AML Compliance Guidelines: Singapore

Singapore is ranked as the top financial centre of Asia-Pacific region and third in the world only behind New York and London.

Financial sector of Singapore is the backbone of the country’s sustained economic growth and resilience over decades.

Stable political system, strong government, transparent and consistent policies, high investment in infrastructure, health, education and training, has built a highly skilled and competitive workforce, improved the living standard of the city-state country and produced a conducive business environment that attracts talent and investment from all around the world.

Singapore is strategically placed on the major crossroads between the Indian Ocean and South China Sea, mainland Asia continent and its Island nations.

City-state country is located on the Strait of Malacca which is a bottleneck for trillions of dollars of global trade. This can be seen in Singapore’s trade volumes which are almost three times of its GDP.

The city state serves as a bridge between asset managers and global investors seeking high return opportunities in Asia Pacific and worldwide. As of 2023 report assets managers in Singapore hold S$5.4 trillion worth of assets, 77% sourced from outside the country and 89% of these funds invested outside the country.

Who Regulates AML/CTF in Singapore?

Monetary Authority of Singapore (MAS)

The Monetary Authority of Singapore (MAS) is the primary authority to regulate anti-money laundering, countering terrorism financing and proliferation financing to protect the integrity of the financial system in Singapore.

MAS is also the main authority who put in place regulation to comply with targeted financial sanctions applied by United Nations Security Council Resolutions and sanctions related to Russia.

After the Russian invasion of Ukraine, MAS has issued a Notice SNR-N01 to the financial institutions to prohibit provision of financial services or entering into any business relationship with the designated entities and designated banks.

As a regulator of the financial industry, MAS issues various instruments under the powers conferred by the Acts, the Authority regulates.

These instruments include, Acts, Regulations and Notices which are legally binding and non compliance can result in criminal offences whereas issuance of Guidelines, Codes, Practice Notes and Circulars provide guidance to specific persons or institutions to carry out certain operations but contravening them is not criminal offence and do not attract civil penalties.

Council for Estate Agencies (CEA)

The Council for Estate Agencies (CEA) established under Article 6 of the Estate Agents Act 2010 is responsible for regulating the Licensed Estate Agents or Registered Salespersons in Singapore.

CEA has powers to make regulations for the detection and prevention of money laundering and countering terrorism financing or reporting transactions relating to suspicion of money laundering or terrorism financing (ML/TF) under the Article 72 subsection 2(q).

Law Society of Singapore (LawSoc)

The Council of the Law Society of Singapore established under Article 47 of the Legal Profession Act 1966 is responsible for the compliance of the legal practitioners in Singapore with the prevention of ML/TF/PF risks required under the Part 5A of Legal Profession Act 1996.

Council may take disciplinary actions or prescribe regulatory action for legal practitioners who contravene part 5A of mentioned regulations.

Accounting and Corporate Regulatory Authority (ACRA)

ACRA, the regulatory and supervisory authority for the public accountants and public accounting entities, derives its regulatory powers from Article 3 of the Accountants Act 2004. Authority discharges its regulatory duties through an Oversight Committee which can determine, prescribe, review or adopt requirements to be applied to the accounting sector for the detection and prevention of ML/TF risk, and recording and reporting of transactions having suspicion of money laundering or terrorism financing.

Ministry of Law

The AML/CFT Division (ACD) of the Ministry of Law is the regulatory authority for the dealers in precious metals and precious stones and implements a risk-based supervisory and regulatory compliance, in order to fight money laundering and terrorism financing in the precious metals and precious stones industry.

What are the key AML/CTF legislations in Singapore?

Financial Services and Markets Act 2022 (FSM Act)

FSMA provides powers to MAS to develop and issue regulations in order to combat financial crimes and terrorism financing. Implemented in different phases, the Act is fully operational from 31st July 2024 to migrate AML and CFT framework from MAS Act 1970 to FSMA 2022.

A financial Institution can be fined for a maximum of $1 million in case of contravention of regulations issued by the Monetary Authority of Singapore under FSMA 2022.

Corruption, Drug Trafficking, and Other Serious Crimes Act 1992 (CDS Act)

CDS Act was enacted to prevent and criminalise corruption, drug dealing and other related serious offences. This act also provides a legal basis to confiscate proceeds and benefits originated or derived from criminal conduct.

