Addressing Gaps Identified in Financial Action Task Force's Recent Assessment of Singapore

Mr Speaker, may I have your permission to take Question Nos 13 and 14 in the name of the hon Member, Mr Louis Chua, together?

Please proceed.

Sir, my response will also cover matters raised in the related oral questions, as well as written questions, all filed by the hon Member, Ms Sylvia Lim1, 2, for a subsequent Sitting. The hon Member may wish to withdraw her Parliamentary Questions (PQs) if her queries are answered in today's Sitting.

Sir, these questions pertain to the Financial Action Task Force (FATF) Mutual Evaluation Report of Singapore 2026 and span matters within the purview of the Ministry of Law (MinLaw), Ministry of Finance (MOF), Ministry of Home Affairs (MHA) and the Monetary Authority of Singapore (MAS).

In the event that there are any supplementary questions that pertain to MOF, MHA and MAS, Sir, I seek your permission for such supplementary questions to be answered by the Ministers overseeing those Ministries and agency.

Alright, please go ahead.

Thank you, Speaker. Sir, the FATF is the global body that leads action to tackle risks associated with money laundering, terrorism financing and proliferation financing (ML/TF/PF). Members periodically undergo a peer assessment, known as a "Mutual Evaluation" (ME), of their level of compliance with the FATF Standards and effectiveness of their anti money laundering, countering of terrorism financing (AML/CFT) and countering proliferation financing framework.

Singapore was one of the first countries and the first international financial centre assessed in this fifth round of the FATF MEs. As with other international financial centres, business and trading hubs, Singapore is inherently exposed to transnational ML/TF/PF risks and is expected to maintain strong defences against them. Since the last round of MEs, higher standards have also been introduced by the FATF.

Against this context, Singapore performed credibly and achieved better overall results than we did in the fourth round. In recognition of this, the FATF has placed Singapore on regular follow-up, which is the category for countries that have been assessed to have performed well.

Every FATF ME report, for every country, identifies both strengths and recommendations for further enhancements. Where the FATF has made recommendations to strengthen certain aspects of our framework, the Government will carefully study them. We will develop action plans that are risk-proportionate and suited to Singapore's context, ensuring that our financial and business ecosystem continues to grow in a trusted environment and create good jobs for Singaporeans.

With that, let me now cover the four areas raised in the PQs.

On international cooperation, the FATF found Singapore provides timely, quality and constructive assistance to our foreign counterparts. Straightforward requests are executed in as little as three days, while complex requests are executed within an average of about 10 weeks. We note the feedback that some requests have taken a longer time to execute. This is often because further factual clarification is required or our legal requirements are not met.

We will continue to strengthen our cooperation with foreign counterparts, including better explaining our requirements for assistance. This covers cooperation channels and asset recovery as well.

Moving on to Beneficial Ownership (BO). Regarding BO transparency, the FATF does not prescribe a singular approach for BO transparency. Rather, each jurisdiction is expected to adopt measures appropriate to its own risks and context. The FATF then assesses whether a jurisdiction has an effective framework to ensure that accurate BO information is available to the competent authorities in a timely manner when needed.

Against this standard, the FATF acknowledged that Singapore has taken significant steps to prevent the misuse of legal persons and legal arrangements.

First, we have a central BO registry for all companies and Limited Liability Partnerships. They are required to verify the BO information periodically, while corporate service providers are also required to check on the BO of their clients as part of customer due diligence. The information is further validated through risk-based audits by the Accounting and Corporate Regulatory Authority.

This is supplemented by the ownership information captured by public agencies. For instance, for landed residential properties, the Singapore Land Authority will conduct checks on the identity and the citizenship of the ultimate beneficial owner. Thus, the identity of the ultimate beneficial owner of any trust, which seeks to purchase landed residential properties, will have to be disclosed to the Government.

Second, AML/CFT-obligated entities, such as banks, are required to conduct customer due diligence checks when dealing with their customers, which include unregistered foreign companies and trusts. Checks include verifying BO information, including the ultimate beneficial owner, and reporting suspicious activities.

Third, BO information obtained by AML/CFT obligated entities is readily available to law enforcement agencies in a timely manner.

These measures have enabled Singapore to establish an effective BO regime that supports investigations and enforcement. Nevertheless, we will carefully study the FATF's recommendations and consider whether further enhancements will be needed to strengthen our framework, while remaining appropriate for Singapore's risk profile.

