Debated in Parliament on 19 Nov 2018.
Order for Second Reading read.
Mr Deputy Speaker, I beg to move, "That the Bill be now read a Second time."
Money laundering and terrorism financing are serious crimes which can have severe and even devastating consequences for Singapore. Left unchecked, they can destroy our reputation as a trusted global financial centre or lead to terrorist attacks.
We are strongly committed to combating these threats and making sure they do not take root here. We closely supervise our banking and trading systems to prevent them from being exploited and have tough legislation and regulations which we strictly enforce. In the last five years, we have seen around 70 convictions annually for money laundering. In 2016, we convicted six foreign nationals for terrorism financing. However, we will need to strengthen our defences.
Money laundering and terrorism financing are getting harder to tackle. With banking and financial systems going digital, monies can now be swiftly transferred between persons and across borders with minimum hassle. This opens up more channels to launder illicit funds and support terrorist activities. The growing volume and complexity of financial transactions also make it harder for regulators to detect offences. In particular, we are concerned with several groups exposed to the risk of money laundering and terrorism financing.
The first group comprises corporations and professional service providers.
In one recent case, a foreign national paid a local corporate service provider to set up several "shell" companies in Singapore. The bank account of one of these companies was then used as a pass-through for stolen monies. The service provider should have known better than to be complicit in this scheme but was overcome by the temptation of easy money.
The second group comprises individuals in Singapore, who act as money mules for overseas organised syndicates. This is where an individual is paid to simply accept money transfers into his or her bank account, and then transfer it out again, thus covering the tracks of illicit funds. The syndicates exploit the anonymity and reach of the Internet messaging tools and online banking to recruit locals to their schemes, and to move monies quickly through our financial system.
We must get tough on both groups. Although regulations are in place, we need more severe punishments to enhance deterrence and more effectively deprive the criminals of their illicit assets. We must also enhance our abilities to detect and prosecute these cases.
This is the aim of the proposed amendments to the Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act, or CDSA in short, and the Terrorism (Suppression of Financing) Act (TSOFA).
We have benchmarked our proposals against the practices of leading jurisdictions, such as Australia, the United States (US), the United Kingdom (UK) and Hong Kong. We have also considered international norms set by the Financial Action Task Force (FATF), of which we are a member. As Members know, FATF is an intergovernmental body which develops international standards to fight money laundering and terrorism financing.
I will, first, explain the proposed amendments targeted at corporations and professional service providers who become involved with money laundering and terrorism financing.
To strengthen deterrence, we propose to increase the penalties for these offences, some of which have not been changed since 2003. Clauses 7 to 10 amend sections 43(5), 44(5), 46(6) and 47(6) to raise the maximum penalty for money laundering committed by an entity from $1 million to the higher of $1 million or twice the value of the property involved.
Next, we will increase the penalties for not reporting suspicious transactions. Today, a person is required under the CDSA to report to the Suspicious Transaction Reporting Office (STRO) when he knows or has reason to believe that any property is linked to criminal conduct or drug dealing and comes across such information in the course of his work. Such reporting is critical to our ability to enforce against money laundering and other crimes, as law enforcement agencies rely heavily on such intelligence to initiate and support investigations. However, the existing penalties for not doing so are manifestly low, with a maximum fine at only $20,000. Given the sums of money involved in such crimes, this is not sufficient as a deterrent.
To illustrate, a property agent was fined this year for not filing a Suspicious Transaction Report after finding out that his client was linked to a foreign Ponzi scheme. This is despite the property agent being well aware of his obligations to file the Report through guidelines and checklists issued by the Council for Estate Agencies. For this case, the client had wanted to buy a property at Sentosa Cove. Had the sale gone through, the agent’s commission would have been in the range of hundreds of thousands of dollars. A maximum fine of $20,000 clearly makes it a small risk to take.
Clause 5, therefore, amends section 39 to raise the maximum penalty for failing to file a Suspicious Transaction Report under section 39(2) to a fine not exceeding $250,000 and/or imprisonment not exceeding three years if the offender is an individual, and to a fine not exceeding $500,000 for corporations.
A related issue is tipping off on any investigations under CDSA or any disclosure made to the Suspicious Transactions Reporting Officer. Such behaviour subverts the course of justice. The penalties should, therefore, be increased. Clause 13 amends section 48 to raise the maximum fine for tipping off under section 48(1) or (2) from $30,000 to $250,000.
Clause 20 amends section 6A of the TSOFA to raise the maximum penalty for non-individuals who commit a terrorism financing offence under sections 3 to 6 of the TSOFA from $1 million to the higher of $1 million or twice the value of the property, financial service or financial transaction involved in the offence. Again, this is to ensure that higher penalties can be imposed on corporations that finance terrorist activities, for which $1 million may not be a sufficient deterrent.
It is also important for us to enhance penalties for not disclosing information related to terrorism financing to the Police.
Clause 22 amends section 8 of the TSOFA to, amongst other things, raise the maximum penalties for failing to inform the Police about transactions relating to a terrorist’s property or whenever one controls or possesses such property.