Monetary Authority of Singapore Act 1970 (MAS Act)

MAS Act provides the basis for the establishment of the Monetary Authority of Singapore (MAS) This Act gives MAS power to promote financial stability and regulate the financial services sector in Singapore.

Terrorism (Suppression of Financing) Act 2002 (TSOFA)

TSOFA provides a basis to criminalise and prosecute the terrorism financing, and seizing, freezing and confiscating terrorist property.

This act also provides legal basis for extradition of terrorism financing offences and implementation of mutual legal assistance arrangements made with other countries under the International Convention for the Suppression of the Financing of Terrorism adopted by the General Assembly of the United Nations on 9 December 1999.
Under this act every person in Singapore and its citizens outside Singapore are required to report information about any transaction or proposed transaction related to any property of a terrorist or terrorist entity.

Sectors regulated under the AML/CTF laws in Singapore?

• Financial Sector (Banks, Capital Markets, Insurance Companies and Intermediaries
• Payment Service Providers
• Dealers in Precious Metals and Stones
• Accounting Sector
• Legal Sector
• Real Estate Sector (Estate Agents & Real Estate Salespersons)

What are AML Regulations for Banks in Singapore?

What are the adverse media and sanctions screening obligations for banks in Singapore?

As per Notice 626, issued by MAS under Article 16 of the FSMA, a bank is obligated to perform screening of their customers, an individual representing a customer, beneficial owners and any other parties associated with a customer against adverse media sources (related to ML/TF), additionally against the lists provided by MAS or any other authority in Singapore to detect and prevent ML/TF risks.

What sources should a bank use to screen their customers?

Banks in Singapore are obligated to screen their customers against the adverse media sources (relevant to ML/TF) and the lists provided by the MAS or any other relevant authorities in Singapore.

Lists of designated individuals and entities provided by the Monetary Authority of Singapore includes lists of countries (like North Korea, Iran, Yemen, Congo etc.) under Targeted Financial Sanctions imposed by UNSC resolutions, lists of terrorist organisations like Taliban, Al-Qaeda, ISIS (Da’esh), and any other persons identified in First Schedule of TSOFA.

When should a bank perform AML and sanctions screening measures for their customers?

Banks are obligated to perform AML and sanctions screening for customers on the following occasions:

• At the time of establishing a business relationship (like opening an account or providing financial advice), or as soon as practicable (in low risk scenarios)
• When a bank sends or receives a value in the form of digital tokens on behalf of a non-account holder customer
• Domestic and International wire transfers exceeding $1500 for non-account holders
• Transaction exceeding $20,000 (except digital token) for a non-account holder
• Periodically after establishing a business relationship with a customer
• When there’s any change or update in customer’s data
• When there’s any change or update in the lists provided by the Monetary Authority of Singapore or any other relevant authority

Banks are obligated to perform screening of both, the payer and the beneficiary, in case of wire transfers and digital token transfers.

What Are Obligations for Banks to Screen Politically Exposed Persons in Singapore

Under paragraph 8 of the Notice 626, banks are obligated to perform enhanced due diligence (EDD) measures where they assess the risks of money laundering and terrorism financing is high.

In addition, banks are obligated to apply EDD measures, such as management approval before onboarding a customer, obtaining source of funds and monitoring the activity during the course of business relationship, if a customer is a politically exposed person, or a family member or a close associate of a politically exposed person.

Paragraph 8.1 of the Notice 626, provides categories of politically exposed persons as domestic politically exposed person, foreign politically exposed person, or international organisation politically exposed persons including their family members and close associates.

For this purpose, banks shall have appropriate policies and procedures in place to determine if a customer, any individual representing a customer, any connected party of the customer, or any beneficial owner of the customer is a politically exposed person, or a family member or close associate of a politically exposed person.

To simplify the process and effectively comply with these obligations banks can use technology and tools to screen their customers against the publicly available information or up to date lists of politically exposed persons managed and maintained by commercial databases.

What are record keeping obligations for banks?

The banks in Singapore are required to retain CDD information about any customer, transaction, account files, business correspondence and result of any analysis for up to 5 years after the termination of such business relationship or completion of any transaction.