Let me now turn to the matter of financial penalties against financial institutions (FIs) and virtual asset service providers (VASPs). The FATF has acknowledged Singapore's stepped-up sanctions against FIs and VASPs for AML/CFT purposes. For example, the maximum financial penalties imposed on FIs and VASPs increased from $800,000 in the previous ME to $5.8 million this round.

Beyond financial penalties, we have taken other firm measures against FIs and VASPs, including the revocation of licences in egregious cases and holding responsible individuals accountable for lapses. These actions are also published for deterrence and to increase industry awareness. MAS closely monitors the implementation and completion of FIs and VASPs' remedial measures. Our overall approach is effective and has led to positive behavioural changes in the industry, such as stronger compliance culture amongst FIs and VASPs and improvements in AML/CFT controls. These improvements have been acknowledged by the FATF.

The FATF has recommended us to review the dissuasiveness and proportionality of our financial penalties. We will consider the recommendation, bearing in mind the specific details of each individual case and the range of enforcement levers available.

Moving to countering proliferation financing. Countering PF and proliferation of weapons of mass destruction has been a key area of focus for Singapore. The FATF has found that Singapore has a robust countering proliferation financing legal framework, and strong coordination and cooperation among Singapore authorities. Singapore’s FIs, such as banks and VASPs, have a good understanding of their countering proliferation financing obligations and implemented risk-based mitigation measures.

The FATF has recommended a deepening of our PF risk understanding and strengthening the risk mitigation measures, particularly for the higher-risk sectors. We will continue to improve our risk understanding as PF risks change and evolve. We will also step up engagements with non-AML/CFT obligated entities to raise awareness.

In conclusion, Singapore has performed credibly in this latest round of MEs and has been placed in the same category as countries that have been assessed to have performed well. Where the FATF has made recommendations to strengthen certain aspects of our framework, the Government will carefully study them and develop action plans that are risk-proportionate and suited to Singapore's context.

Sir, I am obliged to the hon Member Mr Louis Chua for his two supplementary questions. I will take the first supplementary question. For the second supplementary question, as it deals with enforcement measures, I will defer to the political appointment holder dealing with MHA matters.

On the first one, our operational experience is that the law enforcement agencies can and have gotten timely and accurate BO information in relation to legal persons and legal arrangements. It may also help to appreciate that investigations do not start in a vacuum. Law enforcement agencies in Singapore work on leads which point them to relevant AML/CFT obligated entities to advance their investigations. We also tap on information in suspicious transaction reports as well as partnerships with the private sector and foreign partners. This has enabled us to get information in a timely manner.

And also, there was no evidence that the BO information was inaccurate. We provided this evidence to the FATF assessors that we were able to get accurate BO information on unregistered foreign companies and legal arrangements in a timely manner as well.

Sorry, Sir. There is still a second supplementary question that has to be answered, Sir.

That is right. Who is going to take that? Senior Minister of State Sim Ann.

Sir, given the increasingly transnational nature of crime and the rapid advancement of digital finance, international cooperation is indeed key. Singapore will continue to issue MLAs where it is appropriate, but also pursue international cooperation in informal manner. This applies not just to AML/CFT and PF, but also to scams.

Minister Chee.

Thank you, Mr Speaker. I am answering in my capacity as the Deputy Chairman of MAS.

Sir, the way this works is that these countries with the ship registries, otherwise known as flag states, they will set up representative offices overseas to help with the processing of registration applications and the administration of the vessels that are flagged with them. So, this is what the FATF was referring to, these representative offices of these foreign flag states based in Singapore.

Sir, like any commercial entity operating in Singapore, these offices are subject to and must comply with Singapore's laws. And these would include the United Nations Security Council sanctions, which are given full effect in our domestic legislation. And any entity found to be in breach of our laws will be dealt with accordingly. The FATF has actually noted that Singapore has taken action against non-compliant entities.

Sir, we have increased the engagements with these representative offices of the foreign flag states because we know this is an emerging area of concern globally, not just in Singapore, but it is also a concern that has been flagged out by the International Maritime Organization, FATF and also the Asia/Pacific Group on Money Laundering. Singapore has and will continue to engage these entities to alert them to the PF risks and also to remind them of their countering PF obligations. That is something we will continue to do.