Prevention of Proliferation Financing and Other Matters Bill

Mr Speaker, Sir, thank you for allowing me to join the debate.

In recent years, Singapore has ramped up its efforts to counter financial crimes in various sectors including precious metals and precious stones. This Bill demonstrates Singapore's dynamic regulatory approach which fortifies the legal framework while emphasising regulatory compliance, international collaboration and the importance of transparent and ethical practices.

Though the Bill focuses on diverse professions from legal, moneylending and pawnbroking to sectors such as precious stones and precious metals, the benefits will be similar in nature for all.

Through this amended Bill, businesses operating within these sectors will be able to differentiate themselves in the market by demonstrating a strong commitment to preventing money laundering and the financing of terrorism and, in turn, can enhance a company's reputation through building trust with its customers, partners and regulators. By adhering to the updated regulations and increasing internal controls, businesses within these sectors can mitigate the risk of being involved in illicit activities unknowingly. I also believe that the facilitation of information sharing with foreign authorities presents an opportunity for our businesses to engage in more robust international collaboration. This can lead to better global practices and potentially open new markets and partnerships that value such stringent compliance standards.

However, we have to recognise that the impacted sectors will also face some major challenges. There will be a significant increase in compliance costs including the establishment of a compliance officer role as well as an increase in operational costs related to the development of specific training programmes and investment in new monitoring systems.

This Bill also extends the regulatory burden to a broader range of professional services, not just financial institutions. For the legal profession, I expect legal practitioners and law firms will now be required to take active measures in monitoring transactions to prevent financial crimes. The pawnbroking industry will also need to establish more robust programmes to prevent financial crimes. The amended Bill requires the development of policies to identify, assess, and understand risks associated with such pawnbroking transactions. For the moneylending business, if a significant number of moneylenders face difficulties in renewing licenses due to these new regulations, there could be a reduction in available lending options in the market, limiting choices for borrowers.

I would like to take this opportunity to seek some clarifications on this Bill.

Since many business owners, especially SMEs, may face challenges when adopting the proposed changes and regulations, how long will such businesses be given for implementation of these new rules? Also, what additional resources or assistance programmes will the Government provide to help affected businesses understand as well as comply with the new regulations?

Could I please request the Senior Parliamentary Secretary to share with this House any instances thus far that Singapore’s security and policing authorities have faced in detecting efforts to use precious stones and metals in financing terrorism?

Finally, I would appreciate if the Senior Parliamentary Secretary could share the key concerns raised by the various industry players, namely, the pawnbrokers, the dealers in precious metals in the Ministry’s consultation process in finalising this Bill.

Sir, I do believe that Singapore must uphold and strengthen the trust premium that we have built up over the years. In offering a stable and transparent business environment, we have attracted multinationals and investors from around the world. They have set up corporate headquarters and regional offices in Singapore, building up our talent and business ecosystem. We must continue to stay abreast of international developments to counter threats such as money laundering, terrorism financing, as well as other financial crimes. To do so, we need robust policies and coordination within sectors to build capabilities in businesses, especially local SMEs.

Mr Speaker, Sir, notwithstanding my request for some clarifications, I believe this Bill is necessary in strengthening our fight against money laundering, financial terrorism and other financial crimes. I stand in support of the Bill.

Mr Speaker, I thank the Members for their support of the Bill. Members also made comments and suggestions on Singapore's national strategy for preventing money laundering, terrorism financing, and proliferation financing or "financial crimes", and the scope and implementation of the expanded regulations. Let me address each group of issues in turn.

First, on Singapore’s national strategy for preventing financial crimes. Mr Yip Hon Weng and Mr Louis Ng asked about our strategies in managing these risks and how agencies work together to ensure that our system effectively guards against these risks.

Singapore's openness and hub status leave us vulnerable to exploitation by criminals who employ sophisticated tactics to access our financial and trading system and launder their ill-gotten gains. We must constantly review and enhance our regime and defences to keep pace with new risks as they evolve. Singapore adopts a holistic approach across the Government, in partnership with the private sector, and through international collaboration to combat financial crimes. The whole-of-Government effort is led by an inter-agency Steering Committee, which oversees the formulation and implementation of Singapore's national strategy for preventing financial crimes. The Ministry of Law (MinLaw) is a member of this committee.

