Over the past five years, the Monetary Authority of Singapore (MAS) has penalised 17 financial institutions for breaches of Singapore’s laws on money laundering and terrorism financing. These penalties serve as a stark reminder of the importance of robust anti-money laundering (AML) measures within the financial sector, including the legal industry.

While the penalties were primarily imposed on financial institutions, the implications extend to the legal sector due to the industry’s involvement in various financial transactions and legal advisory services. Lawyers and law firms have a crucial role to play in upholding AML regulations and preventing illicit financial activities.

Senior Minister Tharman Shanmugaratnam emphasized that MAS not only sets strict AML requirements in line with international standards but also actively supervises institutions, ensuring their adherence to these requirements. The legal sector must be cognizant of these regulations and expectations, as failure to comply could lead to severe penalties, reputational damage, and legal consequences.

Collaboration between financial institutions, MAS, and law enforcement agencies is vital in the fight against financial crime. The legal sector should actively participate in this collaboration by promptly reporting any suspicious activities or transactions to the relevant authorities. This cooperation can help identify potential money laundering risks and aid in investigations.

The legal sector can learn valuable lessons from the penalties imposed on financial institutions. It highlights the need for robust AML frameworks, thorough due diligence procedures, and effective controls to prevent the misuse of legal entities and the involvement of shell companies in illicit financial activities. By prioritising AML compliance, lawyers and law firms can contribute to safeguarding the integrity of the financial system and maintaining trust in the legal profession.

MAS and law enforcement agencies work closely with key firms to share insights on emerging risks and specific cases. The legal sector should actively engage in this partnership, leveraging the expertise and guidance available to stay informed about evolving AML regulations and best practices.

The penalties imposed on financial institutions for money laundering and terrorism financing offenses serve as a clear message to the legal sector. Lawyers and law firms must prioritise compliance with AML regulations, enhance due diligence practices, and actively collaborate with authorities and financial institutions to combat financial crime effectively. By doing so, the legal sector can demonstrate its commitment to upholding the highest standards of professionalism and integrity in financial transactions and contribute to a stronger, more resilient financial ecosystem.

New stricter property AML rules for Singapore

Singapore’s Ministry of Home Affairs (MHA) and the Smart Nation and Digital Government Office (SNDGO) have proposed stricter laws to combat money muling scams. The proposed amendments to the Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) (CDSA) Bill and the Computer Misuse (Amendment) (CMA) Bill aim to hold money mules accountable for their actions. Currently, money mules can only be charged if it can be proven they had knowledge or reasonable grounds to believe the funds were linked to criminal activity. The proposed amendments would introduce offenses of rash and negligent money laundering and increase penalties for offenders.

The amendments to the CDSA Bill include the introduction of offenses for rash and negligent money laundering, expanding the scope of money laundering liability, and increasing financial penalties. The CMA Bill amendments target the misuse of Singpass accounts, making it an offense to disclose Singpass credentials or obtain, supply, or transmit the credentials of another person.

The proposed amendments reflect the authorities’ recognition of the rising threat of money muling activities. In recent investigations, the police found over 350 suspects involved in scams and money mule operations resulting in more than $4 million in losses. The amendments aim to facilitate easier prosecution of money mules with lower culpability and deter fraudulent activities.

Compliance staff within financial institutions and law firms should stay updated on the legislative developments and review their reporting processes and procedures to effectively identify and escalate suspicious money muling activity. Monitoring transaction patterns, identifying unusual payment methods, scrutinizing customer information, and detecting shell companies are essential red flags to consider. By leveraging data analytics and sharing information about emerging money mule typologies, financial institutions can enhance their detection capabilities and mitigate the risk of money muling activities.

The proposed legislative amendments and the proactive efforts of the Monetary Authority of Singapore (MAS) demonstrate Singapore’s commitment to combatting financial crimes and protecting individuals from scams.