Contravention of these regulations not only attracts significant fines and imprisonment from regulators but can also tarnish the reputation of a bank. During May, 2024, the Monetary Authority of Singapore (MAS) imposed a staggering penalty worth S$2.5 million on a wealth and fund management company, Swiss-Asia Financial Services Pte. Ltd. (SAFA) for contravening different AML/CFT requirements.

MAS concluded that SAFA failed to conduct enterprise-wide risk assessment, to conduct CDD measures before establishing a business relationship, and failed to report suspicious transactions even though there was sufficient reason to do so (like presence of adverse media news regarding client’s involvement in financial crimes) among other breaches.

What are AML regulations for Payment Service Providers in Singapore?

Payment Services Act 2019

Payment Services Act is a risk-based flexible regulatory framework for the payment industry in Singapore. PS Act widens MAS’ regulatory scope to address emerging risks in existing payment services and to expand its powers to the new modes of payment services.

Who’s regulated under this PS Act?

Any entity who provides any of the following services is regulated under PS Act:

• Account issuance service like credit cards or an en-wallet
• Domestic money transfer service;
• Cross-border money transfer service;
• Merchant acquisition services like Point of Sales (POS)
• E-money issuance service;
• Digital payment tokens services (DPTs commonly known as cryptocurrency)
• Money-changing service

Regulated entities performing following activities should apply AML/CTF measures

• Account issuance service like credit cards or an en-wallet
• Domestic money transfer service;
• Cross-border money transfer service;
• Digital payment tokens services (DPTs commonly known as cryptocurrency)
• Money-changing service
• There are some exemptions in above activities when thresholds for some low risk services are met.

What are key AML/CTF requirements of a payment service provider in Singapore?

A payment service provider should identify and assess risks related to ML/TF they may face in carrying out their operations.
A payment service provider should develop and implement procedures, policies, and controls related to screening, CDD measures, transaction monitoring, suspicious transaction reporting and record keeping.

A payment service provider should continuously monitor and assess the implementation of such policies, controls and procedures to examine their effectiveness and cater emerging risks.

A payment service provider should use a risk-based approach to apply enhanced measures where ML/TF risks are higher.

What are adverse media and sanctions screening obligations of payment service providers?

As per the Notice PSN01 and Notice PSN02, a payment service provider shall implement policies and procedures to screen their customer against relevant media sources and lists. For the purpose of screening a customer shall include the following entities:

• Customer
• An individual representing a customer
• Beneficial Owner
• Connected Parties

When screening a customer, a payment service provider is obligated to take into account all relevant sources applicable which includes:

• Adverse media sources relevant to ML/TF risks
• Lists provided by the Monetary Authority of Singapore or any other relevant authorities

A payment service provider is obligated to perform screening measures in the following scenarios:

• When establishing a business relationship with a customer, like opening an account;
• When performing transaction for a non-account holder customer
• When sending, receiving or arranging digital payment tokens for a non-account holder
• On a periodic basis for all existing customers
• When there is any change or update in the information of an entity that needs to be screened or change in lists provided by MAS or other relevant authorities

What are the obligations of the payment service provider related to identification of politically exposed persons?

Regulations require that payment service providers shall implement EDD measures for persons who are politically exposed or hold a prominent public function.

For this purpose payment service providers are obligated to implement policies, procedures, and controls to identify if any customer, related parties, beneficial owner, or a natural person acting on behalf of a customer is a politically exposed person, a close relative, or a close associate of a politically exposed person.

How can DPTs service providers comply with the “FATF Travel Rule”?

As per paragraph 6.51 of Notice PSN02 a payment service provider is required to not only screen a person (originator) sending one or more digital payment tokens, but also a person (beneficiary) receiving those digital payment tokens, against lists and information provided by the MAS or any other relevant authorities in Singapore to identify or assess if there are any ML/TF risks in relation to any such persons.

The results of screening and assessment by the payment service provider shall be documented.

AML Regulations for Financial Institutions Dealing In Precious Stones And Precious Metals

The Notice PSM-N01 serves as a guide to the financial institutions (FIs) in conducting their business operations in relation to precious metals, stones or products.

