Luxe, high-value goods dealers to help spot red flags as part of tighter anti-money laundering efforts

To deter criminals from laundering money through Singapore’s financial system, unregulated sectors, including dealers of high-value goods, will be advised on how to identify red flags in suspicious transactions.

These businesses, currently considered as unregulated dealers, will also be engaged by relevant agencies on how they can refuse to accept large payments in cash for their goods.

These measures to clamp down on money laundering were revealed on Oct 4 in a report by the Inter-Ministerial Committee (IMC) on Anti-Money Laundering.

Stressing the importance of striking a balance between keeping Singapore open for business and keeping out criminals, Minister in the Prime Minister’s Office Indranee Rajah said: “We welcome clean funds and legitimate investments which generate economic growth, jobs and create real value for our people and our country.

“But we will be hostile ground for illegal funds and criminal activities should they find their way to our shores.”

The committee was set up in November 2023 to look into Singapore’s anti-money laundering framework, following the arrest of 10 foreigners in August that year in what became Singapore’s largest money laundering case. It involved over $3 billion in property and assets seized by the authorities.

The nine men and one woman, who are originally from China, were sentenced to between 13 and 17 months’ jail.

Over $940 million worth of their assets were forfeited to the state. They have since been deported and barred from re-entering Singapore.

While measures on regulated entities like banks, corporate service providers (CSPs) and real estate agencies have been tightened, unregulated entities like car dealers will also be advised on how to prevent illicit funds from entering the financial system.

Noting that the relevant government agencies will be engaging car dealers next week, Minister of State for Home Affairs Sun Xueling said: “There are high-value items – for example, art pieces, items with high brand value and collectible items – that are being used for criminals to purchase so they can integrate their money into the system.

“We will pay attention to these sectors and (reach out) to the dealers in these sectors to let them know that this is a risk that they should be watching out for.”

Ms Indranee, who chairs the IMC, said at a press conference on Oct 4 that the $3 billion money laundering case highlighted valuable lessons on how criminals have adapted their tactics to evade Singapore’s safeguards.

The committee was formed to review the anti-money laundering framework here to ensure Singapore’s system remains relevant against increasingly sophisticated criminal tactics.

On whether there would be a list of high-value goods to look out for, Ms Indranee said criminals who engage in money laundering would commonly purchase big-ticket items such as luxury properties and cars to maintain the value of their illicit proceeds. But those purchases are increasingly becoming easier to identify by the authorities conducting anti-money laundering checks.

Ms Indranee, who is also Second Minister for Finance and National Development, said criminals have moved with the times and trends to purchase items in more unorthodox sectors that may appreciate in value over time. She added that it is impossible for the authorities to have a complete list of items from different sectors to look out for, as the items would change over time.

“You can’t have a complete list because Bearbrick (ornaments) – five years ago, nobody would have put that on the list.”

Bearbrick ornaments were among the items seized in the $3 billion money laundering case.

Ms Indranee added that criminals are now using their illicit proceeds to purchase high-end toys, collectibles, art and even handbags, which would not have been on the authorities’ checklist before.

“We can pick out the obvious (goods), but there may be some which are not immediately obvious... That gives you a sense of the challenge that we have,” she said.

She added that the recommendations by the IMC were made after many consultations with businesses in Singapore.

Ms Indranee said one of the main concerns businesses here raised was that the new anti-money laundering requirements would be too tight, and whether conducting business in Singapore would remain easy.

She said the concerns raised were key in helping the IMC navigate its review and come up with the eventual recommendations.

“We have adopted a very calibrated approach, and we are emphasising the recommendations are intended to be just right – not too tight and not too loose. Enough to let in legitimate funds, but to keep out illicit funds,” she said.

She stressed that no institution can guarantee keeping out all money laundering activities, and steps put in place to counter the laundering process should not hinder the country’s economy.

“You must be able to let businesses carry on, and you must do that in a way that allows us to still keep out the illicit funds.”

