In 2004, the International Monetary Fund (IMF) conducted a Financial System Stability Assessment (FSSA) on Singapore in which it evaluated the country's compliance with the Financial Action Task Force (FATF) Recommendations relating to Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT). The FSSA concluded that Singapore complied well with most of the FATF 40+ 8 Recommendations. However, this assessment was based on the FATF's 2002 methodology, which was subsequently revised in 2004. The 2004 IMF report concluded that Singapore had a strong and comprehensive legal, institutional, policy, and supervisory framework to facilitate AML/CFT compliance. Singapore also has a long and well-entrenched culture of compliance and an effective monitoring framework for the implementation of laws. The Monetary Authority of Singapore (MAS), in its 2006/2007 annual report, notes that it has issued revised Notices on AML/CFT, effective from March and April 2007, to keep them in line with the latest standards developed by the FATF. The 2007 U.S. Department of State report also affirms that Singapore is taking important steps to reform its legal and regulatory framework in an attempt to implement the revised FATF Recommendations on AML/CFT, but Singapore has not yet ratified the UN Convention against Transnational Organized Crime. Nonetheless, there is little comprehensive information publicly available addressing Singapore's compliance with the FATF recommendations per the 2004 methodology.

General Overview

In 2004, the International Monetary Fund (IMF) conducted a Financial System Stability Assessment (FSSA) on Singapore in which it evaluated the country's compliance with the Financial Action Task Force (FATF) Recommendations relating to Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT). The FSSA concluded that Singapore "complies well with most of the assessable FATF 40+ 8 Recommendations" (p. 81). Further, Singapore has a strong and comprehensive legal, institutional, policy, and supervisory framework to facilitate AML/CFT compliance. Singapore also has a long and well-embedded culture of compliance, and an effective monitoring framework for the implementation of laws. Some of the areas requiring attention, per the 2004 FSSA, are: (1) effectiveness of cross-border mutual legal assistance; (2) ratification of the Palermo Convention expeditiously; (3) clarification of the customer due diligence (CDD) obligations of reporting institutions; (4) introduction of customer identification requirements for wire transfers; and (5) updates to the Monetary Authority of Singapore's (MAS) AML/CFT Notices for more detailed guidance to the supervised sectors. However, the IMF's 2004 FSSA assessment was based on the FATF's 2002 methodology, which was subsequently revised in 2004 and there is little comprehensive information publicly available addressing Singapore's compliance with the 2004 version of the FATF's recommendations.

In this context, the 2006 IMF report mentions that Singapore is revising the MAS' AML Notices to ensure compliance with the revised FATF Recommendations. The revised notices were to be issued in 2006. In its 2006/2007 Annual Report, the MAS states that it had indeed issued revised MAS' Notices on AML/CFT, effective from March and April 2007 "to keep them in line with the latest standards developed by the FATF" (p. 28). A 2007 U.S. Department of State (DoS) report also affirms that Singapore is taking important steps to reform its legal and regulatory framework in an attempt to implement the revised FATF Recommendations on AML/CFT. However, Singapore has not yet ratified the UN Convention against Transnational Organized Crime (Palermo Convention).

The 2004 IMF FSSA noted that the Suspicious Transactions Reporting (STR) Office is Singapore's Financial Intelligence Unit (FIU) and it became operational in January 2000. The Office is a division within the Commercial Affairs Department (CAD) and has been a member of the Egmont Group since June 2002. The Office has the requisite powers to perform all functions of an effective FIU, including receiving, analyzing, and disseminating information on suspicious transactions and other pertinent matters. It also has access to a range of public and non-public databases, and it can share information with foreign authorities under formal agreements or Memoranda of Understanding (MoUs). The Office keeps extensive statistics pertaining to STRs.

The 2006/2007 MAS annual report (published in 2007) informs that the MAS, as the country's unified financial sector supervisor, monitors financial institutions on their AML/CFT compliance as part of its risk-based supervision. It conducts regular on-site inspections of financial institutions to ensure the adequacy of their AML/CFT policies, procedures, and controls as well as their compliance with the MAS' regulations pertaining to AML/CFT. The CAD website provides statistics relating to Singapore's AML/CFT enforcement. Accordingly, collection and analysis of STRs by the STR Office has directly or indirectly led to the seizure of $10 million of proceeds of crime since 2000. STRs received between 2005 and 2006 showed an increase of 58 percent, jumping from 2,076 to 3,290, and came largely from the financial sector. The STR Office also received more than 50 requests for legal assistance for fighting money laundering/terrorist financing from foreign authorities in both 2005 and 2006.