It mandates application of due diligence measures when dealing with their customers. These regulations obligate financial institutions to guard against establishing a business relation or conducting a transaction related to “regulated dealings” which can facilitate money laundering or terrorism financing.

What are the due diligence obligations of the FIs dealing in precious stones and precious metals?

Due diligence measures mandated by this notice includes:

• Financial institutions (FIs) who deal in precious metals and stones shall identify and verify customers, beneficial owners, an individual acting on behalf of a customer or any other related party.
• FIs who deal in precious metals and stones shall assess and obtain appropriate information to understand the purpose of opening or maintaining an account, or carrying out a transaction
• FIs who deal in precious metals and stones shall continuously monitor based on the risk of a customer their transactions and activities to spot any anomaly in behaviour which poses ML/TF risks
• FIs dealing in precious metals and stones shall screen their customer to prevent risks of ML/TF

What are the screening obligations mandated for financial institutions dealing in precious metals and stones in Singapore?

In order to comply with the CDD obligations, FIs dealing in precious metals and precious stones shall implement management systems, procedures and controls to screen their customers, beneficial owners, an individual representing a customer and any other party related to the customer, against the relevant ML/TF information sources, and the lists provided by the Monetary Authority of Singapore (MAS) or any other relevant authority.

• These screening measures shall be performed when opening an account or carrying out a transaction without opening of an account
• These screening measures should be carried out periodically for existing customers.
• Screening process shall also be carried out when there’s any change or update to customer’s information or lists provided by MAS.

When should FIs dealing in precious metals and stones apply EDD measures?

As per the paragraph 8 of this regulatory instrument, financial institutions are obligated to apply EDD measures where they assess the customer poses a high risk of money laundering and terrorism financing, or where a customer is related to jurisdictions known to have weak AML/CTF measures including jurisdictions in relation to which FATF has called for countermeasures.

What are the obligations of the financial institutions dealing in precious metals and stones related to Politically Exposed Persons?

FIs are obligated to apply EDD measures related to politically exposed persons as they pose a high risk of money laundering since they hold a prominent public function or position that can be used for corruption or misuse of public funds.

FIs shall have policies, procedures and controls to identify where a customer, any individual acting on behalf of a customer, any beneficial owner or any connected party of the customer is a politically exposed person, or family member or a close associate of a politically exposed person (PEP).

As per paragraph 8.1 of this Notice, a close associate means a natural person who has a close social or business relationship with a politically exposed person.

Whereas, a family member means an immediate relative like a parent, step-parent, child, step-child, adopted child, spouse, sibling, step-sibling, and adopted sibling of the politically exposed person.

Politically exposed persons are divided into three categories for the purpose of these regulations:

• Domestic politically exposed person
• Foreign politically exposed person
• International organisation politically exposed person

For the Foreign PEP category, FIs are obligated to apply EDD measures, whereas, for domestic and International organisation PEPs, FIs can use a risk based approach to determine need of application and extent of enhanced due diligence measures.

What is a relevant business transaction in relation to FIs dealing in precious metals and stones?

A transaction that involves the sale, purchase, or redemption of a precious metal, stone, or asset-backed token for which payment exceeds the threshold amount (S$20,000) is called a relevant business transaction.

What is a designated transaction in relation to FIs dealing in precious metals and stones?

A relevant business transaction that was wholly, or partially carried out in cash is called a designated transaction.

Precious Stones and Precious Metals Dealers (PSMD)

Who regulates the precious stones and precious metals dealers in Singapore?

Dealers in precious metals and precious stones who are not a financial institution are regulated by the CAD division of the Ministry of Law.

The Ministry has issued comprehensive guidelines for the regulated dealers in precious metals and stones.

Which legislation covers AML regulations of precious stones and precious metals dealers in Singapore?

These guidelines are issued to regulated dealers under their obligations mentioned in the Precious Stones and Precious Metals (Prevention of Money Laundering, Terrorism Financing, and Proliferation Financing) Act 2019 (“PSPM Act”) and Precious Stones and Precious Metals (Prevention of Money Laundering, Terrorism Financing and Proliferation Financing) Regulations 2019 (“PMLTF Regulations”).

What are the key AML/CTF obligations of the precious stones and precious metals dealers in Singapore?