Specific to the inter-agency coordination between regulators and law enforcement that Mr Yip asked about, an example is the Risk and Typologies Inter-Agency Group (RTIG), which is co-chaired by the Ministry of Home Affairs (MHA), and the Monetary Authority of Singapore (MAS). It oversees the identification, assessment, and mitigation of financial crime risks at the whole-of-Government level. The RTIG involves all relevant supervisory and law enforcement agencies, including the Suspicious Transaction Reporting Office. It also facilitates the sharing of information on surveillance outputs, such as networks and subjects of concern, for collective action across law enforcement and supervisory agencies.

Beyond coordinating within the Government, there is also close collaboration between Government agencies and the private sector to prevent, detect and deter activities in relation to financial crimes. An example is the AML/CFT Industry Partnership (ACIP). Co-chaired by MAS and the Commercial Affairs Department (CAD) of the Singapore Police Force (SPF), ACIP brings selected industry participants, regulators, law enforcement agencies and other Government entities to identify, assess and mitigate key and emerging financial crime risks that Singapore is facing. Another example of close public-private partnership is MinLaw's industry engagements with the precious stones and precious metals dealers (PSMD) industry. MinLaw has also taken steps through industry bodies to help PSMDs better understand and implement the relevant regulatory requirements.

We will continue to ensure strong coordination and collaboration across agencies, work closely with the private sector and our international partners and effectively guard against illicit activities related to financial crimes.

Mr Yip asked about the current status of our engagement with FATF, whether there are remaining gaps in the framework and the next milestones we can look forward to. Singapore was evaluated by the FATF in 2016 and was assessed to have a strong legal and institutional framework against money laundering and terrorism financing.

We have since taken substantial steps to address the few areas identified with scope for improvement and further strengthened our regime. For instance, Singapore passed the PSPM Act of 2019 and amended the Accountants Act to give the Accounting and Corporate Regulatory Authority (ACRA) the powers to conduct inspections for compliance with requirements to combat money laundering and terrorism financing and impose sanctions on entities if they fail to comply with these requirements. These ongoing efforts were acknowledged by the FATF and had raised some of Singapore's ratings in the Third Follow Up Report of 2019.

The amendments to the Bill before us today seek to align our regulatory regimes with the recent updates to the FATF standards in relation to countering proliferation financing. Singapore also actively contributes to the FATF, having taken on a range of leadership roles over the years. More recently, Singapore nominated Mr T Raja Kumar from MHA to run for the position of FATF President. He was appointed by the FATF Plenary in March 2022 for a two-year term between 30 June 2022 and 1 July 2024. Through Singapore's ongoing FATF Presidency, we have, among other things, increased global effectiveness of measures against financial crimes, such as in beneficial ownership transparency and asset recovery, and raised international efforts on tackling emerging areas of financial crime risks such as cyber-enabled fraud, which further strengthen global resilience against financial crime.

Mr Dennis Tan asked whether this Bill factors in lessons from the recent money laundering case and whether the Government has started reviewing existing laws to better prevent money laundering in Singapore.

MinLaw's review of issues in the current Bill started prior to the arrest of the suspects involved in the recent money laundering case. This is part of MinLaw's regular reviews to ensure that our laws remain relevant, effective and fully in line with the latest international standards set by the FATF. On the recent money laundering case, investigations by the Police are still ongoing. There are also ongoing probes by various sectoral regulators, including Government agencies overseeing corporate service providers, real estate agents, PSMDs, lawyers, financial institutions and others.

An Inter-Ministerial Committee chaired by the Second Minister for Finance, Ms Indranee Rajah, has been formed to review Singapore's anti-money laundering regime and keep our regime up to date with increasingly sophisticated crimes. The Committee is currently reviewing the adequacies of the laws and controls in the entire anti-money laundering ecosystem to assess whether there are areas of enhancements to be made. The Committee will put forward its recommendations when ready.