Clause 23 amends section 10(1) to raise the maximum penalty for failing to disclose to the Police information which a person knows or believes might assist in preventing a terrorism financing offence or lead to the arrest, prosecution or conviction of another person for terrorism financing. The penalty increase under these offences will be tiered into three categories with differentiated punishments to reflect the differing culpability of groups that might commit such offences.
First, individuals who come across the property or information in the course of their work, such as bankers. These individuals have a high level of culpability if they do not inform the Police, because they are bound to standards of professional conduct that require such reporting. For this group, the maximum fine will be raised from $50,000 to $250,000, while the maximum imprisonment term remains unchanged at five years.
Next, corporations. These also have a high level of culpability due to their professional obligations. They will, therefore, face a maximum fine of the higher of $1 million or twice the value of the property involved in or services rendered for terrorism financing, up from a maximum fine of $250,000 today.
The last group comprises other individuals who are non-professionals. As this group is less culpable, the penalties are unchanged at the current maximum punishment of $50,000 fine and/or five years’ imprisonment.
On a related matter, clause 24 increases the maximum penalties for disclosing information that might compromise a terrorism financing investigation under section 10B(1) and (2) to a fine of $250,000 and/or five years' imprisonment. As these offences subvert the course of justice, they should be enhanced for greater deterrence.
Let me now turn to the proposed CDSA amendments to combat organised overseas syndicates and their money laundering operations involving money mules.
As explained earlier, we have observed syndicates targeting locals and using their bank accounts to launder criminal proceeds. Money laundering operations planned by these syndicates are complex, with multiple money mules being used to make it difficult for the crime proceeds to be traced to their original source. Some money mules are even trained not to make any admission during Police investigations and taught to destroy evidence by deleting handphone messages. Under our current laws, the prosecution must prove that these money mules know the monies are linked to criminal conduct. This is challenging, especially against mules trained to claim ignorance.
Clause 11 introduces a new section 47AA to CDSA. This criminalises the possession or use by an accused of property which would be suspected by a reasonable person of being benefits from criminal conduct, if the accused cannot satisfactorily explain how he came by the property. With this amendment, the Courts will be able to decide, based on the circumstances of the case, whether the accused could be reasonably expected to suspect that monies are linked to criminal conduct.
The maximum penalties for this new offence are a $150,000 fine and/or three years’ imprisonment for individuals.
I will now move on to the other proposed amendments to CDSA.
While we have levers today to prosecute money laundering that is linked to overseas crimes, our law enforcement agencies have highlighted challenges. Today, prosecutors must not only prove that the overseas act amounts to a serious offence if committed in Singapore. In addition, they must also show that the overseas act amounts to an offence in the overseas jurisdiction. This is based on the established principle of dual criminality. Practically, the law today requires prosecutors to obtain a certificate from the foreign government or a testimony from an expert in that foreign law to fulfil the burden of proof. This is not ideal for two reasons.
First, we frequently encounter delays to obtain the certificate as the foreign government may not act on our request expeditiously, or, in some cases, may not be willing to issue it. Second, engaging an expert is costly and may discourage prosecutors from proceeding with enforcement action.
Clause 12 amends section 47A to address these challenges. In effect, clause 12 will allow the Courts to decide on the basis of evidence presented by the Prosecution that an offence has, indeed, been committed in the overseas jurisdiction, without having to rely on foreign governments or experts.
We will also amend our laws to strengthen our levers against Cross Border Cash Reporting Regime (CBCRR) offences.
Under sections 48C(2) and 48E(2) of CDSA, a person is required to declare to the authorities any sum of monies brought into or out of Singapore exceeding the prescribed amount, which is $20,000 today. Failure to make a report constitutes a CBCRR offence.
Clause 15 introduces a new section 48FA to empower the Court to make a confiscation order against a defendant convicted of a CBCRR offence on any sum beyond the prescribed amount. This means that for a person who is convicted of bringing $100,000 into or out of Singapore without declaring it, the Court has the option to confiscate up to $80,000. This gives the Court greater discretion to impose heavier penalties for CBCRR cases. This will bring our penalties in line with jurisdictions like the US.
For the less serious CBCRR cases, the Police have the powers to compound in lieu of prosecution. Clause 16 amends section 60(1) to raise the maximum composition amount for an offence under section 48C(2) or 48E(2) to $20,000.
These proposed amendments allow a wider range of penalties and composition fines to be taken against CBCRR breaches of different severity and are in line with standards set by FATF.
Next, we will also amend CDSA to enhance the sharing of financial intelligence with financial intelligence units of overseas jurisdictions. As money laundering offences are often transnational, the exchange of financial intelligence between jurisdictions is critical to support the investigation of these cases. Currently, the law only allows us to exchange intelligence with countries with which we have bilateral arrangements. We have around 50 such arrangements today with other countries’ financial intelligence units.