The Principles

1. Legal Systems and Related Institutional Measures

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According to the 2004 IMF FSSA, Singapore has a strong and comprehensive legal, institutional, policy and supervisory framework to facilitate its compliance with the FATF's 40+8 Recommendations pertaining to AML/CFT. Singapore also has a long and well-embedded culture of compliance and an effective monitoring framework for implementation of laws. Nevertheless, this assessment was based on the FATF's 2002 methodology, which was revised in 2004. There is little subsequent information publicly available addressing Singapore's compliance with the recommendations relating to this principle.

According to the 2004 FSSA, at the time, criminalization of money laundering in Singapore was "broadly consistent with international standards" (p. 78). As recognized by the FATF, Singapore has adopted a list approach to predicate offenses, in accordance with the FATF recommendations. It has also included predicate offenses specified in the Vienna Convention, although it does not include all those contained in the Palermo Convention. The crime of money laundering applies to those who have committed money laundering as well as those who have committed the predicate offense. Natural and legal persons knowingly engaged in money laundering or terrorist financing come under the definition of the offense, and intent can be inferred from factual evidence. The FSSA recommended that Singapore move quickly on the ratification of the Palermo Convention, adopt an all-serious-crimes approach to predicate offenses, and impose sufficient monetary sanctions on legal entities guilty of money laundering offenses. The 2007 U.S. DoS report, however, notes that Singapore has yet to ratify the Palermo Convention. The report also adds that the Corruption, Drug Trafficking, and Other Serious Crimes (Confiscation of Benefits) Act was amended in May 2006 to add 108 new categories to the Schedule of Serious Offenses, including narcotics transactions, terrorist financing crimes, illicit arms trafficking, counterfeiting and piracy of products, environmental crime, cyber crime, insider trading, gambling-related crimes, and rigging in commodities and securities markets. However, tax and fiscal offenses did not make it to the expanded list.

The 2007 U.S. DoS report comments that "Singapore is an important participant in the regional effort to stop terrorist financing in Southeast Asia." TF is criminalized by the Terrorism (Suppression of Financing) Act that took effect in 2003. The Act: (1) makes it a criminal offense to deal with terrorist property (including financial assets); (2) criminalizes the provision or collection of any property (including financial assets) with the intention of using the property (or having reasonable grounds to believe that the property will be used) to commit any terrorist act or for various terrorist purposes; (3) provides that any person in Singapore, and every citizen of Singapore outside Singapore, who has information about any transaction or potential transaction relating to terrorist property, or who has information that he/she believes might be of material assistance in preventing a terrorism financing offense, must immediately inform the police; and (4) gives the authorities the power to freeze and seize terrorist assets. Further, the MAS regulations of 2002 give the MAS broad powers to mandate financial institutions to comply with international terrorist financing regulations and apply to all Singapore-incorporated financial institutions, their branches and offices, as well as branches and offices of foreign institutions located in Singapore. The regulations (1) bar banks and financial institutions from providing resources and services of any kind that will benefit terrorists or terrorist financing; and (2) require financial institutions to notify the MAS immediately if they have in their possession, custody or control any property belonging to designated terrorists or any information on transactions involving terrorists' funds. The MAS periodically updates these regulations to include names of suspected terrorists and terrorist organizations listed on the United Nations 1267 Sanctions Committee's consolidated list.

Per the 2004 IMF FSSA, "confiscation and provisional measures provisions [were] quite comprehensive" (p. 78). Powers to restrain and freeze assets were also adequate. Confiscation requires conviction, except in the case of terrorist financing. Third-party rights were also protected by law. The FSSA recommended specific provisions addressing identification and tracing of assets, changes to the laws protecting third party rights to make it more comprehensive. The 2004 IMF FSSA found that, "measures to freeze funds of terrorists and those who finance terrorism [were] comprehensive" (p. 78). The legal provisions did not impede asset sharing, although there was a lack of formal agreements for the same. Statistics on funds frozen, seized, and confiscated were extensively maintained, and supervisors provide training pertaining to confiscation and seizure. The FSSA recommended formal mechanisms for sharing of seized assets, as also broadening the scope of forfeiture beyond FT and basing it upon civil law.

