Singapore is not on the FATF List of Countries that have been identified as having strategic AML deficiencies
Compliance with FATF Recommendations
The last Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in Singapore was undertaken in 2019. According to that Evaluation, Singapore was deemed Compliant for 20 and Largely Compliant for 17 of the FATF 40 Recommendations.
APG Yearly Typologies Report - 2017
Emerging and ongoing trend – Money mules and international wire transfer fraud
In early 2012, the Commercial Affairs Department (CAD) detected a crime trend where illicit funds were being transferred to bank accounts in Singapore. In many of the cases, the criminals hacked into the email accounts of their victims to send instructions to the victims’ banks for the transfer of funds to bank accounts in Singapore. On discovery of the fraudulent transfers, victims informed their banks which then attempted to recall the funds from the banks in Singapore. In other cases, victims fell for the scams perpetrated by the criminals and made the transfer of funds at the criminals’ instruction. Some of these cases were detected when STRs were filed by Singapore financial institutions when they were asked to return funds deposited into their customers’ bank accounts. In other cases, the victims of fraud lodged police reports online.
These cases, known as “international wire transfer fraud” rose from 93 reported cases in 2012 to 212 cases in 2013. The CAD investigations revealed that criminal syndicates operating overseas were behind the movement of stolen funds derived from criminal activities committed overseas. The bank accounts in Singapore are held by locals who befriended members of the criminal syndicates, mainly through social networking websites on the internet. These local bank account holders also known as ‘money mules’, wittingly or unwittingly, at the request of the criminal syndicate, agreed to receive funds into their account and thereafter transfer the funds elsewhere, usually to bank accounts overseas. The money mules usually receive a commission for their role in the transfer of the funds.
In order to tackle the money mule problem, the CAD employed a multi-pronged approach. Firstly, the CAD promptly shared information with relevant agencies – for example, the Suspicious Transaction Reporting Office (STRO) worked closely with STR-filers and shared information by making spontaneous referrals to its foreign counterparts. In addition, STRO’s findings on its assessment of this crime problem were shared with the affected banks as well as the Association of Banks in Singapore (ABS) so that the information could be further disseminated to other members.
Secondly, the CAD worked closely with law enforcement authorities of various jurisdictions to identify the victims whose monies may have been fraudulently transferred into Singapore. This enabled the CAD to conduct further investigations into money laundering and at the same time, take the necessary action to recover the victim’s monies. The following table details the number of foreign victim bank accounts identified through the close collaboration between the CAD and its foreign counterparts, the amounts transferred from the victim’s account and the amounts of criminal proceeds successfully seized by the CAD.
In addition, the CAD worked with the Attorney-General’s Chambers (AGC) to ensure that strong enforcement action is taken against money mules.
Thirdly, the CAD intensified its efforts in the area of crime prevention and public education. In November 2014, the CAD launched a campaign to increase public awareness of the new crime typologies. As part of the crime awareness campaign, police utilised several forms of out-of-home publicity such as billboards, advertisements on public transport, office buildings and hawker centres so as to bring the crime awareness message to the masses. Besides conventional media platforms, the police also leveraged on digital platforms such as YouTube, Facebook, Twitter. In addition to public education, the police worked closely with local media to publicize successful “money mule” prosecutions in order to deter potential criminals.
The above has been successful, resulting in a substantial fall in the number of reports of international wire transfer fraud proceeds being laundered through Singapore ‘money mules’. The number of reports received fell by 83.5%, from 212 cases at the peak in 2013 to 35 cases in 2016.
US Department of State Money Laundering assessment (INCSR)
Singapore was deemed a Jurisdiction of Primary Concern by the US Department of State 2016 International Narcotics Control Strategy Report (INCSR). Key Findings from the report are as follows: -
Singapore’s openness as an international financial, investment, and transport hub exposes it to money laundering and terrorist financing risks. The country’s position as the most stable and prominent financial center in South East Asia, coupled with a regional history of transnational organized crime, large-scale corruption in neighboring states, and a range of other predicate offenses in those states increase the risk that Singapore will be viewed as an attractive destination for criminals to launder their criminal proceeds. Limited large currency reporting requirements and the size and growth of Singapore’s private banking and asset management sectors also pose inherent risks. Among the types of illicit activity noted in the region are fund flows associated with illegal activity in Australia that transit Singapore financial service providers for other parts of Asia.
As of November 17, 2015, there were 37 offshore banks in operation, all foreign-owned. Singapore is a major center for offshore private banking and asset management. Assets under management in Singapore total approximately SGD 2.4 trillion (approximately $1.89 trillion) in 2014. As of the end of 2014, Singapore had at least SGD 1.94 trillion (approximately $1.53 trillion) in foreign funds under management. Singapore does not permit shell banks or anonymous accounts.
There are two casinos in Singapore with estimated combined annual revenue of $4.83 billion in 2014. Online gaming is illegal. Casinos are regulated by the Casino Regulatory Authority. Given the scale of the financial flows associated with the casinos, there are concerns that casinos could be targeted for money laundering purposes.
Singapore exempted the processing of gold and other precious metals from its Goods and Services Tax to attract a larger share of the trade in precious metals. Regionally, gold is often used as a commodity of choice in trade-based money laundering (TBML) schemes and is also used frequently in the settling of accounts in underground financial systems. Singapore is located on a key global trade route and is a major transshipment port. Singapore hosts ten free trade zones which may be used for storage, repackaging of import and export cargo, assembly, and other manufacturing activities approved by the Director General of Customs, in conjunction with the Ministry of Finance. Singaporean authorities recognize the vulnerability of these areas to trade fraud and TBML.
