundering and imposes the requirement for persons to file dealing or criminal conduct (section 46(1)/47(1)). suspicious transaction reports (STRs) and make a disclosure when- • The concealment, conversion, transfer or removal from the juris- ever physical currency or goods exceeding S$20,000 are carried diction of another person’s benefits of drug dealing or criminal con- into or out of Singapore. duct (section 46(2)/47(2)). • The Organised Crime Act 2015 (OCA). This statute criminalises • The acquirement, possession or use of another person’s benefits of the commission by organised criminal groups of serious offences, drug dealing or criminal conduct (section 46(3)/47(3)). including money laundering, and deprives persons involved in such organised crime activity of any benefits derived from it. Mens rea • The Mutual Assistance in Criminal Matters Act (MACMA). This Strict liability is imposed for offences under sections 46(1) and 47(1) statute sets out the framework for mutual legal assistance in crimi- on the basis that the defendant is the author of the underlying predi- nal matters (see question 27). cate offence. • Legal instruments issued by regulatory agencies (such as the In relation to the other money laundering offences, a person will Monetary Authority of Singapore (MAS), in relation to financial be liable if he or she performed the act knowing or having reasonable institutions (FIs)) imposing requirements to conduct customer due grounds to believe in the existence of the relevant facts or that the prop- diligence (CDD). erty represents another person’s proceeds of crime. The meaning of the phrases ‘reasonable grounds to believe’ and Money laundering ‘reason to believe’ has been considered by the Singapore courts. In Ang 2 Criminal enforcement Jeanette v PP [2011] 4 SLR 1, the High Court, in considering an offence under section 44(1)(a) CDSA, agreed with an earlier High Court deci- Which government entities enforce your jurisdiction’s money sion in Ow Yew Beng v PP [2003] 1 SLR(R) 536 that having ‘reason to laundering laws? believe’ involved a ‘lesser degree of conviction than certainty but a The Commercial Affairs Department (CAD) is a department within the higher one than speculation’. Singapore Police Force (SPF) that has the principal responsibility for Accordingly, the test to determine whether a person had ‘reason to investigating and taking enforcement action in respect of money laun- believe’ is part objective and part subjective. In applying the test, the dering and other white-collar crimes. court assumes the position of the individual involved (ie, including his The CAD enforces the AML regime through detection of money or her knowledge and experience), but must reason (ie, infer from the laundering activities, the investigation and prosecution of money facts known to such individual) from that position like an objective, rea- laundering offences and the seizure and confiscation of illegal pro- sonable person (Koh Hak Boon v PP [1993] 2 SLR(R) 733; PP v Wang Ziyi ceeds. Singapore’s Financial Intelligence Unit (FIU) is the Suspicious Able [2008] 2 SLR(R) 61). Transaction Reporting Office (STRO), which is a unit within the CAD. Where the defendant is a legal person, criminal liability for money The CAD works closely with other SPF units and law enforcement laundering may be established by proof that a director, employee or agencies, such as the Central Narcotics Bureau (CNB) and the Corrupt agent had committed, directed or consented to the act within the Practices Investigation Bureau (CPIB). Officers of both the CPIB and scope of his or her actual or apparent authority (section 52 CDSA). If CNB are authorised under the CDSA to investigate money launder- a legal person or corporate body is found guilty, and the offence had ing offences. been committed with the consent or connivance of, or is attributable to the neglect of, its key officer, both the officer and the legal person or 3 Defendants corporate body shall be guilty of that offence (section 59 CDSA). Legal persons subject to criminal liability for money laundering may face Can both natural and legal persons be prosecuted for money parallel criminal, civil and administrative proceedings and actions (see laundering? questions 8 and 20). Yes.

