SINGAPORE - Singapore plans to further tighten scrutiny on the close to 3,000 firms providing corporate services, in a bid to strengthen the anti-money laundering controls here.

Under a draft law it is planning, firms’ failure to comply with anti-money laundering/countering the financing of terrorism obligations could see them and their senior management fined up to $100,000 per breach if convicted.

The Ministry of Finance and the Accounting and Corporate Regulatory Authority (Acra) said on March 12 that they have proposed a new Corporate Service Providers (CSP) Bill to tighten the scrutiny on corporate service providers.

Amendments are also proposed to the Companies Act 1967 and Limited Liability Partnerships Act 2005 to enhance the transparency of beneficial ownership of companies and limited liability partnerships.

Members of the public can provide feedback on the proposals from March 12 to 25.

The proposed CSP Bill will require all companies or individuals providing corporate secretarial services in and from Singapore to register with Acra, regardless of whether they need to file transactions with the authority.

These corporate services include forming companies on behalf of someone else as well as acting or arranging for someone else to act as directors or nominee shareholders.

Singapore requires companies to appoint at least one local resident director, so foreigners based overseas often look for local nominee directors to act on their behalf on matters relating to their company.

To address this need, CSPs provide services for nominee directors to be appointed, among other services.

The services also include providing registered office or business addresses, accounting services and carrying out transactions with Acra on behalf of someone else or as a secretary of a company by way of business.

The proposed Bill seeks to combat the misuse of nominee directorship arrangements by prohibiting persons from acting as nominee directors unless their appointments are arranged by registered CSPs and assessed as fit and proper by the registered CSPs.

On concerns about individuals holding an excessive number of directorships, Acra will enhance its supervisory and enforcement efforts on such people.

To enhance corporate transparency, nominee directors and shareholders must disclose their nominee status and identities of their nominators to Acra.

In 2022, Acra sought public feedback on the proposed legislative amendments relating to Singapore’s regulatory regime for CSPs.

It aimed to improve Singapore’s compliance with recommendations by the Financial Action Task Force – a global financial crime watchdog – and maintain the Republic’s reputation as a trusted financial hub.

It also wanted to address the risks presented by the misuse of nominee arrangements in the creation of shell companies to facilitate money laundering and to require individuals who act as nominee directors to be qualified persons.

The new Bill will be tabled in Parliament in the first half of 2024. 

A multibillion-dollar money laundering case shook Singapore in August 2023, which saw the arrest of 10 foreigners who held passports from countries such as China, Turkey and Cambodia. Assets seized in the case to date are worth more than $3 billion.

A number of Singapore residents, who were registered as a shareholder, director or secretary of firms set up by foreigners, have been accused of helping to set up shell companies that were used by scammers and money launderers.

On Oct 3, 2023, Ms Indranee Rajah, Singapore’s Second Minister for Finance, told Parliament that she will lead an inter-ministerial committee to ensure that the country’s anti-money laundering framework is up to date in dealing with increasingly sophisticated financial crimes.

Its review will focus on four areas:

First, how to prevent corporate structures from being abused by money launderers.

Second, how financial institutions can enhance their controls and collaborate more effectively to guard against and flag suspicious transactions.

Third, how other players in the system, such as CSPs, real estate agents, and precious stones and metals dealers, can help to guard against money laundering risks.

Finally, how to centralise and strengthen capabilities across government agencies to better detect suspicious activity.