The 2004 IMF FSSA further noted that the STR Office is Singapore's FIU and it became operational in January 2000. The STR Office is a member of the Egmont Group since June 2002. The Office has the requisite powers to perform all functions of an effective FIU, including receiving, analyzing and disseminating information on suspicious transactions and other pertinent matters. It also has access to a range of public and non-public databases, and it can share information with foreign authorities under formal MoUs. The STR Office keeps extensive statistics pertaining to STRs. The 2007 U.S. DoS report adds that the STR Office has developed a computerized system for electronic submission of STRs and dissemination of AML/CFT related materials. This is expected to improve STR. Financial institutions and designated non-financial business and professions (DNFBP) are being encouraged to participate in the system. The report, however, observes that "procedural regulations and bank secrecy laws limit the STR Office's ability to provide information relating to financial crimes."

According to the 2004 IMF FSSA, responsibility for AML/CFT investigations is clearly assigned with distinct departments and staff and a unit especially dedicated to work on proceeds of crime matters. The Criminal Procedure Code, special provisions under the Corruption, Drug Trafficking and other Serious Crimes Act and the Terrorism (Suppression of Financing) Act provide for easy access to financial records by the law enforcement officials. The officials also have investigative tools, though the legal backing of some has not been tested. The FSSA recommended Singapore provide the law enforcement, investigation and prosecution authorities with additional and specified funding to enable them to better discharge their duties.

The 2007 U.S. DoS report notes that movement of currency and bearer negotiable instruments in and out of Singapore is not monitored and not subject to reporting requirements, but that Singapore is working on legislative amendments to enable the implementation of FATF Special Recommendation (SR) IX, pertaining to cross border declaration and disclosure. The report therefore recommends Singapore implement SR IX, so as to detect and prevent cross border smuggling of currency.

2. Preventive Measures - Financial Institutions

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The 2004 IMF FSSA noted that financial entities have the duty to report STRs under the Corruption, Drug Trafficking, and Other Serious Crimes Act. Per the 2007 U.S. DoS report, since 2000, extensive know your customer guidelines (in the form of sector specific MAS AML Notices) exist for financial institutions, including finance companies, merchant banks, life insurers, brokers, securities dealers, investment advisors, futures brokers and advisors, trust companies, approved trustees, money changers and remitters and other financial service providers. However, large currency transactions are not systematically reported. According to the FSSA, "Singapore financial institutions have a strong compliance culture with recognition of AML/CFT requirements, generally appropriate procedures in place, and careful implementation" (p. 84). Nevertheless, the 2004 FSSA was based on the FATF's 2002 methodology, which was revised in 2004. There is little subsequent information publicly available addressing Singapore's compliance with the recommendations relating to this principle.

The 2004 FSSA noted that the MAS has issued Notices and guidelines to financial institutions for identifying suspicious transactions and on reporting procedures; and on basic CDD measures and prohibiting anonymous accounts. Singapore's Financial Intelligence Unit, the STR Office, also provides regular guidance in the form of typologies and other types of interactive assistance. The FSSA also found that AML/CFT inspections were regular and part of regular on-site inspections and offsite monitoring through internal and external audit reports. The banking industry had guidelines that went beyond the MAS Notices, and the banks in Singapore were found to have implemented many of the proposals of the Basel CDD paper and the Wolfsberg principles (standards) for private banking. However, the FSSA had found marked variations in the implementation of AML/CFT requirements by institutions, most likely due to different interpretations of MAS Notices. It therefore recommended that guidelines be clarified and made more stringent, especially with regard to conducting transactions without complete identification, identifying persons authorized to transact in the name of legal entities; identification of beneficial ownership; CDD measures and increased due diligence; suspicious transaction reporting without delays; adequate screening procedures for hiring; and extending the tipping-off procedures to reports under the Terrorism (Suppression of Financing) Act. In this respect, the Singapore authorities responded that they are working towards revising the MAS Notices, and the STR Office was also in the process of introducing a computerized system for facilitating STR by financial institutions and dissemination information and guidance to the institutions for AML/CFT compliance.

The 2006/2007 MAS annual report informs that the MAS issued revised AML/CFT Notices for the different financial sectors in March and April 2007, which inter alia introduced more rigorous CDD requirements; employed risk sensitivity to the CDD measures with enhanced due diligence for higher risk customers like politically exposed persons, and simplified due diligence for low risk customers; and imposed legally binding obligations on financial institutions. These notices were revised to keep them aligned to the revised FATF Recommendations. The MAS also conducts ongoing AML/CFT inspections as part of its regular inspections of financial institutions to ascertain that their AML/CFT policies, procedures, and controls are in place and they are in compliance with the MAS' regulations.