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5 Qualifying assets and transactions 8 Resolutions and sanctions Is there any limitation on the types of assets or transactions What is the range of outcomes in criminal money laundering that can form the basis of a money laundering offence? cases? There are no limitations. Money laundering offences under the CDSA The outcome of a money laundering case depends on the specific are defined in relation to ‘property’, which is a term that includes money offence under which the prosecution has filed charges. Upon conviction and all other forms of property, whether moveable or immovable, and for a money laundering offence under Part VI of the CDSA, natural per- including things in action and other intangible or incorporeal prop- sons are liable to a maximum fine of S$500,000 and/or imprisonment erty, whether situated in Singapore or elsewhere (sections 2(1) and 3(5) for a term of up to 10 years, while legal persons are liable to a maximum CDSA). There is no value threshold imposed. fine of S$1 million. In addition to any criminal liability, a confiscation, restraint or 6 Predicate offences charging order may also be made by the court in respect of realisable Generally, what constitute predicate offences? property (see question 9). The term ‘realisable property’ includes any property held by the defendant, as well as any property gifted directly or Singapore has adopted a list approach when defining predicate offences. indirectly by the defendant to a person and that is caught by the CDSA Only offences that are listed in the First and Second Schedules of the (section 2 CDSA). CDSA constitute predicate offences. Certain tax offences have been included as predicate offences. 9 Forfeiture In addition, an overseas offence that corresponds to one listed Describe any related asset freezing, forfeiture, disgorgement within the CDSA would also be considered to be a predicate offence. and victim compensation laws. This is achieved by means of the CDSA defining ‘drug dealing’ and ‘criminal conduct’ to include, respectively, a foreign drug dealing Confiscation orders offence and a foreign serious offence, which in turn refer to offences Upon conviction for one or more predicate offences, the court may, against a corresponding foreign law that consists of or includes conduct on the application of the Public Prosecutor, make a confiscation order which, if such conduct had occurred in Singapore, would have consti- against the defendant in respect of benefits derived by him or her from tuted a drug dealing offence or a serious offence, as the case may be. drug dealing (section 4 CDSA) or criminal conduct (section 5 CDSA) if the court is satisfied that such benefits have been so derived. 7 Defences A confiscation order involves ordering the defendant to pay an Are there any codified or common law defences to charges of amount assessed to be the value of the benefit derived by the defendant money laundering? from drug dealing or criminal conduct. Confiscation orders operate as though they were a fine imposed by the court. In default of payment, Codified defences are available for money laundering offences under the defendant may be subject to terms of imprisonment. sections 43 and 44 of the CDSA. It is a defence to prove the absence For this purpose, a person who holds any property or interest therein of knowledge or reasonable grounds to believe that the defendant had that is disproportionate to his or her known sources of income, the hold- intended to disclose his or her suspicion and there is reasonable excuse ing of which cannot be explained to the satisfaction of the court, is pre- for failing to do so; or that the defendant had disclosed his or her sus- sumed, until the contrary is proven, to have derived benefits from drug picion to the appropriate person designated by his or her employer for dealing or criminal conduct. The assessed value of the benefits will be making such disclosures. the aggregate of the values of such properties and interests. There are also provisions under the CDSA that provide immunity A third party that asserts an interest in any property for which a from liability for money laundering offences if disclosure is made to the confiscation order is sought may make an application to the court, who authorities and appropriate consent is obtained. may, if satisfied that the third party was not involved in the defendant’s Specific disclosure and protection mechanisms are provided under drug dealing or criminal conduct and had acquired the property for suf- sections 43(3) and 44(3) of the CDSA. If a person discloses to an author- ficient consideration and without knowledge or reasonable suspicion of ised officer his or her suspicion or belief that any property is derived its illicit origins, make an order declaring the nature, extent and value of from or used in connection with drug dealing or criminal conduct and his or her interest in the property. he or she acts with the consent of the authorised officer, that act will A confiscation order may