Next, I turn to the questions relating to the scope and implementation of the expanded regulations. Mr Yip Hon Weng asked whether the requirements for PSMD, moneylending, pawnbroking and legal services sectors to implement measures to counter proliferation financing might result in excessive compliance burden on these businesses or persons. As mentioned in my opening speech for this Bill, these requirements are not expected to result in significant compliance implications on the regulated entities. The measures to counter proliferation financing are similar to the measures that the PSMD, moneylending, pawnbroking and legal services sectors already have in place to counter money laundering and terrorism financing.

Mr Louis Ng asked for the steps taken at the industry level to prevent the safeguards from becoming a box-checking exercise. MinLaw requires the entities it regulates to develop and implement measures to prevent financial crimes. We also carry out inspections, investigations and enforcement to ensure compliance.

Mr Neil Parekh and Mr Yip asked about the education or support that will be provided to the regulated entities to help them understand and comply with the new requirements. Mr Parekh also asked about key concerns raised by pawnbrokers and PSMDs in relation to this Bill and how much time the regulated entities will be given to implement these new requirements.

MinLaw will continue to engage the relevant sectors as the changes are rolled out. We will also provide guidance for the regulated entities to comply with the new requirements. While no major concerns have been raised during consultations, MinLaw will continue working with industry associations as the new requirements are implemented and, at the same time, having a view to the compliance costs. Should MinLaw come across regulated entities that are not complying with the requirements after the amendments are in force, we will assess and follow up with them to rectify the situation. We will take into consideration the time that regulated entities may reasonably need to implement these measures.

Mr Yip asked about the requirement for former regulated dealers to continue keeping records for a prescribed period. The intention of this requirement is to deter errant PSMDs from disposing of records after ceasing to be regulated dealers. The new provision will allow enforcement action to be taken against former regulated dealers, for example, if they dispose of records to thwart investigations into offences under the PSPM Act detected while they were regulated dealers. Investigations for complex cases may take longer and extend beyond the dealer's registration period. Hence, it is important to preserve these records as evidence to assist in investigations. The Registrar will exercise his powers of investigations provided under the PSPM Act judiciously.

MinLaw will also continually review the regulatory and enforcement resources to leverage technology where possible and work closely with stakeholders in the process.

Mr Speaker, I believe I have addressed the salient issues raised by Members relating to the provisions within the scope of this Bill. There were a number of other comments relating to matters outside the ambit of the Bill.

Mr Neil Parekh asked about instances where Singapore's security and policing authorities have detected efforts to use precious stones and metals in financing terrorism. To date, there has been no indication of the PSMD sector in Singapore being used to finance terrorism. Singapore closely monitors developments in the methods used by terrorists and remains vigilant in combating the threat of terrorism financing.

Mr Yip asked about the specific measures that are being considered to manage risks associated with evolving technologies in the field of fintech. Criminal typologies and methods will continue to change in line with developments and advances in technology and we must keep pace with these changes. We regularly review and update our framework to counter activities in relation to financial crimes as criminals innovate. For example, when virtual assets, or what we term as digital assets, took off years ago, MAS had assessed the risk of financial crimes as a key area of concern due to the potential of digital assets to facilitate rapid and anonymous transactions online and across borders. In 2020, Singapore was one of the first jurisdictions in the world to tighten our regime by requiring licensing and supervision for providers of digital payment token services and imposing requirements to counter money laundering and terrorism financing.

Mr Yip also asked about the effectiveness and safeguards in relation to casinos' anti-money laundering controls since 2006. From 2010, when the two casinos opened, to September 2023, 11 individuals were detected using criminal proceeds in the casinos and were prosecuted and convicted for money laundering offences. The Gambling Regulatory Authority (GRA) requires the casino operators to put in place safeguards to prevent money laundering, such as conducting customer due diligence checks and periodic monitoring of patrons' transactions. GRA also conducts regular inspections of the casino operators.

I would like to conclude by thanking the Members once again for their support of the Bill, which will allow clear alignment of the regulatory regimes for the PSMD, moneylending, pawnbroking and legal services sector with updated FATF requirements. It will also strengthen the regulatory regime for PSMDs and improve operational effectiveness in regulating PSMDs. Sir, with that, on behalf of the Minister for Law, I beg to move.