The 2004 FSSA noted that Singapore was soon expected to require full originator information for wire transfers in accordance with the FATF Special Recommendation VII stipulated timeframe. The 2006/2007 MAS annual report informs in this respect that the MAS Notices of 2007 operationalized the requirements of SR VII on cross border wire transfers. The 2004 IMF FSSA further observed that the laws regarding integrity standards, administrative sanctions, and supervisory cooperation "are comprehensive" (p. 80) and they, coupled with institutional efforts to gain feedback and provide training, have considerably strengthened the oversight framework in Singapore.

The 2007 U.S. DoS report notes that the MAS is Singapore's financial sector regulator, including with respect to AML/CFT compliance. When granting licenses, the MAS conducts extensive regulatory checks on applications, including fitness of directors, and confirms that, in the case of foreign banks, there is adequate home country supervision. Unlicensed banking operations are not permitted by law. The 2004 IMF FSSA found that the MAS performs on-site and offsite inspections, including through internal and external audit reports, to monitor financial institutions' compliance with their AML/CFT obligations. Full-scale examinations cover AML/CFT inspections, and include sample testing of transactions and customer records, and visits to retail branches to test compliance at the field level. Post 9/11, the MAS was also found to have conducted a series of terrorist-financing inspections of institutions. The FSSA found the MAS in the midst of transitioning to a risk-based supervision system, and recommended the MAS to ensure ongoing AML/CFT inspections of institutions, and especially an annual visit to institutions with vulnerable business. The 2007 U.S. DoS report noted that shell banks are not permitted in Singapore, either in the domestic or offshore sectors. It adds that the revised MAS AML Notices (then in the process of being formulated) would proscribe banks from entering into or maintaining correspondent banking relationships with shell banks.

3. Preventive Measures - Designated non-Financial Business and Professions

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There is little information publicly available addressing Singapore's compliance with the recommendations relating to this principle. According to the 2007 U.S. DoS report, any for-profit business in Singapore, whether domestic or foreign, must register under the Companies Act to begin operation. Every Singapore-incorporated company is also required to have at least two directors, one of whom must be a resident in Singapore, and one or more company secretaries who must be resident in Singapore. However, there is no nationality requirement. Further, the Trust Companies Act, which replaced the Singapore Trustees Act in 2005, requires trust companies to be licensed by the MAS, and its directors and managers must be approved by the MAS before appointment. The report also finds that the MAS is formulating regulations imposing CDD requirements on trust companies. According to the report, Singapore's Moneylenders Act was amended in April 2006 to require moneylenders under investigation to provide relevant information or documents, and the amended Act imposes new penalties for providing false or misleading information or for hindering access to and inspection of suspected premises. Singapore lifted its ban on casinos in April 2005, and implemented the Casino Control Act in June 2006, establishing the Casino Regulatory Authority of Singapore to monitor the casino sector, and impose certain cash reporting requirements on it. Internet gaming sites are illegal in Singapore. The U.S. DoS report notes that Singapore is also planning on issuing regulations governing designated nonfinancial businesses and professions to bring them into conformity with the FATF recommendations.