still be made, notwithstanding that a per- not be a money laundering offence. Alternatively, if a person discloses son may have absconded if he or she is taken to have been convicted of his or her suspicion or belief to an authorised officer after he or she acts drug dealing or a serious offence, as provided for under section 26 of the and the disclosure is made on his or her own initiative and as soon as CDSA, and if the court is satisfied on the evidence before it that the evi- it is reasonable for him or her to do so, the act will also not constitute a dence would have warranted his or her conviction if it was unrebutted. money laundering offence. It is also possible for a court to make a substitute property confis- Section 40 CDSA contains a broader disclosure and protection cation order under section 29B of the CDSA if it is satisfied that the mechanism that offers protection from money laundering offences to defendant had used or intended to use an instrumentality for the com- a person who files an STR under section 39 CDSA. For such purposes, mission of the offence but the instrumentality is no longer available for where a person or his or her officer, employee or agent gives informa- confiscation. In such a case, the defendant is liable to pay the govern- tion to the STRO as soon as practicable after knowledge had been ment an amount the court assesses to be the value of the instrumental- acquired, such person shall be deemed not to have been in possession ity, as specified in the substitute property confiscation order. of that information at any time. The effect of section 40 is therefore to In relation to organised crime activity, under the OCA, material or remove the mental element of a potential money laundering charge, financial gains from organised crime activity can be confiscated with- without which the offence of money laundering may not be made out. out the need for a criminal conviction. This is provided that the court is In WBL Corp Ltd v Lew Chee Fai Kevin [2012] 2 SLR 978, the Court of satisfied, on a balance of probabilities, that the person has carried out Appeal held that section 40 effectively exonerated a party that filed an an organised crime activity and has derived benefits from the organ- STR from liability for money laundering. This decision appears to have ised crime activity. For this purpose, the expression ‘organised crime had an anomalous effect, in that a party that has committed a money activity’ refers to any activity carried out by a person in (or outside) laundering offence could absolve itself of liability by filing an STR, even Singapore that amounts to a serious offence specified in the Schedule without having to rely on the disclosure and consent exception pro- to the OCA and is carried out at the direction of or in furtherance of vided in section 44(3) or 44(4). the illegal purpose of a group which the person knows or has reason- Apart from the above, there are general exceptions provided in able grounds to believe is an (locally linked) organised criminal group. Singapore’s Penal Code that are available as defences in respect of any The expression also includes an activity carried out by a person that criminal prosecution. amounts to an offence under Part 2 of the OCA. Part 2 of the OCA contains a group of provisions that criminalise being a member of an organised criminal group, instructing or facilitating the commission of

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an offence by such a group, and recruiting of members and expending Entity Covered Relevant legislation of property to support these groups. institutions and persons Restraint orders and charging orders MAS FIs: Respective MAS AML/CFT Notices (and To assist in the enforcement of confiscation orders, the High Court • Banks related Guidelines) issued under section 27B of Singapore is empowered to make, upon application by the Public • Merchant banks of the Monetary Authority of Singapore Act as follows: Prosecutor, a restraint order under section 16 of the CDSA or a charging • Finance order under section 17 of the CDSA, where proceedings for confiscation companies • MAS Notice 626: banks orders are contemplated. A restraint order serves to prohibit any person • Money changers • MAS Notice 626A: credit card or charge card from dealing with realisable property, while a charging order (applica- • Remittance agents licensees ble to immoveable property and to securities) serves to secure payment • Insurers • MAS Notice 1014: merchant banks of any amount payable under a confiscation order. Similar restraint • Insurance brokers • MAS Notice 824: finance companies orders and charging orders are also provided under the OCA in support • Capital markets • MAS Notice 3001: money changers and of confiscation orders made under the OCA. intermediaries remittance agents Where realisable property is held by a company that is in the pro- • Trust companies • MAS Notice 314: life insurers cess of winding up (whether voluntarily or compulsorily), the liquidator • Financial advisers • MAS Notice SFA04-N02: capital markets intermediaries may not exercise its functions in relation to property that is subject to • The Central • MAS Notice TCA-N03: trust companies a restraint order made before the passing of the winding-up resolution Depository • MAS Notice SFA13-N01: approved trustees or making of the compulsory winding up order (the relevant time), or (Pte) Ltd (the • MAS Notice FAA-N06: financial advisers any proceeds realised by the public trustee or a receiver appointed by Depository) • MAS Notice SFA03AA-N01: the Depository the court. This is unless payment out of the property is made towards • Stored value facility holders • MAS Notice PSOA-N02: holders of stored expenses properly incurred in the winding up of the property (section value facilities 24 CDSA). Casino Casino operators Casino Control Act After the relevant time has passed, the court may not exercise its Regulatory power to make restraint orders and charging orders in relation to any Casino Control (Prevention of Money Authority Laundering and Terrorist Financing) realisable property held by the company if the effect of the orders would Regulations 2009 be to inhibit the liquidator from making distributions to the company’s Insolvency Pawnbrokers Pawnbrokers Act 2015 creditors or to prevent making of payments towards expenses incurred and Public in the winding up of the property. For the avoidance of doubt, charging Trustee’s orders made before the relevant time, as well as property subject to a Office restraint order made at the relevant time, remain enforceable. Accounting Corporate service Accounting and Corporate Regulatory and providers Authority (Filing Agents and Qualified 10 Limitation periods Corporate Individuals) Regulations 2015 What are the limitation periods governing money laundering Regulatory Guidelines for Registered Filing Agents Authority prosecutions? (ACRA) As a general rule, prosecutions for criminal offences are not subject to Council Real estate agents Practice Circular on the Prevention of Money enforcement limitation periods. The court may, however, take into con- for Estate and salespersons Laundering and Countering the Financing of sideration the delayed or protracted prosecution or enforcement as a Agencies Terrorism factor in deciding the case. The Law Lawyers Legal Profession Act Society of Legal Profession (Professional Conduct) Rules Singapore 11 Extraterritorial reach Law Society Council’s Practice Direction 1 of 2008 on the Prevention of Money Laundering Do your jurisdiction’s money laundering laws have and the Funding of Terrorist Activities extraterritorial reach? ACRA Public accountants The Institute of Singapore Chartered Yes, the CDSA has extraterritorial effect. Section 3(5) CDSA provides Accountants’ (ISCA) Ethics Pronouncement that the CDSA applies to properties ‘situated in Singapore and else- 200: ‘Anti-Money Laundering and Countering the Financing of Terrorism – Requirements where’. The CDSA will therefore apply to a person who commits a and Guidelines for Professional Accountants money laundering offence overseas. Conduct that occurs in another in Singapore’ jurisdiction may also constitute a predicate offence for money launder- Singapore Dealers in precious Corruption, Drug Trafficking and Other ing if such conduct, had it occurred in Singapore, would constitute a Police metals and stones Serious Crimes (Confiscation of Benefits) Act predicate offence under the CDSA (see question 6). Force Corruption, Drug Trafficking and Other (CAD) Serious Crimes (Cash Transaction Reports) AML requirements for covered institutions and individuals Regulations 2014 12 Enforcement and regulation 13 Covered institutions and persons Which government entities enforce your jurisdiction’s AML Which institutions and persons must carry out AML regime and regulate covered institutions and persons? Do the measures? AML rules provide for ongoing and periodic assessments of covered institutions and persons? See question 12. The following sectors in Singapore are subject to regulation for AML. 14 Compliance The specific content of regulation varies according to the sector, but regulation here is primarily focused on requiring persons or entities Do the AML laws in your jurisdiction require covered within the sector to undertake CDD measures prior to entering into a institutions and persons to implement AML compliance business relationship with or providing services to a customer. programmes? What are the required elements of such programmes? There are variations across the different classes of covered institutions and persons, but covered institutions and persons are generally required to implement a robust AML framework commensurate with their risk profile and the nature, scale and complexity of their business. Sectors subject to more stringent regulation (such as FIs) are required to adopt an overall risk-based approach, which involves the institution

