Singapore proposes tightening rules on corporate service providers amid money-laundering concerns

SINGAPORE: Singapore is considering stricter regulations for corporate service providers in response to recent money-laundering incidents involving foreign nationals within the city-state. The proposed measures aim to enhance oversight and combat illicit financial activities.

According to the proposal released on Tuesday (12 March), all entities offering corporate services, including business formation and regulatory filings, must register with the Accounting and Corporate Regulatory Authority (ACRA). This registration requirement applies to local and foreign-based service providers operating in or from Singapore.

Additionally, the government is contemplating imposing hefty fines, potentially reaching up to $100,000, on registered corporate service providers and their senior management if they violate anti-money-laundering and illicit financing regulations.

The impetus for these proposed changes stems from a recent $3 billion money-laundering scandal involving ten Chinese-born individuals.

These individuals allegedly used proceeds from illicit remote gambling operations to finance extravagant lifestyles. Many of them had established companies in Singapore, with local citizens serving as directors and corporate secretaries.

One significant aspect of the proposal involves nominee directors. The government suggests that nominee directors must undergo appointments and vetting procedures by registered corporate service providers.

Notably absent from the proposal is a specific cap on the number of nominee directorships an individual can hold, a measure previously mentioned by Second Minister for National Development Indranee Rajah in October.

ACRA has pledged to intensify its supervisory and enforcement efforts, particularly concerning individuals holding numerous nominee directorships and exhibiting other high-risk indicators.

According to Bloomberg, this approach aims to address concerns raised by recent scandals, such as the revelation that firms associated with the accused individuals in the $3 billion case had secretaries or directors involved in over 3,000 companies.

The public has until March 25 to provide feedback on the proposed regulations.

ACRA encourages stakeholders to engage in this consultation process to ensure the effectiveness and practicality of the proposed measures in combating money laundering and enhancing the integrity of Singapore’s corporate sector.