Clause 6 amends section 41 to allow us to exchange information under an international arrangement, provided that there are sufficient safeguards to protect the confidentiality of information shared and control their use. In effect, this will allow us to exchange financial intelligence with more than 150 financial intelligence units of overseas jurisdictions which are members of the Egmont Group of Financial Intelligence Units, thereby tripling the size of our network. We will be able to access more valuable information, while being assured that information shared in return is not abused, through the guidelines that the Egmont Group puts in place for its members.
Under CDSA, we will also make amendments with clauses 2 and 3 to clarify the powers of the Courts to confiscate criminal proceeds, and an amendment with clause 4 to expand the types of assets for which charging orders can be imposed on by the Courts to include “capital market products”.
I will next touch on the other TSOFA amendments. While cases of terrorism financing in Singapore are few, these proposed amendments are important to strengthen the counter terrorism financing regime.
Clause 18 amends section 4 of TSOFA to prohibit financing the overseas travel of an individual to any place to provide or receive any training in facilitating or carrying out any terrorist act, when one knows or has reasonable grounds to believe that the involved property or services are used to support the individual’s travel. This gives effect to Resolution 2178 (2014) of the Security Council of the United Nations (UN) and is also in line with FATF standards.
Next, we will enhance TSOFA penalties for greater deterrence. Clause 21 inserts a new section 6B into TSOFA to make a person who abets, conspires or attempts to commit a terrorism financing offence under sections 3, 4, 5 or 6 of the Act liable to the same punishment as if the person had committed the offence under the applicable section.
These acts are no less egregious than the primary terrorism financing offence and should be punished at the same level to create a clear deterrence against anyone from getting involved. This proposed amendment will align how we peg our terrorism financing penalties with jurisdictions like the UK and Australia.
We will also make amendments with clauses 17, 18 and 19 to protect a person against civil liability when the person complies with TSOFA prohibitions. This will give greater confidence to a person to do the right thing without fear of breaching contractual obligations.
Mr Deputy Speaker, Singapore, as a major international trade and financial centre, faces high risks of our systems being exploited by criminals and syndicates to launder monies and finance terrorist activities. These threats are real and can lead to concomitant terrorist attacks, a loss in reputation as a trusted global hub, and a breakdown in law and order. We must do all that we can to obviate these risks.
These proposed amendments enhance the effectiveness of our laws to deter corporations and professional service providers against being involved in money laundering and terrorism financing activities. They also demonstrate our commitment that we have towards combating overseas organised syndicates and dismantling their money laundering operations involving money mules. All in all, the proposed amendments strengthen our frameworks to combat such criminal activities and ensure that we will have an even more effective set of levers and powers to deter, detect and prosecute. Mr Deputy Speaker, I beg to move.
*Question proposed.*
Mr Deputy Speaker: Mr Christopher de Souza.
Sir, this Bill strengthens our response to transnational financial crimes involving money laundering and terrorism financing by expanding the scope of offences, making enforcement and investigation easier, and enhancing the offences' penalties.
The Bill is also timely. Why? Because the present and rapid advancement of technology has facilitated the exchanging of cash for virtual currency and vice versa. Technology has also enabled transactions and transfers to be done from almost anywhere. For example, someone who does not have an e-payment app could easily ask someone else to help them pay another person in exchange for the money in cash. This would not normally be a problem unless the cash actually came, for instance, from dealing in drugs or other illicit activities. To make matters worse, there could be a cross-border element to the crime.
This Bill expands the scope of the offences pertaining to money laundering and provides a more comprehensive approach to tackling the issue. In particular, clause 4 expands the definition of capital market products, no longer requiring the product to be linked to Singapore. This allows a charging order to be made against more assets.
Additionally, clause 11 of the Bill creates a new offence for a person to possess or use any property that may be reasonably suspected of being or representing any benefits of drug dealing or benefits from criminal conduct, if the person fails to account satisfactorily how the person came by that property.
These enhancements are to be welcomed.
The other crime that this Bill strengthens our stance against is the financing of terrorism.
Financing of terrorism adds fuel to fire. It adds financial support to aid the committing of heinous acts. Therefore, terrorism financing has to be stopped and its streams of support dried up.
To that end, Singapore is party to the International Convention for the Suppression of the Financing of Terrorism. TSOFA implements this international agreement and, today, this Bill goes further in our commitment by implementing the UN Security Council Resolution 2178 through clause 18.
Clause 18 expands the scope of the offence to include financing someone to travel to another country to be trained or to train others to commit a terrorist attack. Clause 21 goes one step further and makes it an offence to abet, attempt or conspire to commit those terrorism financing offences.
Because people would not be convicted of a crime without fulfilling both the mental element and physical action of the offence, there may be instances where although they were unaware, acts of terrorism are still being financially supported. As such, may I ask the Minister: what is being done to raise awareness on what are some "red flags" to look out for, such that monies donated or provided do not unwittingly fund terrorism?
Besides expanding the scope of offences, this Bill also makes enforcement and investigation easier under CDSA, an Act that the Minister alluded to in her speech. How? By facilitating the sharing of information internationally and by making it easier to prove that something is a foreign serious offence or foreign drug offence. This is holistic and should be welcomed. After all, knowledge and information are key assets in winning wars against terror as well as its financing.