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© Law Business Research 2017 Shook Lin & Bok LLP SINGAPORE or person undertaking a risk assessment to identify and assess relevant risk-sensitive basis, so that suspicious activity or transactions may be money laundering risks. The risk assessment is generally required to reported to the STRO. take into account various factors, such as the geographical locations of its business units, customer base and profile, product lines and delivery 17 High-risk categories of customers, business partners and channels, as well as any other emerging areas of risks. Appropriate con- transactions trols, policies and procedures are then to be developed and applied to Do your jurisdiction’s AML rules require that covered manage and mitigate the money laundering risks. institutions and persons conduct risk-based analyses? Which Before covered institutions and persons establish a business rela- high-risk categories are specified? tionship with a customer or before they engage in transactions with a customer, they are generally required to identify the customer, any Yes, enhanced CDD is commonly prescribed by sectoral regulators beneficial owners and other persons who may be associated with the when the customer falls into a high-risk category. Examples of a high- customer, and to also take steps to verify their identities. Where the risk customer include: customer is considered to pose lower risks, simplified measures may • where the customer or one of its agents, connected parties or ben- be employed and conversely where the customer is considered to pose eficial owners is a politically exposed person (PEP) or a family higher risks, enhanced measures (commensurate to the risk scenario) member or close associate of a PEP. A PEP has, in most cases, been would be required – see question 16. broadly defined to include domestic, foreign and international On an ongoing basis, covered institutions and persons are typically organisation PEPs; or required to closely monitor their business dealings with customers so • where the customer or its beneficial owner is from or in a country that suspicious activity can be promptly reported to the STRO. or jurisdiction in relation to which the Financial Action Task Force Existing AML controls, policies and procedures are to be kept under (FATF) has called for countermeasures. regular review to ensure that they continue to be effective in helping to manage and mitigate money laundering risks. Such enhanced CDD measures may entail: • procuring approval from senior management to establish or to con- 15 Breach of AML requirements tinue business relations with the customer; What constitutes breach of AML duties imposed by the law? • making additional inquiries and checks, especially as to the source of the customer’s wealth or the source of the funds that will be Singapore does not have an integrated AML law as such. While most received from the customer; and aspects of Singapore’s laws on money laundering are provided for in the • more intense scrutiny and ongoing monitoring of business rela- CDSA, the legal requirement to conduct CDD is found in sector-specific tions and transactions. regulatory frameworks. Thus, enforcement of the requirement to conduct CDD is largely in the hands of sectoral regulators such as the MAS Some sectoral regulators have also provided guidance on potential red- (for FIs). flag indicators. These include: Failure to comply with the regulatory requirements (whether these • unusual or excessively complex ownership structure given the be set out in the CDSA or in sector-specific regimes) generally consti- nature of the business; tutes an offence under the relevant law, which is enforced either via • where the customer is a personal asset-holding vehicle; criminal prosecution or by imposition of regulatory penalties. • where the customer is overly evasive or resistant to providing Singapore law provides for the crime of tipping-off. It is an offence additional information, or provides unsatisfactory information under section 48 CDSA to tip-off or disclose information that is likely to when asked; prejudice an investigation or proposed investigation. It is also a tipping- • where business relations are conducted under unusual circum- off offence to inform another person that an STR has been filed. stances or there is significant unexplained geographic distance between the institution and the customer; 16 Customer and business partner due diligence • where the transaction is structured in a circuitous manner, involves Describe due diligence requirements in your jurisdiction’s possible shell companies or has no apparent or visible economic or AML regime. lawful purpose; • where frequent payments are received from a party not related to There are variations across the different classes of covered institutions the customer, and not known to have any business association with and persons, but generally speaking, covered institutions and persons the customer; and are required to perform CDD on their customers as and when: • where the customer’s activity is not commensurate with its • business relations are established; known profile. • (where no business relations are established) the transaction