6-2-2024 (SINGAPORE) Strengthening its resolve against the proliferation of financing aimed at circumventing sanctions and facilitating the spread of weapons of mass destruction, Singapore enacted amendments to existing laws on Tuesday (Feb 6).
The revisions, proposed within the framework of the Prevention of Proliferation Financing and Other Matters Bill, enable Singapore to adhere to updated requirements outlined by the Financial Action Task Force (FATF), a global watchdog on money laundering and terrorism financing. Since 1992, Singapore has been a member of FATF and currently holds the presidency of the task force.
Proliferation financing, as defined by FATF, involves providing funds or financial services for the manufacturing, acquisition, possession, development, export, transshipment, brokering, transport, transfer, stockpiling, or use of nuclear, chemical, or biological weapons and their means of delivery and related materials, in contravention of national laws or international obligations.
The FATF’s 2020 standards mandate that countries and the private sector evaluate and mitigate proliferation financing risks associated with the “potential breaches, non-implementation or evasion” of targeted financial sanctions.
In addition to the financial sector, the FATF highlighted the significant role played by other non-financial sectors in combating illicit financial flows, stated Rahayu Mahzam, Senior Parliamentary Secretary at the Law Ministry, as she presented the Bill for a second reading.
Business operations in these sectors encompass dealing in precious stones and metals, moneylending, pawnbroking, and providing legal services.
“As a regulator of these sectors, MinLaw regularly reviews our laws to ensure that they remain relevant, effective, and fully compliant with the latest international standards set by the FATF,” Rahayu mentioned.
Consequently, the Bill encompasses changes to four Acts: the Precious Stones and Precious Metals (Prevention of Money Laundering and Terrorism Financing) Act, the Moneylenders Act, the Pawnbrokers Act, and the Legal Profession Act.
The Bill proposes updating the regulatory frameworks of these sectors and mandating businesses or individuals covered by the Acts to implement adequate measures to combat proliferation financing.
These measures include conducting risk assessments and developing and implementing internal policies, procedures, and controls.
Among other provisions, the Bill includes amendments to prevent individuals with prior convictions related to the prevention of financial crimes from obtaining licenses or holding management positions in moneylending and pawnbroking businesses. Further amendments to the Precious Stones and Precious Metals (Prevention of Money Laundering and Terrorism Financing) Act aim to strengthen the regulatory regime of the sector.
One significant change involves updating the definition of a precious product. Currently, a precious product refers to any jewellery, watch, apparel, accessory, ornament, or other finished product containing or made of precious metals or stones, with at least 50 per cent of its value attributable to these materials.
However, Rahayu noted that the current definition fails to encompass products where the majority of their value is attributed to other factors, such as branding or workmanship, despite their potential links to financial crimes.
To address this gap, the Bill will amend the definition to include any precious product priced at more than S$20,000 (US$14,900), irrespective of the value attributable to precious metals or stones.
The prescribed threshold value of S$20,000 aligns with FATF standards and international best practices, Rahayu stated in a speech delivered before parliament.
The debate on the Bill continued on Tuesday, with Members of Parliament expressing support for the legislation while raising concerns about potential increased compliance costs, particularly for small- and medium-sized enterprises.
Responding to queries, Rahayu noted that the new requirements are not expected to result in significant compliance implications, as the measures to counter proliferation financing resemble those already in place to counter money laundering and terrorism financing.
Nominated MP Neil Parekh sought clarification on the timeframe for businesses to comply with the new rules and whether assistance programs would be available for those needing guidance.
Rahayu assured that the Law Ministry would engage relevant sectors and provide guidance during the rollout of the rule changes. She emphasized that MinLaw would assess and follow up with regulated entities not complying with the requirements after the amendments are imposed.
The discussion also touched on the massive money laundering case uncovered last year, with MPs questioning if lessons learned from the crackdown were applied to the proposed amendments.
Rahayu confirmed that the review of issues addressed in the Bill began prior to the arrest of suspects involved in the recent money laundering crackdown. She highlighted ongoing investigations by the police and various sectoral regulators into the case.
Furthermore, a new inter-ministerial committee, chaired by Second Minister for Finance and National Development Indranee Rajah, is evaluating the adequacy of the country’s anti-money laundering laws and controls, with recommendations forthcoming, Rahayu concluded.