The third way in which this Bill strengthens our response to transnational financial crimes is by enhancing penalties. Firstly, the maximum punishment has increased substantively. For instance, clause 5 changes the maximum penalty for an individual from a fine of $20,000 to a maximum penalty of a fine of $250,000 and/or imprisonment of up to three years. I agree with the enhancements. Why? Because these financial crimes are calculated crimes based on the lucrativeness and perceived benefit of committing a crime. They can be committed across jurisdictions. Therefore, it is imperative that Singapore plays its part by deploying tough laws to deter money laundering and financing of terrorism. I believe the Minister talked about how the punishment tariffs were calculated in the Bill. I am asking how they compare with the other jurisdictions.
Sir, in conclusion, this Bill strengthens our response to transnational financial crimes involving money laundering and terrorism financing. It is timely and needed. Therefore, I support it.
Mr Deputy Speaker: Ms Sylvia Lim.
Mr Deputy Speaker, in its press release on the Bill on 1 October, the Ministry explained that this Bill seeks to strengthen Singapore's anti-money laundering and counter-terrorism financing frameworks. It was stated that the Bill would enable Singapore to more effectively tackle money laundering and terrorism financing, which are usually more complex and transnational in nature. The Ministry emphasised that there was a need to ensure that our laws remained relevant to the current operating landscape.
One gets the sense that this Bill is being tabled because the current laws are deemed somewhat inadequate to deal with the problem of money laundering and terrorism financing. Indeed, the ongoing investigations into the 1Malaysia Development Berhad (1MDB) scandal and the alleged transfers of hundreds of millions of dollars to and from the Singapore bank accounts of Mr Low Taek Jho, or Jho Low, make uneasy reading. An online financial news portal finews.asia has even described Singapore as, and I quote, "the banking centre at the heart of the scandal". While the facts are yet to be fully established, this is a reputation we do not want. I thus support moves to strengthen the legal and enforcement machinery to tackle this challenging task.
To have a further understanding of the need to amend our laws, could the Government share its assessment of the current efficacy of the two Acts in question, namely, CDSA and TSOFA? What has been the rate of reporting, detection and prosecution, and how satisfactory is it?
Coming back to the Bill now before the House, I note that the Bill focuses much attention on enhancing the penalties for offences. For instance, under clause 5, the maximum fine for not reporting knowledge or suspicion of property suspected to be linked to drug dealing or criminal conduct has gone up from $20,000 to $250,000, an increase of 12.5 times. For offenders who are not individuals, being entities, such as banks and corporations, the fine has gone up to $500,000, an increase of 25 times. Clauses 7, 8, 9, 10, 20, 22 and 23 will also impose on entities an additional monetary exposure of being fined an amount of up to two times the value of the benefits of crime.
Sir, having penalties that sting is certainly necessary, but not a sufficient deterrent by themselves. Such illicit activities will go on unless the chance of being caught is high. Here, the law enforcement agencies face a monumental task. Besides their transnational nature, laundering criminal proceeds and financing terrorism usually involve layers of intermediaries, including seemingly innocuous ones like legitimate businesses and charities, making detection especially challenging. Earlier, the Minister also mentioned anonymous digital transfers as yet another obstacle for investigators to overcome today. In this vein, I would like to seek some clarification as to how the Government as a whole is going about improving the likelihood of detection of such activities. Such an endeavour will involve other authorities and agencies besides the Ministry of Home Affairs (MHA).
Last year, it was announced that the Government was going on the offensive against money laundering and terrorism financing by setting up the Anti-Money laundering and Countering the Financing of Terrorism Industry Partnership (ACIP), under the auspices of the Monetary Authority of Singapore (MAS) and the Commercial Affairs Department (CAD). The ACIP would specifically work with eight banks and the Association of Banks in Singapore (ABS). One year on, how has it enhanced the likelihood of detection of such crimes?
Besides domestic agencies, the sharing of financial intelligence across borders is vital. To this end, I note that clause 6 of the Bill is amending section 41 to enable the Ministry to share financial intelligence not just with jurisdictions with which it has bilateral arrangements, but with other jurisdictions which have endorsed the Egmont Charter and Principles for Information Exchange. It would be useful for the Minister to give her assessment on how well the current bilateral arrangements are working, and to elaborate further on the potential of working with countries who have subscribed to the Egmont Documents.
In summary, Sir, I believe the Bill brings about important changes which are necessary to meet the challenge of tackling money laundering and terrorism financing. Nevertheless, the Government's clarifications on improving detection and the effectiveness of financial intelligence sharing will be most relevant to the Bill's efficacy.
Mr Deputy Speaker: Prof Fatimah Lateef.
Mr Deputy Speaker, Singapore is a financial hub. We have trusted reputation as a financial, business and economic centre. Our regulatory framework is current and relatively robust but there may be loopholes. Moreover, money laundering and terrorism funding these days are getting more sophisticated and it may go undetected for some time. Being linked to different aspects of terrorism today seems to be sexy and fashionable, especially for certain segments of people and perhaps also our young who may view it as an exciting adventure. They are more information technology (IT)-savvy, and its use and execution can be very smooth and fabulous but still a form of exploitation.