under- taken exceeds a prescribed amount; 18 Record-keeping and reporting requirements • there is a suspicion of money laundering or terrorism financing Describe the record-keeping and reporting requirements for (ML/TF); or • the veracity or adequacy of any information previously obtained is covered institutions and persons. in doubt. The requirements for record keeping and reporting are, for FIs, set out in the CDSA and for certain other covered institutions and persons in CDD measures generally entail a qualitative assessment of ML/TF other legal regimes. risks presented by the customer. Except in certain low-risk scenarios, the CDD measures generally involve the following measures: Record-keeping • identifying and verifying the identity of the customer (or where it Covered institutions and persons are generally required to retain CDD is a legal person, its legal form, proof of existence, constitution and information, as well as other relevant data, documents and informa- powers that regulate and bind it); tion, for a period of at least five years. This may include, for example, • where the customer is a legal person, identifying the persons details of its risk assessments, information on business relations with or with executive authority within the organisation structure of transactions for a customer, and information pertaining to a matter that the customer; has been the subject of an STR. Such requirements may be imposed • identifying and verifying the identity of any agent of the customer, either under the CDSA or by the respective sectoral regulators. including the agent’s authority to act; and Section 37 CDSA expressly requires that FIs retain records of finan- • checking for the existence of any beneficial owner in relation to a cial transactions for a minimum retention period of five years. customer, and if so, identifying and verifying their identities. Dealers in precious metals and stones are also required under section 48I CDSA to maintain records of cash transactions exceeding After a customer is onboarded, it would usually be necessary for S$20,000, as well as customer information, for a period of five years. the transactions with the customer to be monitored, again on a

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personal data is disclosed to any officer of a prescribed law enforce- Update and trends ment agency. In relation to FIs, in order that the PDPA should not compromise In 2016, the MAS took regulatory actions against several financial the ability of FIs to effectively conduct CDD, the AML/CFT notices institutions for AML control lapses in connection with the 1Malaysia issued by MAS (that are legally binding and thus have the effect of law) Development Berhad (1MDB) case. 1MDB is a Malaysian government entity and allegations were made in various countries concerning override the PDPA by specifically providing that consent from the cus- senior Malaysian politicians having misappropriated funds belong- tomer is not needed for FIs to collect, use and disclose personal data to ing to 1MDB, some of which were said to have been routed through meet AML/CFT requirements. banks operating in Singapore. MAS conducted onsite inspections There are also statutes that impose confidentiality obligations on of several banks as a result and took action against some of them, certain classes of regulated persons. For example, banks in Singapore as follows: are subject to a statutory duty to observe confidentiality in respect of • Directing that internal disciplinary action be taken against the bank account information under section 47 of the Banking Act (BA). bank officers who had failed to perform their duties effectively; However, exceptions are provided in the BA to enable banks to disclose • Directing that an independent party be appointed to confirm information if this is required for the purposes of an investigation or the that rectification measures had been effectively implemented by the bank and to report its findings to the MAS; prosecution of an offence, so that banking confidentiality cannot be • Directing that the bank management investigate the control relied upon as a shield against criminal investigations. lapses and promptly address any control deficiencies; • Issuing a notice of the MAS’ intention to issue a Prohibition 20 Resolutions and sanctions Order for a period of 10 years against a bank representative What is the range of outcomes in AML controversies? What who had managed the client relationship with 1MDB; • Imposing hefty multimillion-dollar financial penalties for are the possible sanctions for breach of AML laws? breach of AML regulations; and There is a broad range of enforcement measures available to the author- • Withdrawing the operating licence of two of the banks. ities in Singapore. Most AML contraventions are enforced via criminal prosecutions, which may result in imprisonment or substantial fines. For contraventions of lesser severity, administrative sanctions can be Suspicious transaction reporting imposed, such as a reprimand or warning. Section 