Singapore toughens penalties for money laundering and terrorism financing

Those caught in the act will need to pay over $1m or twice the value of the suspicious transaction.

Entities engaged in money laundering and terrorism financing will be now subject to tighter penalties after the Parliament completed the second reading of the amendments to the Serious Crimes and Counter-Terrorism Bill.

According to Josephine Teo, second minister for Home Affairs, the number of Suspicious Transaction Reports (STRs) filed increased significantly from 22,000 to 35,000 in 2013-2017. In the same period, there were about 70 convictions annually for money laundering. In 2016, there were six convictions for terrorism financing.

Increased penalties
The maximum penalty for money laundering and terrorism financing offence as defined by the Terrorism (Suppression of Financing) Act, or TSOFA, will be raised from $1m to over $1m or twice the value of the property, financial service, or financial transaction.

The penalties for not reporting suspicious transactions will also be raised. Persons required to report such transactions under the Corruption, Drug, Trafficking and other serious crimes (Confiscation of Benefits) Act (CDSA) but fail to do so are previously hit by a maximum fine of $20,000.

“Given the sums of money involved in such crimes, this is not sufficient as a deterrent,” Teo said. The amendments propose to raise the individual penalty to $250,000 or no more than three years imprisonment and the corporate penalty to $500,000. The penalties for tipping off investigations under the CDSA will also be raised from $30,000 to $250,000.

Penalties 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 arrest, prosecution, or conviction for terrorism financing will also be tiered into three categories with different punishments.

Fines for individuals like bankers will be raised from $50,000 to $250,000; and for corporations, from $250,000 to $1m or twice the value of the property involved or the services rendered. Penalties for non-professionals remain unchanged at $50,000 and/or five years’ imprisonment.

On the other hand, fines for disclosing information that might compromise a terrorism financing investigation will reach $250,000 and/or five years’ imprisonment.

Targeting overseas syndicates
According to Teo, syndicates that target locals and use their accounts to launder criminal proceeds. However, 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,” she added.

An amendment will criminalise 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. The maximum penalties for this new offence are a $150,000 fine and/or three years’ imprisonment for individuals.

“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 minister said.

Another amendment includes prosecutors being required to prove that the overseas act amounts to a serious offence if committed in Singapore and an offence in the serious jurisdiction.

According to Teo, 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 as foreign governments may not expedite requests or refuse to issue the certificate, and engaging experts may discourage prosecutors from proceeding with enforcement action.

An amendment aims to address these by allowing the courts to decide on the basis of evidence presented by the prosecution that an offence had indeed been committed in the overseas jurisdiction, without having to rely on foreign governments or experts.

Other amendments
The minister also introduced the amendments to strengthen Singapore’s levers Cross Border Cash Reporting Regime offences, or CBCRR.

A person needs to declare any sum of monies exceeding $20,000, and failure to do so constitutes a CBCRR offence. Under a new clause, the court can make a confiscation order against a defendant convicted of a CBCRR offence.

“This means that for a person who is convicted of bringing in $100,000 into or out of Singapore without declaring it, the court has the option to confiscate up to $80,000. This gives the courts greater discretion to impose heavier penalties for CBCRR cases,” Teo added.

The police can also raise the maximum composition amount for an offence to $20,000.

The CDSA will also be amended to expand the links for financial intelligence exchange. From Singapore’s 50 arrangements with other countries’ units, the exchange will be expanded to over 150 units of overseas jurisdictions which are members of the Egmont Group of Financial Intelligence Units.

Also read: MAS strengthens vigilance against money laundering and terrorism financing

Under the CDSA, the courts’ powers to confiscate criminal proceeds will be clarified and “capital market products” will be included in the types of assets for charging orders can be imposed on.

Minister Teo touched on other amendments for the TSOFA. Financing the travel of individuals that are suspected to provide or receive any training in facilitating or carrying out any terrorist act will be prohibited, when one knows or has reasonable grounds to believe that the involved property or services are used to support the individual’s travel.

TSOFA penalties will also be toughened by making a person who conspires or attempts to commit terrorism financing liable to the same punishment as if they had committed the offence. “This proposed amendment will align how we peg our terrorism financing penalties with jurisdictions like the United Kingdom and Australia,” Teo added.

Lastly, a person will be protected against civil liability when they comply with TSOFA prohibitions. “This will give greater confidence to a person to do the right thing without fear of breaching contractual obligations,” the minister said.