Anti-Money Laundering (AML) in Singapore: Complete Guide (2023)

Singapore has a robust and open economy, with reasonable taxes and a well-qualified labor market. The city-state focuses on doing business internationally, which has appealed to companies from all over the world. So it’s no surprise that the World Bank ranks the country as the second best in the world for business. However, Singapore’s open economy approach risks attracting criminals involved in money laundering or terrorism financing. To confront this threat, Singapore has established several governmental authorities and a variety of Anti-Money Laundering (AML) regulations.

Singapore has generally been successful in confronting money laundering. It’s constantly developing new regulations and providing companies with guidelines to adapt to the latest technologies and innovations (e.g., crypto). This has generated a positive response from international organizations such as the Financial Action Task Force (FATF), which stated in its latest review that Singapore is steadily developing its AML regulations and ensuring that companies implement them. 

Businesses planning to launch in Singapore need to comply with all the relevant regulations and follow different guidelines. To simplify the process, we at Sumsub have prepared an article explaining how companies can stay compliant in Singapore. 

Highlights

1. Who’s affected?
2. Who are the regulators?
3. What are the regulations?
4. How to stay compliant
5. How to report suspicious activities
6. What are the penalties?
7. FAQ

Who’s affected?

AML regulations in Singapore apply to financial institutions as well as certain designated business, including but not limited to: 

• Banks;
• Casinos;
• Exchange companies;
• Brokers;
• Financial advisers;
• Real estate agents;
• Dealers of precious metals;
• Payment service providers.

The following types of transactions fall under AML regulations:

• Money transfers (both domestic and international);
• E-money issuance;
• Account issuance;
• Money exchange;
• Virtual assets.

Who are the regulators?

There are several regulators in Singapore. The Monetary Authority of Singapore (MAS) is Singapore’s central bank and integrated financial regulator. The focus of the MAS is regulating and licensing financial institutions, such as banks. The MAS also publishes guidelines for different financial institutions.

There are separate authorities for other types of companies operating in Singapore. Thus, casinos are overseen by the Casino Regulatory Authority of Singapore. Meanwhile, real estate agencies have to comply with Council for Estate Agencies regulations.

What are the regulations?

The main AML regulation in Singapore is the Corruption, Drug Trafficking, and Other Serious Crimes Act 1992 (CDSA). The Act defines the roles of governmental authorities and imposes rules for money laundering prevention, including reporting procedures and penalties for criminals.

How to stay compliant

To stay compliant, companies need to follow the obligations set out by the CDSA, which include: 

Establishing internal policies

Companies should develop and implement adequate internal policies, procedures and controls, taking into consideration their money laundering risks and the size of their business. These should be communicated to r employees in a timely manner. 

Performing Customer Due Diligence (CDD)

Companies have to establish proper Customer Due Diligence (CDD) procedures, which is the process of collecting and verifying information about a customer during onboarding. CDD includes identification, verification, and ongoing monitoring of information provided by customers. 

When establishing business relationships, the following information should be collected from individuals to meet CDD requirements:

• Full name; 
• Unique identification number (e.g., identity card number, birth certificate number, or passport number); 
• Residential address; 
• Date of birth; 
• Nationality.

Additionally, if a customer is a legal person or legal arrangement, companies have to identify the legal form, constitution and powers that regulate and bind the legal person or legal arrangement. The following information should be collected: 

• Full name, including any aliases; 
• Unique identification number (such as an identity card number, birth certificate number or passport number of the connected party).

After collecting this information and comparing it to provided documents, companies can use external services or available databases to ensure authenticity. Companies should also check customers for presence on sanctions lists (e.g., OFAC, UN, HMT, EU, DFT), Politically Exposed Persons (PEP) lists, and adverse media, followed by an ongoing monitoring process.

Recordkeeping

Financial institutions are required to keep records of their customers and transactions for at least five years from the end of the business relationship or final transaction. Dealers of precious stones have to keep such records for the same amount of time when transactions exceed S$20,000 (approximately $15,000).

How to report suspicious activities

The Suspicious Transaction Reporting Office (STRO) is the main government institution responsible for analyzing reports filed by companies. There are three types of reports that the authority may receive:

• Suspicious Transaction Report;
• Cash Transaction Report;
• Cash Movement Report.

In case a company detects suspicious activity (e.g., related to drug trafficking), it should immediately send a Suspicious Transaction Report to the STRO containing all the transactions of the customer in question, including attempted ones.

Dealers of precious stones and metals have to report all transactions exceeding S$20,000 (approximately $15,000), while casinos have to report all transactions exceeding S$10,000 (approximately $7,500). Such transactions should be reported within 15 business days.

Complete instructions on report submission can be found here.

What are the penalties?

According to CDSA, the following penalties apply to those convicted of money laundering activities:

• For individuals: a fine of up to S$500,000 (approximately $375,000) or up to 10 years imprisonment;
• For companies: a fine of up to S$1,000,000 (approximately $750,000) or double the amount of goods acquired through illegal activity, whichever is higher.

For companies that fail to comply with AML regulations (e.g., don’t report suspicious activities in a timely manner), the following penalties may apply:

• Official warnings;
• Reprimands;
• Prohibition orders;
• Removal of management from their positions;
• License termination;
• Monetary penalties.

The maximum monetary penalty for financial institutions failing to meet AML obligations cannot exceed S$1,000,000 (approximately $750,000).

FAQ

• What is considered money laundering in Singapore?

  According to the Singapore Police Force, money laundering includes, but is not limited to, the process whereby criminals try to disguise the true origin of their funds. Such funds usually come from drug trafficking or other serious crimes.

• Is Singapore a high-risk country for money laundering?

  No. According to the latest FATF Mutual Evaluation Report, Singapore fully complies with 20 recommendations and mostly complies with 17 recommendations (out of 40 total). This means that the country is successfully confronting the spread of money laundering. The full text of the report can be found here.

• What are MAS guidelines?

  The Monetary Authority of Singapore (MAS) publishes guidelines for different types of companies. Breaking these guidelines isn’t a criminal offense, but non-compliance can affect a company’s risk evaluation by MAS.

• What is MAS 643?

  It is one of the guidelines published by the Monetary Authority of Singapore (MAS). MAS 643 applies to banks. It provides banks with transaction requirements when engaging with third parties. The full text can be found here.

• What is MAS 626?

  It is one of the guidelines published by the Monetary Authority of Singapore (MAS). MAS 626 applies to banks and targets Anti-Money Laundering (AML) and Countering Financing of Terrorism (CFT) activities. The full text can be found here.