39 CDSA makes it mandatory for a person in the course of his or Covered institutions and persons that contravene AML laws also her trade, profession, business or employment to lodge an STR if he or run the risk of being subject to penalties imposed by their sectoral regu- she knows or has reasonable grounds to suspect that any property rep- lators. For FIs, the MAS may revoke their licence to operate or impose resents the proceeds of, or was or is intended to be used in connection restrictions upon their operations. with, any act that may constitute drug dealing or criminal conduct. The See also question 15. failure to do so constitutes a criminal offence. The statutory obligation to file STRs is also supplemented by anti-money laundering/combating 21 Limitation periods the financing of terrorism (AML/CFT) guidelines issued by regulators of the various sectors. What are the limitation periods governing AML matters? As mentioned in question 10, as a general rule prosecutions for crimi- Cash transaction reporting nal offence are not subject to enforcement limitation periods. The court Under the Casino Control Act, casino operators are required to file may, however, take into consideration the delayed or protracted pros- a cash transaction report with the STRO for cash transactions with a ecution and enforcement as a factor in deciding the case. patron (or on its behalf) involving an aggregate amount of S$10,000 or more in a transaction (or in any gaming day). 22 Extraterritoriality Under the CDSA, dealers of precious metals and stones are likewise required to submit a cash transaction report to the STRO in respect of Do your jurisdiction’s AML laws have extraterritorial reach? any cash transaction with a customer (or its agent), the aggregate of For FIs incorporated in Singapore, the AML rules do have a degree of which exceeds S$20,000 in a transaction (or in a day). extraterritorial reach. The regulatory standards set out in the AML/ CFT notices issued by the MAS apply not just to FIs that operate within Cross-border cash movement reporting Singapore, but, in the case of FIs incorporated in Singapore, also to such Part VIA CDSA governs the disclosure of information regarding move- FIs’ overseas branches and subsidiaries. ment of cash and bearer negotiable instruments in and out of Singapore. Singapore-incorporated FIs are generally required to develop and Persons moving cash into or out of Singapore, or who receive cash from implement group policies and procedures that meet local AML require- outside of Singapore above the amount of S$20,000, are required to ments, and implement them in all overseas branches and subsidiaries report such movement or receipt. within the group. Where the AML requirements in the host jurisdiction differ from those in Singapore, institutions may be required to apply the 19 Privacy laws higher of the two standards to the overseas branch or subsidiary, to the Describe any privacy laws that affect record-keeping extent that the law of the host jurisdiction permits. Where the law of the host jurisdiction conflicts with Singapore law so that the overseas requirements, due diligence efforts and information sharing. branch or subsidiary is unable to fully observe the higher standard, the Generally, Singapore’s privacy and confidentiality laws have been care- institution may be required to implement additional measures to effec- fully structured so as not to inhibit the effective operation of AML/ tively manage the money laundering risks, notify the relevant Singapore CFT laws. authorities and comply with any further directions that may be given. Personal data in Singapore is protected by the Personal Data Protection Act 2012 (PDPA), which comprises rules governing the col- Civil claims lection, use, disclosure, access to, correction and care of personal data by organisations. The PDPA applies concurrently with other Singapore 23 Civil claims and private enforcement laws and regulations. Unless otherwise expressly provided in the PDPA Enumerate and describe the required elements of a civil or other written law, organisations are generally required to obtain the claim or private right of action against money launderers and individual’s informed consent for the collection, use and disclosure of covered institutions and persons in breach of AML laws. his or her personal data for notified purposes that a reasonable person would consider appropriate in the given circumstances. Scheduled Liability for breach of AML laws in Singapore is generally imposed by exceptions or limitations have, however, been specified in the PDPA to the criminal and regulatory regimes and no specific allowance has been accommodate existing regulations and other reasonable situations. In made for civil enforcement of AML breaches under the CDSA. It is particular, disclosure of personal data may be made without consent presently uncertain whether obligations arising under AML laws can be where it is necessary for any investigation and proceedings, or if the enforced via a civil claim or private right of action.

