Singapore passed a new law on Tuesday, Jul 2, significantly increasing penalties for corporate service providers that breach anti-money laundering duties. The Accounting and Corporate Regulatory Authority (ACRA) now requires all corporate service providers to register, regardless of whether they transact with the authority.
ACRA, under the Ministry of Finance, has adopted a stricter stance on corporate service providers and individuals failing to comply with regulations. Since 2021, ACRA imposed 41 sanctions, canceling or suspending the registration of 31 firms and individuals. The new Corporate Service Providers Bill raises fines for non-compliance from S$25,000 to S$100,000 (US$73,650).
All businesses providing corporate services, including those serving only overseas clients, must register with ACRA. This requirement extends to accounting firms performing services specified by the Financial Action Task Force, a global watchdog on money laundering and terrorism financing.
Second Minister for Finance Indranee Rajah highlighted the vulnerability of nominee directorship arrangements to abuse. Nominee directors, often local residents appointed by corporate service providers, sometimes fail to perform their fiduciary duties. New regulations mandate that only registered corporate service providers can arrange nominee directorships, ensuring individuals are fit and proper for the role.
The recent S$3 billion money laundering case underscored the importance of these measures. The offenders, part of an illicit gambling ring, laundered money into luxury assets. This case, though incorporated into the new law, does not solely drive the new regulations.
Parliament also debated the Companies and Limited Liability Partnerships (Miscellaneous Amendments) Bill alongside the Corporate Service Providers Bill. Corporate service providers act as “gatekeepers” against company misuse, supporting businesses in filing annual returns and arranging directors. They must conduct customer due diligence for all clients, resident or non-resident.
Concerns arose regarding the impact of the new law on business compliance costs. MPs like Mr. Lim Biow Chuan and Nominated MP Neil Parekh noted the potential financial burden and service interruptions for small companies. However, Ms. Indranee assured that the requirements, reflecting best practices, should not significantly increase compliance costs or affect Singapore’s business environment.
Mr. Louis Chua raised the issue of “Singapore-washing,” where foreign firms relocate to mitigate geopolitical risks. He emphasized maintaining Singapore’s reputation against money laundering. While some MPs felt the penalties might be excessive, Ms. Indranee stated that the government had extensively consulted stakeholders and calibrated the requirements appropriately.
The Bill rejected an initial proposal requiring nominee directors to meet training requirements, considering it overly restrictive and costly. Instead, corporate service providers must ensure nominee directors are qualified, allowing capable individuals to hold multiple directorships without unnecessary limits.
Together, the Corporate Service Providers Bill and the Companies and Limited Liability Partnerships (Miscellaneous Amendments) Bill aim to strengthen Singapore’s anti-money laundering framework, ensuring the city-state remains a safe and legitimate business hub.
Our take:
Corporate services play a critical role in the global fight against money laundering and counter-terrorism financing. At Forbis Group, we understand the immense responsibility that comes with ensuring our financial systems adhere to stringent regulations. As a corporate services provider in Singapore, a leading financial hub with a high volume of transactions, our role is more vital than ever.
We welcome the recent regulatory changes aimed at strengthening compliance and enhancing transparency within the industry. These measures are crucial in maintaining the integrity of our financial ecosystem and safeguarding it against illicit activities. However, it is essential that corporate service providers are given adequate time to adapt and fortify their internal processes to meet these new standards effectively.
At Forbis Group, we are committed to supporting our clients through this transition. We believe that by fostering a culture of compliance and accountability, we can not only protect our financial system but also contribute to a more secure and sustainable business environment. Our dedication to upholding the highest standards of regulatory compliance reflects our unwavering commitment to the principles of people, planet, and profit – the foundation of our long-term business sustainability strategy.
By integrating these new regulations into our practices, we aim to not only comply with the law but to lead by example in promoting ethical business conduct. The integrity and security of our financial system depend on the collective efforts of all corporate service providers. At Forbis Group, we are proud to play our part in this crucial endeavor, ensuring that our clients, and the broader business community, can operate in a safe and transparent environment.