This guidance provides for a risk-based approach to conduct risk assessment, to form and establish policies, controls, and procedures, and to implement CDD measures in order to combat money laundering and terrorism financing risks.

It also enlist requirements for reporting, record keeping, and data protection for the regulated dealers in precious metals and stones.

What is an STR report and whom to file it?

If a regulated dealer suspects that there’s a ML/TF/PF risk when conducting business activities regarding the sale/purchase of precious metals or precious stones, the dealer should file a suspicious transaction report (STR) as soon as practicable to the Suspicious Transaction Reporting Officer (STRO) via SONAR portal.

What is a CTR when should it be filed?

When a dealer sells or buys a precious metal or a precious stone whose payment is made in cash exceeding S$20,000, the dealer is required to file within 15 days a cash transaction report (CTR) electronically via the SONAR portal.

What are record-keeping and reporting requirements for regulated dealers?

Regulated dealers are required to maintain relevant records pertaining to all customers and transactions (whether completed or not) up to 5 years after conducting such transactions.

Regulated dealers are required to file semi-annual reports to the Ministry of Law, regarding all transactions and business activities conducted during the six months period.

What are screening obligations of the regulated dealers dealing in precious metals and stones?

Form B, of this guidance, under CDD measures, contains detailed requirements regarding screening measures to be taken by the regulated dealers.

All names and citizenships of individual customers, corporate customers, and beneficial owners of corporate customers obtained during the CDD must be screened against following lists:

• Domestic designations: First Schedule of TSOFA.
• Designations (like ISIL (Da’esh), Taliban, and Al-Qaeda) maintained by the United Nations pursuant to UNSC Resolutions
• Lists of designated individuals and entities on MAS’s website, Targeted Financial Sanctions pursuant to UN Regulations

When should a regulated dealer apply enhanced due diligence (EDD) measures?

Regulated dealers are obliged to apply EDD measures in the following circumstances:

Politically Exposed Persons (PEP):

• When a customer, the person on whose behalf the customer is acting, a beneficial owner (in case of a legal person) is a PEP, a close associate or a family member of a PEP.
• For the purpose of definition of a PEP, regulations rely on FATF recommendations and are not intended to include middle-ranking or more junior individuals or officials in the listed categories.
• As per this guidance, in the context of Singapore, PEPs include at least Government Ministers, Members of Parliament, Nominated Members of Parliament and Non-Constituency Members of Parliament.

High-Risk Countries:

• When a customer belongs to a country under FATF’s list of jurisdictions under increased monitoring or a country known to have weak AML/CTF measures.

Recommendations about CDD and Screening measures:

When conducting enhanced CDD measures, a regulated dealer may consider referring to the following sources:

• Use the internet to search publicly available media as sources for determining, verifying, and monitoring information;
• Subscribe to commercial screening databases to help identify the customer and check against adverse media sources;
• Refer to the FATF guidance paper on dealing with PEPs.

AML Compliance Requirements for Real Estate Sector in Singapore

Estate agents (“EAs”) and real estate salespersons (“RESs”) while carrying out estate agency work in respect of property located in Singapore or outside are obligated to comply with the measures mentioned in Part 4A of the Estate Agents Act 2010 to prevent risks of ML/TF. The measures mentioned in this part are consistent with the FATF standards.

What are the key AML/CTF obligations of the estate agents and real estate salespersons in Singapore?

Key obligations mentioned in this act include carrying out due diligence measures when carrying out estate agency work, maintaining record of all estate agency related activities and due diligence measures and reporting of suspicious transactions (STR) to STRO.

Contravention of these measures may attract disciplinary actions. Failure to File an STR where there are reasonable grounds to suspect that the property may be linked to a criminal activity is an offence under the CDS Act 1992 and may be punishable by fine or imprisonment upon conviction.

What are the recommendations of the CEA about screening procedures for the real estate sector?

For the purpose of conducting CDD the Council for Estate Agents states that besides using their own database (internal or external) RES/EA must screen their clients and beneficial owners against the following lists:

• UN lists of designated individuals and entities
• Individuals and entities designated under First Schedule of TSOFA
• Any other list provided by the authorities in Singapore

Real estate salespersons and estate agents are recommended by the Council for Estate Agents (CEA) to subscribe to commercial AML solution providers to help them with the screening process.