4. Legal Person and Arrangements & Non-Profit Organizations

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There is little information publicly available addressing Singapore's compliance with the recommendations relating to this principle. The 2007 U.S. DoS report observes that a legal person incorporated in Singapore has the same status and powers as a natural person. Singapore does not permit bearer shares. Trust companies in Singapore, whether domestic or offshore, are subject to the same regulations, record keeping, and suspicious transaction reporting requirements that apply to banks. Per the 2007 U.S. DoS report, charities in Singapore come under extensive government regulation and are subject to close oversight and reporting requirements and restrictions limiting transfer of funds out of the country. Charities are required to be registered with the Commissioner of Charities, which reports to the Minister for Community Development, Youth, and Sports. Charities are also required to submit documents detailing their objectives and information pertaining to their trustees, and to keep detailed accounting records for at least seven years. The Commissioner of Charities is empowered to investigate charities, restrict their transactions, suspend their employees or trustees, search or seize records, and take over the administration of the charity in its care. Further, the Charities (Fund-raising Appeals for Foreign Charitable Purposes) Regulations of 1994 requires any charity or person wishing to conduct or participate in fundraising for a foreign charitable purpose to apply for a permit and demonstrate that 80 percent of the funds raised will be used in Singapore. The Commissioner of Charities has the discretion to reduce that percentage in individual cases. Permit holders also have to fulfill additional record-keeping and reporting requirements, including itemized expenditure details, amounts transferred outside Singapore, and names of recipients of those funds. Foreign donations to charities operating in Singapore do not come under any reporting requirements or restrictions. The U.S. DoS report states that, as of 2005, there were 1,807 charities registered in Singapore, and the government issued 36 permits for fundraising for foreign charities in 2005. The report also finds that, effective January 1, 2007, Singapore was to tighten regulations under the Income Tax Act governing public fund-raising by charities, wherein, charities authorized to receive tax-deductible donations will be required to disclose the amount of funds raised if they exceed Singapore dollar (S$) 1 million, as well as expenses incurred, and planned use of funds.

5. National and International Co-operation

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The 2004 IMF FSSA noted that, in terms of domestic cooperation, the Financial Investigation Division of the Commercial Affairs Department of the Singapore Police Force and the Attorney General's Chambers cooperate well in the investigation and prosecution of ML/TF offenses. Per the 2006/2007 MAS report, the MAS is a member of the FATF and the Asia-Pacific Group on Money Laundering, and works with other international regulatory bodies "in setting high standards against money laundering and terrorism financing" (p. 28), by developing and disseminating these standards. The U.S. DoS report adds that Singapore is also a member of the Egmont Group and the Offshore Group of Banking Supervisors. The 2004 IMF FSSA noted that with a MoU or other agreement in place, the STR Office is allowed to share information with foreign authorities. The 2007 U.S. DoS report also mentions that Singapore is party to the UN International Convention for the Suppression of the Financing of Terrorism and the 1988 UN Drug Convention. It has also signed, but not ratified, the UN Convention against Transnational Organized Crime (Palermo Convention). However, there is little information publicly available addressing Singapore's compliance with the recommendations relating to this principle.

According to the 2007 U.S. DoS report, the Mutual Assistance in Criminal Matters Act of 2000 regulates law enforcement cooperation and facilitates supervisory information exchange. The Act was amended in 2006 to enable Singapore to extend assistance without bilateral treaties, MoUs or other agreements. The Act allows international cooperation on any of the 292 predicate serious offenses listed under the Corruption, Drug Trafficking, and Other Serious Crimes (Confiscation of Benefits) Act. Pursuant to the Mutual Assistance in Criminal Matters Act, Singapore signed an agreement with the United States in November 2000 (effective 2001) called the Agreement Concerning the Investigation of Drug Trafficking Offenses and Seizure and Forfeiture of Proceeds and Instrumentalities of Drug Trafficking to facilitate information exchange on drug money laundering suspects and targets, and reciprocal honoring of seizure/forfeiture warrants. However, the agreement does not provide for information sharing on non-narcotics related money laundering, terrorist financing, or financial fraud. The U.S. DoS report advises Singapore to lift its rigid bank secrecy restrictions so as to enhance its law enforcement cooperation and information sharing and "to conform to international standards and best practices." The 2007 U.S. DoS report informs that pursuant to the Mutual Assistance in Criminal Matters Act and the Terrorism Act, Singapore also reached mutual legal assistance agreements with the UK in matters related to terrorist-financing offenses, and with Hong Kong and India.

Singapore is also a party to the Association of Southeast Asian Nations Treaty on Mutual Legal Assistance in Criminal Matters along with Malaysia, Vietnam, Brunei, Cambodia, Indonesia, Laos, the Philippines, Thailand, and Burma, which will come into effect when all the respective governments have ratified it. The report, however, calls for the "conclusion of broad mutual legal assistance agreements... to further Singapore's ability to work internationally to counter money laundering and terrorist financing."

The 2004 IMF FSSA noted that Singapore allows for the extradition of individuals for money laundering offenses to and from Malaysia, Hong Kong, and 39 declared Commonwealth countries and territories. The basis for FT related extradition is provided by the CFT Convention. The FSSA, however, recommended that Singapore: "(1) make extradition possible with a wider range of countries; [and] (2) re-consider the process whereby required notifications are planned only after a request is made posing possible ex post facto issues for requesting countries" (80).