I support the enhanced framework and the higher maximum penalties proposed in the Bill. This Bill is moving in the right direction to ensure law enforcement and intelligence agencies have the powers to keep Singapore safer. I have a few clarifications for the Minister.
Firstly, can the Minister explain the role and job description of a suspicious transaction reporting officer? How is it different from the usual enforcement officers? As their jobs entail getting and procuring information with foreign countries as well, how are these officers identified and trained? How are they different from the usual CAD?
Secondly, Singapore is a member of FATF. How do we stand in the implementation of the recommended regulations and guidelines thus far? Under this FATF, it helps us to identify our own national level vulnerabilities. What are these so far and how have we worked to ensure they are addressed appropriately and adequately and are reviewed at regular intervals?
Thirdly, also pertaining to FATF, there is a recommendation on preventing abuse of non-profit organisations and the non-government organisation (NGO) sector. Globally, this sector seems to be at a higher risk for money laundering and terrorist funding activities. Can the Minister share on how we have ringfenced and conducted surveillance on these as necessary?
Fourthly, on matters pertaining to money laundering and counter-terrorism funding, it requires a national and concerted effort. Whilst the financial sector may be more well prepared and vigilant as it is often a target sector, how about our other non-financial sectors and stakeholders? What about accountants and lawyers, for example?
Fifth, in line with this Bill, we may also need to strengthen and have more prudent risk assessment when dealing with foreign businesses and investments. How are we educating and aligning our business personnel, trade sectors and also how is the Ministry working perhaps with our chambers of commerce. Mr Deputy Speaker, in Malay, please.
(In Malay): [Please refer to Vernacular Speech.] I have two questions for the Minister in relation to this Bill. First, regarding this Bill, can the Minister provide clarification on the sharing of cross-border information through the officers who are tasked with the issue of terrorism funding?
Secondly, aside from the financial and audit sectors, other sectors can also be affected and become victims in this matter. How does the Islamic Religious Council of Singapore (MUIS) provide guidance and heighten awareness amongst our Mosque Management Boards so that they have a better understanding and become more vigilant about their financial account matters?
(In English): There is a need for us to develop a culture of risk sensitivity through better risk assessment. All stakeholders across all industries must work hand-in-hand to uphold our reputation and combat the potential undesirable effects of a possibility that is waiting to happen. All stakeholders and the industry's regulators, enforcement agencies and everyone must do our part and uphold our reputation of being a clean and trusted business and financial centre with strong anti-money laundering and counter-terrorism financing controls. I support the Bill.
Mr Murali Pillai.
Mr Deputy Speaker, Sir, I declare my interest as a practising lawyer who occasionally handles criminal cases.
Given Singapore’s position as a major financial hub and the greater push towards digitisation of our financial services and banking industry, Singapore is vulnerable to criminals who exploit our financial system to make illicit gains.
Singapore is not unique in this regard. There has been a trend of rising economic crime worldwide.
In response to a Parliamentary Question that I filed last month on economic crimes in Singapore, the hon Minister for Home Affairs stated that the number of commercial crimes reported in Singapore had remained stable over the last three years from 2015 to 2017. However, in PwC's global economic crime and fraud survey 2018, PwC noted its findings of a sharp increase and a record high of reported economic crime in Singapore, which is consistent with the global trend.
In particular, according to PwC's survey, more than one-third of Singapore-based organisations experienced economic crime, up from 22% in 2016.
The hon Attorney-General noted in his keynote address at the 36th Cambridge International Symposium on Economic Crime earlier this year that while our domestic crime rate remains low, Singapore’s exposure to transnational economic crime is on the rise.
The amount of foreign illicit funds seized by CAD in 2016 amounted to around S$164.5 million. This is a nearly five-fold increase from the previous year in 2015.
Given the increase in both extent and sophistication of transnational economic crime syndicates, I fully support the Bill, which seeks to enhance the law enforcement agencies' abilities to seize assets from illicit activities and deter criminals by taking the profit out of their crimes.
In this regard, I beg to differ with the opinion expressed by the hon Member of Parliament Ms Sylvia Lim who postulated the question as to whether this Bill throws up purported inadequacies in the current regime by reference to the 1MDB case. As a private practitioner, it seems to me that actually the 1MDB case shows the efficacy of the regime as it stands now. Singapore, ahead of other jurisdictions, has prosecuted and secured convictions of perpetrators. Not only that, two banks were closed down as the result of quick action by the relevant law enforcement authorities. Not only that, recently, FATF has given Singapore, after a mutual evaluation, a clean bill of health.
So, this shows that the regime works but we are faced with a dynamic situation, not a static situation. And it is entirely appropriate for the hon Minister to highlight that, given the inventiveness of these criminals, we need to constantly check to see whether or not the measures we have are adequate. In this regard, I have a few suggestions.