92 Getting the Deal Through – Anti-Money Laundering 2017

International anti-money laundering efforts STRs may be lodged in writing or via the STRO’s web-based STR On-Line Lodging System (STROLLS). 24 Supranational List your jurisdiction’s memberships of supranational 27 Mutual legal assistance organisations that address money laundering. In which circumstances will your jurisdiction provide Singapore is a member of the following international AML/CFT organi- mutual legal assistance with respect to money laundering sations: the FATF; the Asia/Pacific Group on Money Laundering (APG); investigations? What are your jurisdiction’s policies and and the Egmont Group of Financial Intelligence Units. procedures with respect to requests from foreign countries for identifying, freezing and seizing assets? 25 Anti-money laundering assessments Singapore’s mutual legal assistance framework is governed by the Give details of any assessments of your jurisdiction’s money MACMA. Certain forms of mutual legal assistance are available only laundering regime conducted by virtue of your membership to countries that have entered into a mutual legal assistance treaty of supranational organisations. (MLAT) with Singapore. Such countries are gazetted as ‘prescribed foreign countries’ under the MACMA and may be rendered assistance A mutual evaluation of Singapore’s AML/CFT regime was con- in accordance with the terms of the relevant MLAT and the MACMA. ducted by the FATF in 2007. In the Mutual Evaluation Report (MER) Where no MLAT has been signed, mutual legal assistance remains avail- of 29 February 2008, Singapore was assessed to have either a compli- able but the foreign country must give an undertaking of reciprocity. ant (C) or largely compliant (LC) rating in respect of 43 out of a total 49 Recommendations and Special Recommendations, and a partially compliant (PC) or non-compliant (NC) rating in respect of the remain- Dual criminality requirement ing six Recommendations. Dual criminality is generally required under the MACMA. In order to In a follow-up report of 25 February 2011, Singapore’s rating on FATF qualify, the foreign offence for which Singapore’s assistance is sought Recommendation 1 (scope of money laundering offences) was revised must be of such a nature that if the conduct had occurred in Singapore, upwards to an LC rating. The ratings for the other Recommendations it would have constituted an offence prescribed under the First or that were previously rated PC or NC remain unchanged. Second Schedule of the MACMA. From 18 November to 4 December 2015, the FATF and APG jointly The MACMA was partially liberalised in 2014, with the require- conducted another on-site mutual evaluation of Singapore. The MER ment of dual criminality waived in relation to certain non-coercive for this was finalised and published in September 2016, in which assistance with respect to tax offences. This allows Singapore to render Singapore was assessed to have either a moderate or substantial rating assistance in relation to a foreign tax offence, even though the underly- for effectiveness and technical compliance with 10 out of 11 immedi- ing conduct might not have constituted a Singapore tax offence if it had ate outcomes, and a low rating in respect of the immediate outcome occurred in Singapore. for terrorism-financing investigation and prosecution. Singapore was also assessed to have either a compliant or largely compliant rating in Procedures respect of 34 out of a total of 40 recommendations, and a partially com- A wide range of assistance is available under the MACMA, ranging from pliant rating in respect of the remaining six Recommendations. the taking of evidence, enforcement of foreign confiscation orders, arranging for attendance of persons in the foreign state, search and sei- 26 FIUs zure, and effecting the service of process. Formal requests for assistance are handled and processed by the Give details of your jurisdiction’s Financial Intelligence Unit International Affairs Division of the Attorney-General’s Chambers. (FIU). The STRO is the FIU of Singapore and the main agency responsible for Other sources of assistance receiving and analysing STRs. It was admitted into the Egmont Group The STRO may share financial intelligence in relation to ML/TF and in June 2002. Its contact details are: other serious offences with its FIU counterparts with whom it has signed MoUs, and may also exchange information through the Egmont Suspicious Transaction Reporting Office Group of FIUs. Commercial Affairs Department Informal forms of assistance may also be rendered by the enforce- 391 New Bridge Road #06-701 ment units within the CAD and STRO through the Interpol network, or Police Cantonment Complex Block D directly with foreign law enforcement counterparts through police-to- Singapore 088762 police contacts. [email protected]

Eric Chan [email protected] Agnes Lim [email protected]

1 Robinson Road Tel: +65 6535 1944 #18-00 AIA Tower Fax: +65 6535 8577 Singapore 048542 www.shooklin.com Singapore

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