The Sword and the Scales: Enforcement and restraint in the ongoing development of Singapore’s AML framework

Objectives

The Act has three objectives: to enhance the ability of law enforcement authorities to prosecute money-laundering offences, including through enhanced data sharing and prosecutorial levers; to clarify the processes for dealing with seized properties; and to strengthen AML laws relating to casino operations. We examine these objectives and relevant amendments below.

Enhancing the prosecution of ML cases arising from criminal conduct abroad

Prior to the Act, the Prosecution needed to show that funds allegedly laundered in Singapore were directly linked to certain types of criminal conduct, as set out in the Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act (“CDSA”). Accordingly, where the criminal conduct was committed outside Singapore, the Prosecution had to show a complete financial trail: from the point at which the crime was committed overseas, to the relevant funds being deposited with the money launderer in Singapore. Evidence demonstrating such a trail could be challenging to obtain – especially where criminal proceeds passed through multiple jurisdictions.

The Act amends this evidential requirement. Going forward, the Prosecution no longer needs to prove that the relevant property represents the proceeds of a particular criminal conduct. Instead, it must only prove that the accused person had transferred, converted, or acquired the relevant property; and that he or she knew, or had reasonable grounds to believe, that in doing so, he or she was dealing with criminal proceeds of an offence generally. 

In introducing this amendment in Parliament, the government noted that it would allow authorities to better pursue persons who seek to launder proceeds of crime through Singapore’s financial system – whether a kingpin or money mule. It would also bring Singapore in line with jurisdictions like Hong Kong and Australia, which do not require a direct link between a specific criminal conduct and its proceeds of crime. 

Designating foreign environmental crimes as predicate offences 

Before the Act, Singapore authorities could only investigate ML offences arising from extraterritorial conduct if such conduct constituted a serious offence stipulated under the CDSA. Environmental offences – including illegal mining, waste trafficking or logging – were inapplicable in Singapore’s context, and thus were not previously considered as serious offences. 

The Act addresses this gap by introducing a third schedule to the CDSA which designates serious foreign environmental crime as ML predicate offences. This amendment allows Singapore enforcement authorities to investigate ML offences, if they suspect that monies in Singapore derived from serious environmental crimes conducted overseas. The value of these expanded powers is underscored by the fact that environmental crimes are significant contributors to transnational organised crime in Asia, and that associated funds often flow into Singapore. 

Cross-agency data sharing 

The Act introduced amendments to other legislation, including the Income Tax Act 1947 and the Regulation of Imports and Exports Act 1995, to enhance the ability of authorities to detect ML and terrorism financing. These changes permit two government agencies – the Inland Revenue Authority of Singapore and Singapore Customs – to share tax and trade data, respectively, with the Suspicious Transaction Reporting Office (“STRO”) of the Singapore Police Force. 

In its Parliamentary comments, the government noted that these data sharing arrangements will enable the STRO to enhance its analyses of ML risks. Money launderers may layer their activities across different sectors or front entities; therefore, cross-agency data-sharing, which enables the government to develop richer financial intelligence from a variety of government agencies, is of significant detection and enforcement value. Similar data-sharing arrangements already apply in other jurisdictions, like the United Kingdom, South Korea and Hong Kong. 

Separately, the Act will amend the CDSA to allow two AML regulators, such as the Accounting and Corporate Regulatory Authority (“ACRA”) and the Council for Estate Agencies (“CEA”), to access suspicious transaction reports filed by their respective regulated entities. AML regulators of other sectors, such as the Monetary Authority of Singapore and Ministry of Law, already have this access. 

Disposing of seized properties linked to absconding persons

The Act introduces amendments relating to properties seized from absconding persons. 

As background, Singapore enforcement authorities have sometimes seized properties linked to persons suspected of committing ML offences. Some of those persons have refused to return to Singapore to assist in government investigations, but have nonetheless appointed legal counsel in Singapore to apply for the release of their funds. The Act’s amendments seek to pre-empt such conduct. 

In particular, the Act tightens the Criminal Procedure Code to state that the court must not dispose of any seized property, if investigations remain pending into the absconded person. The Act also requires an absconded person to personally present himself to a law enforcement officer to assist in the investigations, before he can make a claim to the seized properties. 

In analysing these amendments, the government emphasised that they enable the Government to better deal with absconded suspects, by depriving them of the financial gains from ML or other criminal activities if they refuse to return to Singapore for investigations. Legitimate investors have no cause for concern. 

Strengthening the AML Framework for casino operators 

Lastly, the Act amends the Casino Control Act to tighten the requirements for casino operators to detect and prevent ML, terrorism financing (“TF”) and related risks. Casino operators are now required to perform customer due diligence on patrons who perform single cash transactions or deposits of S$4,000 or more – lower than the earlier thresholds of S$10,000 or S$5,000 for single cash transactions or deposits, respectively. 

Relevant safeguards 

But the Act also includes safeguards against potential enforcement overreach. In amending the evidential requirements of the CDSA, for example, the government emphasised that it was still necessary for the Prosecution to prove the necessary fault element: that the person dealing with the monies knew or had reasonable grounds to believe that he was dealing in criminal proceeds. Legitimate businesses, which should be able to show the legitimacy of monies received, have “nothing to fear.” 

Similarly, in its Parliamentary discussions on the benefits of cross-agency data sharing, the government noted the importance of data safeguards, such as restrictions of onward sharing of tax or trade data received by the STRO. In considering the amendment relating to the disposal of seized properties, the government noted that this amendment did not change the existing thresholds for the seizure of property (rather than its disposal). Law enforcement agencies may continue to seize properties only in certain circumstances, such as when they suspect that such property forms evidence of an offence. 

Practical implications 

Companies in impacted sectors will need to review their ML policies and related procedures, to ensure compliance with the more rigorous AML compliance environment and the strengthened enforcement powers set out in the Act. For example, natural resources companies that transmit funds to Singapore will have an increased impetus to ensure that their operations comply with local laws relating to mining, logging and waste trafficking. Financial institutions in Singapore that receive funds from such companies would be well advised to evaluate their clients’ operations in greater detail to reduce AML risk exposure arising from illegal activities. Lastly, the changes in the Act should encourage property agencies and corporate service providers, which are regulated by the ACRA and CEA respectively, to review their AML policies and procedures, given the enhanced data-sharing arrangements described above. 

In sum, the Act appears designed to achieve the fine balance that forms the ideal of ML regulations: strengthening the powers of government to detect and prosecute ML offences, while not deterring legitimate business or investment activity. 

The Act signals the ongoing priority by the Singapore government to continue detecting, prosecuting and deterring ML offences and its significance continues to resonate within the regulatory landscape. As observed in Parliamentary comments, this is a “journey without end,” as money laundering actors continue their own innovations. We expect this nationwide project to continue playing out in 2025 and beyond. 

How we can help 

Our extensive expertise in anti-corruption, AML and sanctions due diligence positions Hogan Lovells well to advise companies in complying with evolving AML laws in Singapore and across the Asia Pacific region. Our services include the development of policies and procedures to ensure compliance with local regulations, conducting risk assessments to identify potential areas of improvement in corporate AML systems, and providing bespoke training programs and legal advice to enhance overall risk management in an increasingly regulated environment. 

Authored by Nick Williams and Han Liang Lie.