The Bill provides for the Public Prosecutor to apply to Court to make a confiscation order against monies that a person has moved in or out of Singapore in contravention of section 48C or 48D of CDSA.
This, as well as confiscation powers under sections 4 and 5 of CDSA, only apply after the accused is convicted of the offence. By then, it may be too late as the monies may have been dissipated by the accused.
These provisions will have "bite" if assets are frozen at the outset and the confiscation order is then applied against the frozen assets.
There could also be situations where assets from ill-gotten gains are in Singapore, given that it is a prominent international financial centre. But the perpetrators may not be here. Hence, the prosecution, much less conviction, is not contemplated. Yet, there is a compelling case to seize and confiscate such monies, too.
As the hon Minister mentioned, these activities can have the impact of "destroying our reputation as a trusted global financial centre”.
I would suggest that we consider having civil seizure and confiscation provisions prior to or in parallel with criminal proceedings.
The Organised Crime Act has such provisions. The Act, which was introduced in 2016, allows for confiscation without the need for a criminal conviction where a person carries out a serious offence at the direction of an organised criminal group. Serious offences include the various offences under CDSA, such as assisting to retain, acquiring, possessing or transferring benefits of criminal conduct.
However, the Organised Crime Act, as the name implies, requires the prosecutor to prove that the accused knew or had reasonable grounds to believe that he or she was acting in accordance with the direction of an organised criminal group. Hence, the ambit is fairly narrow. Providing for a wider civil-based freezing and confiscation regime under CDSA would give the law enforcement agencies more teeth.
As a parallel, the US has a civil forfeiture regime in place, which allows law enforcement officers to take assets from persons suspected of involvement in crime, without necessarily charging them for wrongdoing.
Australia also has a similar legislation which allows for civil-based recovery. Such civil-based recovery allows restraint and recovery of assets suspected of criminal origins without the necessity of securing a criminal conviction.
The UK has additionally introduced an "unexplained wealth order" civil-based regime whereby, independent of a conviction in a criminal court, a person's assets may be seized and confiscated in favour of the government if he or she is unable to explain the disparity between his known sources of wealth and the value of his assets.
The UK Law Commission has recently embarked on a two-year project to review its laws on confiscation to ensure effective recovery of proceeds of crime which is presently in the pre-consultation stage. The review will focus on whether the present conviction-based confiscation regime is sufficient and what improvements could be made.
Specifically, it is consulting on a proposal whereby a person who is charged in Court for an economic crime, is also visited with a "freezing order" of his assets amounting to the same amount that he is alleged to have gained from the economic crime.
It is typical, in the words of Prof Michael Levi, a very well-known criminology professor, that criminals in such situations often claim that they have spent all their ill-gotten gains on fast women and slow horses. Clearly though, they should not be taken at face value. We should ensure that we have sufficient tools to combat economic crimes, in particular, by depriving criminals of their ill-gotten gains. In this regard and in light of the global trends, I have three suggestions.
First, providing for an increase in punishment or some punitive measure against the criminal if the confiscation order made against him is not satisfied. There is already a trend in the UK of unsatisfied confiscation orders. Such paper judgments cannot deter people from committing economic crimes. What we do not want is for criminals to go to jail at the expense of our people, come out and then connect with the monies that they had stolen later.
Second, providing resources to our authorities to "chase" after the assets of criminals in other countries. It should not just stop at invoking Mutual Legal Aid Treaties (MLATs). If necessary, there should be civil actions taken to recover the proceeds.
Third, at the point of charging a person for an economic crime, if he has unexplained wealth in his name, even though it cannot be specifically traced to the crime in question, the authorities should consider commencing money laundering prosecution in parallel so that the unexplained wealth may be frozen pending the outcome of the criminal proceedings. This will allow the confiscation order that may be made subsequently in the event of a conviction to have more "bite".
In my Parliamentary Question last month on economic crimes, I had asked for the total value of assets misappropriated or gained by offenders who have been convicted for economic crimes in Singapore, in contrast with the total value of assets recovered by the authorities. The response from the Ministry was that Singapore does not track such data. With respect we should. Without tracking such data, we may not be able to monitor the effectiveness of our confiscation regime to track our progress on this front.
Separately, I would ask how would the confiscation orders work in the context of co-accused persons? Would they be jointly and severally liable in respect of the confiscation order?
Moving on, in respect of the proposed amendment to allow for exchange of information under an international arrangement, I note from the hon Minister’s speech that this would include the Egmont Group of Financial Intelligence Units. Apart from this, what other international arrangements are contemplated, and would such international arrangements be disclosed?
In conclusion, I would like to highlight that the hon Attorney-General's speech at the Cambridge Symposium where he described Singapore's approach to combating economic crime as the 3D approach – detection, deterrence and deprivation.
