8 Ways to Protect Your Company Against Money Laundering

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As a global business hub and financial centre, Singapore also attracts cross-border money laundering schemes.

We have listed below eight ways to ensure a high level of protection to your company’s financial system and to make it less vulnerable to those seeking to launder money through your business.

  1. Be familiar with the money laundering and anti-money laundering laws and regulations.

    The more you know about these laws and regulations, the better you can guard your company against money laundering activities and the easier you can exercise your rights against them.

    There are four main legal instruments that comprise Singapore’s legal framework for combating money laundering acts, namely:

    1. The Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act (CDSA)This statute mandates individuals and companies to make full disclosures of physical goods or currency beyond S$20,000 in value that will be transported into or out of Singapore.
    2. The Organised Crime Act 2015 (OCA)This statute is directly in charge of placing restriction and approbating sanctions and punitive measures to organised criminal groups involved in money laundering activities. It monitors both local citizens and/or residents involved in highly profitable illegal trade as well as foreign individuals and/or groups with involvement in OCA-related activities that affect Singapore.
    3. The Mutual Assistance in Criminal Matters Act (MACMA)This statute enables the Singapore government to become a stronger partner and facilitator of mutual legal assistance to fight cross-border crimes including money laundering offences.
    4. The Monetary Authority of Singapore (MAS)Its anti-money laundering regulations require financial institutions to have in place targeted measures within their systems and to conduct customer due diligence (CDD).
  2. Comply with existing obligations and key amendments set by the Companies Act.

    To increase transparency of businesses and accountability among owners, make sure your company adheres to the following regulations as prescribed by the Companies Act:

    1. The current company location is the same as the registered address
    2. There is an updated registry of beneficial owners and shareholders
    3. Full disclosure of nominee status of nominee directors/managers to the company
    4. Restriction of any issuance and transfer of shares by foreign-owned but Singapore-registered companies
    5. There is an assigned liquidator for keeping all business transactions in the event of a winding up
    6. All financial records must be intact and not destroyed during and after the liquidation process
  3. Establish AML Policy

    Your company’s AML policy should clearly indicate appropriate procedures and necessary controls regarding customer due diligence (CDD) procedures, senior management assessment, hiring and training of staff, as well as record keeping and audit and compliance.

  4. Know your clients and customers.

    There are specific guidelines for conducting Customer Due Diligence (CDD) and Know Your Customer (KYC) procedures.

    1. Craft a clear and straightforward customer acceptance policy.
    2. Require customer information that will specifically confirm his or her identity.
    3. Ascertain if the client comes from a country or jurisdiction with high rates of money laundering offences.
    4. Determine if the client is a high-ranking executive, official, public servant, or PEP (Politically Exposed Person).
  5. Educate your staff and employees.

    Provide the proper training and information awareness for all staff and employees within three months of joining your company. Conduct regular subsequent programmes to cover topics such as AML policy, CDD procedures, trends and methods in ML, etc.

  6. Appoint an Internal Auditor and/or a Compliance Officer.

    An Internal Auditor is in charge of regular monitoring and assessment of the effectiveness of money laundering-related procedures and controls within your company.

    A Compliance Officer is the official authority in AML related matters such as approval or disapproval of high-risk clients as well as filing for an STR.

    For the sake of independence, these roles should not be assigned to the same person. And as much as possible, the latter should be from the senior management.

  7. Monitor your customers on a regular basis.

    Even after the customer passed the company’s screening procedures, it is essential to have in place an ongoing monitoring scheme during your business relationship to ensure that all financial transactions – especially the investment source and funds – are in line with the declared information.

    Customers deemed to the highest risk for violating the anti-money laundering policies by your company and by the government should be given top priority.

  8. Be quick in alerting authorities on suspicious activities.

    If you or your employee notices or directly identifies any odd or irregular financial activity, this must be flagged as a Suspicious Transaction Report (STR) right away and be turned over to the STRO, which directly reports to the Singapore Police Force.

    As Singapore’s Financial Intelligence Unit, the STRO is the central agency that receives, analyses, and disseminates STRs, turning them into financial intelligence that can help in the detection and sanctioning of criminal offences.

Getting Professional Help from Corporate Services Singapore

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For more information on the Companies Act or sound advice on regulatory compliance matters, let Corporate Services Singapore be your professional guide.

Posted in Company Incorporation.