Acra proposes stringent rules to combat illicit financial activities

Professionals and companies that help businesses with corporate filings may face more stringent requirements if new legislative proposals are passed.

The Accounting and Corporate Regulatory Authority (Acra) said yesterday that its proposals aim to improve Singapore's compliance with recommendations by the Financial Action Task Force - an intergovernmental organisation that aims to combat money laundering and terrorism financing - and maintain the Republic's reputation as a trusted financial hub.

The proposals also seek to address risks from the misuse of nominee arrangements to create shell companies that facilitate money laundering, and require individuals who act as nominee directors to be qualified people.

Among the authority's key proposals is a new Corporate Service Providers Bill that requires all entities or people providing corporate secretarial services in and from Singapore to register with Acra as corporate service providers.

This is regardless of whether they need to transact with the authority. Corporate secretarial services include forming corporations and arranging for another person to act as a shareholder on a corporation's behalf.

Locally registered or incorporated individuals and entities wishing to transact with Acra on behalf of their customers must first register with the authority as registered filing agents.

These agents are subject to anti-money laundering and counter-financing of terrorism obligations.

However, there is a regulatory gap as corporate service providers that are not registered filing agents may be engaged by customers to facilitate illicit activities, said Acra.

The authority is also proposing an increase in financial penalties for registered filing agents, corporate service providers and registered qualified individuals if they breach the terms and conditions of their registration.

It wants to increase the maximum financial penalty for registered filing agents from the current $25,000 to at least $50,000 per breach, and impose an equivalent financial penalty for corporate service providers.

It is suggesting increasing the maximum penalty for registered qualified individuals from $10,000 to $20,000 per breach.

It is also proposing a fine of up to $100,000 for breaches of anti-money laundering and counter-financing of terrorism obligations, committed with involvement or neglect by individuals such as directors, owners or partners of corporate service providers.

Acra also wants to require corporate service providers to ensure that individuals they appoint as nominee directors are fit and proper, and satisfy certain training requirements, if they hold more than a legally prescribed number of nominee directorships.

This proposed requirement excludes qualified individuals such as registered public accountants.

Acra is also proposing a new requirement for nominee directors and shareholders to disclose their nominee status and the identity of their nominator to Acra. The nominee status of these directors and shareholders will be made public.

Members of the public can go to https://bit.ly/3POABrh to provide feedback on the authority's legislative proposals until July 19.