The confiscation provisions in the Bill specifically focuses on the final "D" is deprivation. My suggestions are made in the context of focusing also on the first two Ds, that is, getting the authorities to detect the extent of a criminal’s wealth as well as providing some "teeth" to deter like-minded offenders. As criminals constantly revamp their methods to evade detection and the law, we, too, must constantly evaluate our means to guard against them or deter such behaviour. I support the Bill, which is in step with our efforts to ensure that Singapore is not seen as an easy target for criminals.
Minister Josephine Teo.
Mr Deputy Speaker, I thank Members who have spoken in support of the Bill. Members raised many useful points, which I will address.
Let me first elaborate on the regulation of the non-financial sectors. Assoc Prof Fatimah Lateef asked how we are regulating non-profit organisations, businesses and professions, such as law and accountancy. She also asked how MUIS is working with the management of mosques to ensure that they do not run afoul of our laws on anti-money laundering and countering terrorism financing. Mr Christopher de Souza asked how we are raising awareness of such laws so that monies donated or provided are not unwittingly used to fund terrorism.
Professionals in non-financial sectors that may be at risk of becoming parties to money laundering activities, such as lawyers, accountants and so on, are collectively known as Designated Non-Financial Business Professionals (DNFBPs). There are many, many acronyms in this particular set of amendments.
Today, the different DNFBPs are supervised by their respective sector regulators. For example, casinos are supervised by the Casino Regulatory Authority (CRA), and corporate service providers by the Accounting and Corporate Regulatory Authority (ACRA).
These regulators develop the control measures to address their sector's inherent risks against money laundering and terrorism financing and oversee implementation of these requirements through education and enforcement. Examples of such requirements include the need for DNFBPs to put in place customer due diligence measures and to have controls and policies to ensure compliance with UN sanctions obligations.
DNFBPs who breach these requirements are liable to a range of penalties, including fines or face prosecution.
In the non-profit sector, charities are supervised by the Charities Unit, and mosques by MUIS. These agencies work closely with charities and mosques to educate them about their risks and help them to put in place procedures to identify and report suspicious transactions.
At the national level, MHA, the Ministry of Finance (MOF) and MAS have set up the Steering Committee for combating money laundering and terrorism financing. This Steering Committee formulates our national policies on anti-money laundering and countering the financing of terrorism (AML/CFT) to ensure that our mechanisms and controls against money laundering and terrorism financing remain relevant and are consistent with international standards and best practices. It also coordinates the practices of regulatory and law enforcement agencies in different sectors to ensure consistency. Our coordinated national approach has strengthened our regime.
Ms Sylvia Lim asked for the rate of reporting, detection and prosecution of CDSA and TSOFA cases, and how the setting up of ACIP has enhanced the detection of such cases.
From 2013 to 2017, the number of Suspicious Transaction Reports (STRs) filed increased from 22,000 to 35,000. In the same period, there were about 70 convictions annually for money laundering. In 2016, there were six convictions for terrorism financing.
We strive to improve the situation further through ACIP, which brings together stakeholders from industry and the Government to discuss and raise awareness of transnational financial risks confronting Singapore.
Since it began in 2017, it has published two papers highlighting best practices regarding red flag indicators and crime typologies targeted at businesses and professions. The papers guide industries to put in place better controls to detect financial crimes. The Police are also sharing case-specific information with ACIP stakeholders to help them better detect and report crime.
The increase in STRs filed over the past few years suggests that the different sectors are increasingly aware of their AML and CFT obligations. Sector agencies regulating DNFBPs also observed the improving quality of such reports.
Let me now address Members' questions on the effectiveness of our regulatory regime. Assoc Prof Fatimah Lateef asked specifically how we stand in the implementation of FATF standards.
FATF member countries, such as Singapore, go through periodic assessments to assess our compliance with the standards, and whether our measures are effective. The last assessment on Singapore in 2016 showed that we have a strong regulatory framework, good understanding of our risks and good internal cooperation. Nevertheless, we have to anticipate and strengthen our defences. In areas where there were suggestions for improvement, we have taken firm action.
For example, FATF highlighted the need to enhance transparency of information on beneficial ownership for companies, limited liability partnerships and trustees.
In 2017, we amended our laws to require such entities to maintain beneficial ownership information. MOF and ACRA are exploring the setting up of a central non-public register of such information, where timely access will facilitate law enforcement and supervisory efforts.
Another area FATF highlighted was the need to regulate the precious stones and metal dealers (PSMDs).
Since then, the Ministry of Law (MinLaw) has established a new AML and CFT Division. In addition, MinLaw recently concluded a public consultation on the proposed regulatory regime for PSMDs. A comprehensive regime will be ready by 2019.
Mr Deputy Speaker, we take FATF assessments seriously and are following up on the areas for improvement, some of which feature in this round of amendments as well. I thank Members for their suggestions on how we might further improve our regime.
Mr Murali Pillai was accurate in categorising this set of amendments as anticipatory in nature so that we do not find ourselves on the back foot in a dynamic anti-money laundering and counter terrorism financing landscape.
He suggested strengthening our powers of confiscation and shared a number of practices across international jurisdictions which allow confiscation to take place prior to or apart from criminal proceedings, such as civil confiscation regimes, unexplained wealth orders and freezing orders.