To do so, these unregulated entities will be advised on how to file a suspicious transaction report (STR).

This will make it harder for criminals to do business with these dealers, without placing undue restrictions on legitimate activities, said the report.

Ms Indranee said the money laundering case gave insight into how criminals adapted their tactics to evade Singapore’s safeguards.

While the recommendations and measures by the committee were published, operationally sensitive information was left out, she said. “In this constant game of cat and mouse, we must avoid revealing information that would help potential bad actors circumvent our defences.”

Gatekeepers’ practices lacking in some cases

Preventing money laundering here relies widely on gatekeepers, like financial institutions, accounting entities, CSPs, casinos, precious stones and metal dealers, lawyers, real estate agencies and developers.

Said the committee: “While we have robust anti-money laundering requirements, we observed that gatekeepers’ practices vary, and fall short in some instances.

“Sector supervisors will provide more guidance on anti-money laundering practices, to set a clearer baseline for their respective sectors.”

Some examples of sector supervisors include the Monetary Authority of Singapore (MAS) for financial institutions and banks; and the Accounting and Corporate Regulatory Authority (Acra) for accountants and CSPs.

Minister of State for Trade and Industry Alvin Tan, who also serves on the MAS board, noted that within the financial sector, relationship managers and bankers are very much on the front line.

“They must know the policies or processes that are required and what are the evolving threats and techniques that emerge over time so that they are up to date with regard to the new modes of operations of bad actors,” he said.

Information and data sharing

Singapore will also strengthen information-sharing mechanisms within government agencies by getting them to communicate more with one another to spot potential crimes more quickly.

One such platform is the newly announced National AML Verification Interface for Government Agencies Threat Evaluation (Navigate), which will be led by the Singapore Police Force (SPF).

Under Navigate, law enforcement agencies and other relevant players will screen against one another’s databases to identify suspicious entities faster.

Navigate will be rolled out in the next few years.

The Government will also set up a work group, led by the Ministry of Home Affairs and SPF, to update operational policies, data sharing processes and sense-making capabilities.

This work group will complement Navigate by strengthening coordination between agencies. SPF will lead the training across all agencies, including in the use of technology and data analytics.

Several measures have been taken recently to plug loopholes that were exploited in the nation’s anti-money laundering framework.

A centralised digital platform for banks was launched on April 1.

The Collaborative Sharing of Money Laundering/Terrorism Financing Information and Cases, or Cosmic, will allow banks to voluntarily share information on suspicious customers with one another.

The platform was co-developed by MAS and six banks – DBS Bank, OCBC Bank, UOB, Citibank, HSBC and Standard Chartered Bank.

The participating banks will be allowed to share information on potential criminal behaviour while protecting the interests of most customers who are legitimate, with safeguards in place to protect the confidentiality of information shared.

The Anti-Money Laundering and Other Matters Bill will also enhance data sharing by allowing the Inland Revenue Authority of Singapore and Singapore Customs to share tax and trade data with the Suspicious Transaction Reporting Office (STRO).

The Bill, which was passed in Parliament on Aug 6, will allow Singapore courts to order the sale of seized properties that are linked to crimes, without the consent of involved parties.

Previously, the authorities had to continue maintaining such properties if no consensus was reached among parties.

The STRO is Singapore’s financial intelligence unit and comes under the police’s Commercial Affairs Department.

It receives STRs and other reports, which are then analysed to detect money laundering and other serious crimes.

Under the Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act, it is mandatory to lodge an STR if one has reason to suspect criminal activity in a transaction.

The Corporate Service Providers Bill and the Companies and Limited Liability Partnerships (Miscellaneous Amendments) Bill were both passed in Parliament in July.

With the new Bills, all business entities providing corporate services in and from Singapore are required to register with Acra as registered CSPs.

Newly registered companies must maintain information on owners from the date of incorporation, instead of doing so within the first 30 days of being incorporated.

Source: Straits Times © SPH Media Limited. Permission required for reproduction.

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