There are no international sanctions currently in force against this country.
BRIBERY & CORRUPTION
Rating (100-Good / 0-Bad)
Transparency International Corruption Index 85
World Governance Indicator – Control of Corruption 100
Singapore ranks among the least corrupt countries in the world. Companies face very low risks of corruption in the city state, which has numerous safeguards and rigorous audit controls. Key anti-corruption legislation includes the Penal Code and the Prevention of Corruption Act (PCA), which prohibit active and passive bribery, gifts and facilitation payments in the public and private sector. Maximum punishment includes fines of up to SGD 100,000 (approx. USD 80,000), prison sentences of up to seven years and in some instances both. Facilitation payments, bribery and gifts are uncommon in business transactions. Singapore has ratified the United Nations Convention against Corruption. For further information - GAN Integrity Business Anti-Corruption Portal
Singapore has a highly developed and successful free-market economy. It enjoys a remarkably open and corruption-free environment, stable prices, and a per capita GDP higher than that of most developed countries. Unemployment is very low. The economy depends heavily on exports, particularly of consumer electronics, information technology products, medical and optical devices, pharmaceuticals, and on its vibrant transportation, business, and financial services sectors.
The economy contracted 0.6% in 2009 as a result of the global financial crisis, but has continued to grow since 2010 on the strength of renewed exports. Growth in 2014-15 was slower at under 3%, largely a result of soft demand for exports amid a sluggish global economy and weak growth in Singapore’s manufacturing sector.
The government is attempting to restructure Singapore’s economy by weaning its dependence on foreign labour, addressing weak productivity, and increasing Singaporean wages. Singapore has attracted major investments in pharmaceuticals and medical technology production and will continue efforts to strengthen its position as Southeast Asia's leading financial and high-tech hub. Singapore is a member of the 12-nation Trans-Pacific Partnership free trade negotiations, as well as the Regional Comprehensive Economic Partnership negotiations with the nine other ASEAN members plus Australia, China, India, Japan, South Korea, and New Zealand. In 2015, Singapore formed, with the other ASEAN members, the ASEAN Economic Community.
Agriculture - products:
orchids, vegetables; poultry, eggs; fish, ornamental fish
electronics, chemicals, financial services, oil drilling equipment, petroleum refining, rubber processing and rubber products, processed food and beverages, ship repair, offshore platform construction, life sciences, entrepot trade
Exports - commodities:
machinery and equipment (including electronics and telecommunications), pharmaceuticals and other chemicals, refined petroleum products, foodstuffs and beverages
Exports - partners:
China 13.7%, Hong Kong 11.5%, Malaysia 10.8%, Indonesia 8.2%, US 6.9%, Japan 4.4%, South Korea 4.1% (2015)
Imports - commodities:
machinery and equipment, mineral fuels, chemicals, foodstuffs, consumer goods
Imports - partners:
China 14.2%, US 11.2%, Malaysia 11.2%, Japan 6.3%, South Korea 6.1%, Indonesia 4.8% (2015)
Investment Climate - US State Department
Foreign investments, combined with investments through government-linked corporations (GLCs), underpin Singapore's open, heavily trade-dependent economy. With the exception of some restrictions in the financial services, professional services, and media sectors, Singapore maintains a predominantly open investment regime, with strong government commitment to maintaining a free market and active management of Singapore's economic development. Companies in Singapore cite transparency and lack of corruption, business friendly laws and regulations, tax structure, customs facilitation, and well-developed infrastructure as leading attractive features of Singapore’s business and investment climate. The World Bank's, Doing Business 2016 report ranked Singapore as the easiest country in which to do business. The Global Competitiveness Report 2015-2016 by the World Economic Forum ranked Singapore as the second-most competitive economy globally. Singapore typically ranks as the least corrupt country in Asia and one of the least corrupt in the world, and actively enforces its robust anti-corruption laws. The U.S.-Singapore Free Trade Agreement (FTA), which came into force January 1, 2004, expanded U.S. market access in goods, services, investment, and government procurement, enhanced intellectual property protection, and provided for cooperation in promoting labor rights and the environment. The government actively uses the public sector resources it controls as both an investor and catalyst for development.
The U.S. direct investment position in Singapore in 2014 reached USD 179.8 billion, primarily in non-bank holding companies, manufacturing (especially computers and electronic products), and finance and insurance – an increase of 12.5 percent from the previous year.
Singapore's extensive arbitration and mediation centers and commercial court have contributed to its development as an international hub for dispute resolution, and a desired base for international law firms and MNC corporate counsel. The Singapore International Commercial Court (SICC) heard its first case in May 2015, marking a milestone in Singapore’s quest to become a leading arbitration center.
The government is increasingly tightening restrictions on hiring foreign workers in favor of employment of Singaporean nationals. The Ministry of Manpower introduced measures in 2016 to watchlist companies and suspend work pass privileges for firms found not to have a “healthy Singaporean core,” demonstrated commitment to developing a Singaporean core, and not to be “relevant” to Singapore’s economy and society. As of April 2016, approximately 100 companies have been watchlisted.
Singapore's aggressive pursuit of foreign investment as a pillar of its overall economic strategy has enabled the country to evolve into a regional base for multinational corporations (MNCs). The Economic Development Board (EDB), Singapore's investment promotion agency, focuses on securing major investments in high value-added manufacturing and service activities as part of a strategy to replace labor-intensive, low value-added activities that have migrated offshore.
As part of a strategy to develop Singapore into a top financial center, the government offers tax incentives for financial institutions looking to set up operations.
Other Useful Links
FATF AML Deficiency List
Offshore Finance Center
US Dept of State Money Laundering assessment