Such companies offer expertise and resources for more comprehensive screening of their clients customised to the needs of the real estate sector.

AML Compliance Requirements for Accounting Sector in Singapore

Accounting sector which includes public accountants, accounting corporations, accounting firms and accounting LLPs is regulated by Accounting & Corporations Regulatory Authority (ACRA). ACRA conducts inspections to review the compliance of the accounting sector with the Accountants (Prevention of Money Laundering and Financing of Terrorism) Rules 2023 and imposes penalties in case of any breaches of these requirements.

What are the key AML compliance requirements for the accounting sector in Singapore?

Key obligations of the accounting entities and sole practitioners include customer due diligence, identification and verification of customers and beneficial owners, screening of clients, application of enhanced and simple due diligence measures, identification of politically exposed persons, maintaining records for up to 5 years and reporting suspicious transactions to STRO and implementation of an independent audit function to assess the effectiveness of these measures.

What are the screening requirements for public accountants and accounting entities in Singapore?

Accounting entities and sole practitioners are obligated to perform screening of their clients, beneficial owners (where client is a legal person), representative of a client and connected parties of the client (e.g. where client is a partnership firm, its members are a connected party) against the relevant ML/TF sources.

These sources include:

• UN lists of designated individuals and entities
• Individuals and entities designated under First Schedule of TSOFA
• Any other list provided by the authorities in Singapore

AML Compliance Requirements for Legal Sector in Singapore

Under Part 5A of Legal Profession Act 1966, law practice and legal practitioners (solicitors, advocate or foreign lawyer) when preparing or carrying out a transaction related to relevant activity (dealing in real estate, managing assets or bank accounts, providing trust company services etc) are obligated to prevent such transactions from being used as a means of ML/TF/PF.

What are the key AML/CTF obligations of the legal sector in Singapore?

Key obligations of the legal sector under this statutory instrument include carrying out due diligence of their clients, not dealing with or providing services for anonymous clients, reporting of suspicious transactions, and maintaining records and documents related to CDD measures, clients, and relevant activities.

What are PEP screening requirements for the legal sector in Singapore?

Legal Profession (Prevention of Money Laundering and Financing of Terrorism) Rules 2015 obligates the legal sector to implement measures for the identification and classification of politically exposed persons (PEPs).

Classification of PEPs is important as it determines the level of due diligence measures required for each category.

Rule 13, obligates that legal practitioners must apply the enhanced due diligence measures if a client or beneficial owner of the client (who is a legal person) is classified as a foreign politically exposed person or is a family member or a close associate of such person.

Moreover, enhanced due diligence measures for domestic politically exposed persons or international organisation politically exposed persons should be taken when legal practitioners determine ML/TF risks to be high in particular cases.

What are the recommendations of the regulators about AML Screening Services for the Legal Sector in Singapore?

Council’s Practice Direction on Prevention of Money Laundering & Financing of Terrorism provides clear guidance whether a legal practitioner should subscribe to a commercial database.

If a business is dealing with overseas clients where risk of potential PEPs and sanctioned entities is high, such business is strongly recommended to use reliable commercial screening services.

Such AML screening services will help legal practitioners to screen their customers against the consolidated lists of the United Nations, or other clients who pose high risk due to presence of adverse media, and will help in identification and classification of PEPs.

Changes to AML Regime in Singapore Followed by Money Laundering Scandal

In August 2023, a $2.3 billion worth money laundering scandal in Singapore sparked a debate on the adequacy and effectiveness of AML measures employed by the regulated entities.

Authorities suspect this money was connected with illegal operations outside Singapore.

Major banks, real estate agents and precious metal dealers have been implicated in the case, who failed to prevent, or facilitated operations to mix these funds in Singapore’s economy.

One year after this scandal, finance professionals have also been arrested linked with this case.

In the wake of these events, the Parliament of Singapore has passed the Anti-Money Laundering and Other Matters Bill.

This bill will introduce significant changes to AML and CTF regulations in the city state to improve the cue prosecution of financial crimes, enhancing inter-agency cooperation and data sharing, designate of serious foreign environmental crimes as predicate offences, improving the process of seizure and restraint of properties, to cater emerging and evolving typologies, and aligning AML/CTF framework with the FATF standards.