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The Singaporean government has tabled its new Anti-Money Laundering Bill in parliament for its first reading as part of its ongoing reforms of AML regulation.
The bigger picture
This bill represents the culmination of Singapore’s ongoing cycle of reforms to its anti-money laundering regulation that it has been conducting since the classification of environmental crimes as an anti-money laundering offence in May 2024.
This was followed by an updated Money Laundering National Risk Assessment, a new National Asset Recovery Strategy that includes a four-faceted approach to ill gotten asset recovery, and finally an updated Terrorist Financing Risk Assessment and Counter-Terrorism Financing Strategy.
The release of these reforms and the bill also coincides with the Financial Action Task Force (FATF) plenary, which was held in Singapore in June 2024 and signals the end of Singapore’s presidency of the task force.
How does this change things?
There are several key changes proposed in the bill and risk assessments that may be of interest to payment service providers (PSPs).
The first is the inclusion of serious environmental crimes abroad, including illegal mining and logging, as predicate money laundering offences, which means that entities conducting money laundering checks may have to consider these crimes as risks.
Second is the proposed changes to the treatment of seized properties in the AML bill, which would allow these properties to be sold if they are likely to depreciate, be unduly costly to maintain, or if the sale of the properties is in the interest of justice. Although this change is unlikely to affect PSPs that deal with conventional funds, it remains to be seen whether or not these reforms will apply to digital tokens (crypto) as a form of property.
Third, PSPs will now have to take into account the new Money Laundering Risk Assessment and Terrorist Financing National Risk Assessment when taking their risk-based approach to AML checks. These new assessments will be of particular interest to digital payment token providers, cross-border money transfers providers and operators who work with banks on the use of fast cross-border payment systems as the risk profiles for these operators have been increased.
Why should you care?
At an operational level, PSPs will now have to take into account more risks when conducting AML checks, which may require more resources depending on the risk profiles of the specific business or customer base.
An increase in resources may also be required of digital payment token operators if they are subject to the changes in the treatment of seized properties, although it remains to be seen whether this will be the case once the bill becomes law and is implemented.
At an institutional level, PSPs who provide services for which risk profiles have been increased may be subject to increased scrutiny from authorities and, as such, may have to take additional measures to ensure that their reputation remains intact.