Let me assure the House that our current regime already has in place several mechanisms to seize, restrain and confiscate the property of criminals.
During investigations, the Police can seize the property under section 35 of the Criminal Procedure Code if it is suspected to be linked to a criminal offence.
In addition, section 16 of CDSA allows the High Court to make a restraint order on the property of an accused involved in these crimes even if the property might not be directly linked to these crimes.
These levers allow the Court to subsequently confiscate the property once the accused is convicted, minimising the risk of dissipation.
In determining the confiscation amount upon conviction, law enforcement agencies will consider the criminal's known income. Similar to the unexplained wealth order regime in the UK, any amount that is disproportionate to his known income will be presumed to have been derived benefits from criminal conduct and confiscated.
In response to Mr Murali Pillai's question on whether we can confiscate criminal proceeds parked in Singapore even though the perpetrator is not physically here, the answer is yes, we can. Section 27 of CDSA allows for a confiscation order where the person has absconded and cannot be brought back to Singapore.
Mr Murali Pillai also had specific questions about how confiscation works.
Regarding his question on whether we should have punitive measures against the criminal if the confiscation order made against him is not satisfied, section 14 of CDSA allows us to do that. In effect, it converts the outstanding amount into equivalent fines and allows the Court to imprison the person in default for not paying the fine. He also asked how confiscation orders would work in the context of a co-accused. Confiscation is pursued against an individual, and not jointly.
With the above measures in place, we assess that there is currently no need for a civil confiscation regime under CDSA. But let me assure Mr Murali Pillai that this is a matter we will continue to review.
On international benchmarks, Mr Christopher de Souza asked how our penalties compare with other jurisdictions. The increased penalties allow for greater deterrence against such offences and are benchmarked to international standards.
For the amendment cited by Mr Christopher de Souza in which we are raising the penalty for an individual failing to file STRs from a fine of $20,000 to a maximum penalty of a fine of $250,000 and/or imprisonment of up to three years, the revised penalties are comparable with jurisdictions, such as New Zealand and the US, where fines can go up to S$300,000 and imprisonment in the range of two to five years. So, they are quite comparable.
In most cases, including the case of failing to file STRs, we have increased or tiered the penalties to allow a calibrated response according to the severity of the offence and the nature of the offender. For example, the maximum penalty imposed on a corporation is higher than on an individual.
We also sought to achieve parity across the penalties in CDSA and TSOFA based on the nature of the offence. For example, the penalties for persons failing to report information on terrorism financing is pegged to the penalties for failing to file an STR. This is because, in both cases, there is a similar professional obligation on persons to report suspicious information or transactions to the authorities.
Next, let me address international cooperation and its effectiveness, which Prof Fatimah Lateef and Ms Sylvia Lim asked about. Assoc Prof Fatimah Lateef also asked about the role and training of officers from STRO.
STRO is a specialised unit in CAD of the Police. STRO officers gather intelligence from a variety of sources to detect financial crime and support investigations. As STRO manages sensitive information, all its officers are security-vetted and undergo comprehensive training on their responsibilities in managing such information.
Besides the STRs, as mentioned in my earlier speech, STRO officers also work closely with foreign counterparts to exchange intelligence. Cooperation with overseas jurisdictions has led us to detect transnational crime and prevent our financial systems from being abused.
For example, in one recent case, we detected irregular money flows and shared information with another country. This led to joint investigations that uncovered more than $27 million which had been transferred to Singapore from one of the largest ever overseas Ponzi schemes. We were able to seize the criminal proceeds and successfully return the monies to the country of origin.
Depriving overseas syndicates of their criminal proceeds deters them from using Singapore to launder their ill-gotten gains.
The growing volume and complexity of financial transactions across borders point to the increasing importance of international cooperation.
In my earlier opening speech, I shared with Members how our proposed amendments will allow us to exchange financial intelligence, including information on terrorism financing.
The proposed amendments will allow STRO to exchange information with more than 150 countries under the Egmont Group, compared to just 50 countries today. This will open up new channels of information and allow us to more effectively target overseas organised syndicates and their money mule operations. To Mr Murali Pillai's question on whether the Government is contemplating other international arrangements, we are always open to possibilities but have no firm plans for now.
Mr Deputy Speaker, I thank Members once again for their support of the Bill. I hope I have addressed their concerns adequately. Money laundering and terrorism financing are serious crimes.
As an international financial hub, Singapore is a potential transit point for illicit funds. There are serious consequences on Singapore if such risks are not addressed.
The proposed amendments allow us to get tougher on corporations and professional service providers involved in money laundering and terrorism financing activities and target overseas organised syndicates and their money laundering operations involving money mules and other perpetrators. With the support of the House, I beg to move.
*Question put, and agreed to.*
*Bill accordingly read a Second time and committed to a Committee of the whole House.*
*The House immediately resolved itself into a Committee on the Bill. – [Mrs Josephine Teo.]*
*Bill considered in Committee; reported without amendment; read a Third time and passed.*
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