Singapore proposes new regulatory regime for Corporate Service Providers

Singapore’s Accounting & Corporate Regulatory Authority (ACRA) issued a consultation on a new Corporate Service Providers (CSP) Bill which, together with proposed amendments to the Companies Act and ACRA Act, will introduce corporate governance and regulatory changes to boost the city-state’s compliance with global standards, The public consultation ran from 31 May to 19 July.

The proposals aim to improve Singapore’s compliance with the Financial Action Task Force (FATF) recommendations relating to combatting money laundering, and terrorism financing (ML/TF), and to address the risks presented by the misuse of nominee arrangements in the creation of shell companies to facilitate money laundering; and to impose new qualification requirements on individuals who serve as nominee directors on a commercial basis.

The new CSP Bill would require all entities or persons providing corporate secretarial services in and from Singapore to register with ACRA as Corporate Service Providers (CSPs), regardless of whether they need to transact with ACRA.

It would also introduce a requirement for CSPs to conduct screening of customers against prescribed sources of information, perform risk assessment, impose group-wide AML / CFT obligations covering their branches or subsidiaries in Singapore or elsewhere and provide that the AML/CFT obligations for CSPs also cover the financing of the proliferation of weapons of mass destruction.

CSPs would be required to ensure that individuals they appoint to act as nominee directors are fit and proper and, requirements if they hold more than a legally prescribed number of nominee directorships by way of business, satisfy prescribed training (unless they are qualified persons).

CSOs would be required to provide ACRA with copies of Suspicious Transaction Reports (STRs) that they file with the Suspicious Transaction Reporting Office. The existing exemptions permitting Registered Filing Agents (RFAs) not to have to inquire on the existence of beneficial owners in relation to a customer that is a government entity, whether Singaporean or foreign, will be removed.

Under the proposals, nominee directors and shareholders would be required to disclose their nominee status and the identity of their nominator to ACRA. ACRA would need to maintain these details and to make the records publicly available.

CSPs, RFAs and registered qualified individuals (RQIs) would be subject to harsher financial penalties for violating the terms and conditions of registration. Fines for RFAs and CSPs would double from S$25,000 to S$50,000 per breach, while fines for RQIs would double from S$10,000 to at least S$20,000 per breach.

The proposals would also introduce a fine not exceeding S$100,000 for breaches of AML / CFT obligations that are committed with the connivance of, or attributable to any neglect, by, inter alia, directors, owners or partners of CSPs.

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