This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SECTION 01 OF 05 SINGAPORE 003509 
 
SIPDIS 
 
SENSITIVE 
 
STATE FOR INL ERINDLER AND EB/ESC/TFS 
 
JUSTICE FOR OIA AND AFMLS 
 
TREASURY FOR FINCEN RMILLER 
 
E.O. 12356: N/A 
TAGS: KCRM PTER ETTC KTFN EFIN ECON SNAR SN
SUBJECT: SINGAPORE 2006 INCSR SUBMISSION PART II - MONEY 
LAUNDERING AND FINANCIAL CRIMES 
 
REF: A) STATE 210351 B) Singapore 3469 
 
¶1.  Per reftel instructions, Post hereby submits the draft 
of Part II of the 2006 International Narcotics Control 
Strategy Report - Money Laundering and Financial Crimes.  We 
have also emailed the text of the draft report, in MS Word 
format and showing changes from last year's version, to INL. 
Ref B provided Part I. 
 
¶2.  Begin text of the report: 
 
INCSR II - Singapore - Money Laundering and Financial Crimes 
 
¶3.  As a significant international financial and investment 
center, and in particular as a major offshore financial 
center, Singapore is vulnerable to potential launderers. 
Bank secrecy laws and the lack of routine currency reporting 
requirements make Singapore an attractive destination to 
drug traffickers, other criminals, and terrorist 
organizations and their supporters seeking to launder their 
money, and for flight capital.  Money laundering occurs 
mainly in the offshore sector, but may also occur in the non- 
bank financial system, which includes large numbers of 
moneychangers and remittance agencies.  Singapore has been a 
key player in the regional effort to stop terrorist 
financing. 
 
¶4.  Singapore should continue close monitoring of its 
domestic and offshore financial sectors.  As a major 
financial center, it should also take measures to regulate 
and monitor large currency and bearer negotiable instrument 
movements into and out of the country, in line with the 
Financial Action Task Force's (FATF) Special Recommendation 
Nine, adopted in October 2004, that countries implement 
measures such as declaration systems, in order to detect 
cross-border currency smuggling.  The conclusion of broad 
mutual legal assistance agreements is also important to 
further Singapore's ability to work internationally to 
counter money laundering and terrorist financing. 
 
¶5.  The Monetary Authority of Singapore (MAS), a semi- 
autonomous entity under the Ministry of Finance, serves as 
Singapore's Central Bank and financial sector regulator, 
particularly with respect to Singapore's anti-money 
laundering and efforts countering the financing of terrorism 
(AML/CFT).  MAS performs extensive prudential and regulatory 
checks on all applicants for banking licenses, including 
whether banks are under adequate home country banking 
supervision.  Banks must have clearly identified directors. 
Unlicensed banking transactions are illegal. 
 
¶6.  Singapore has a sizeable offshore financial sector.  In 
2005, there were 110 commercial banks in operation, 
including five Singapore and 24 foreign full banks, 46 
offshore banks, and 35 wholesale banks; all offshore and 
wholesale banks are foreign-owned.  Singapore does not 
permit shell banks, in either the domestic or offshore 
sectors. 
 
¶7.  In addition to banks offering trust, nominee, and 
fiduciary accounts, Singapore has 16 trust companies.  All 
banks and trust companies, whether domestic or offshore, are 
subject to the same regulation, record keeping, and 
reporting requirements, including regarding money laundering 
and suspicious transactions.  In August 2005, Singapore 
introduced regulations under the new Trust Companies Act 
(enacted in January 2005 to replace the Singapore Trustees 
Act) that mandated licensing of trust companies and MAS 
approval for appointments of managers and directors. 
 
¶8.  Singapore's approximately 600,000 foreign guest workers 
are the main users of alternative remittance systems.  As of 
June 2005, there were 406 money-changers and 102 remittance 
agents.  All must be licensed and are subject to the Money- 
Changing and Remittance Businesses Act (MCRBA), which 
includes requirements for record keeping and the filing of 
suspicious transaction reports.  Firms must submit a 
financial statement every three months and report the 
largest amount transmitted on a single day.  They must also 
answer questions about their business and overseas partners. 
Unlicensed informal networks, such as hawala, are illegal. 
 
¶9.  In August 2005, Singapore amended the MCRBA to apply 
certain AML/CFT regulations to remittance licensees and 
money-changers engaged in inward remittance transactions. 
The Act eliminated sole proprietorships and required all 
remittance agents to incorporate under the Companies Act 
with a minimum paid-up capital of S$100,000 (US$60,000). 
 
¶10.  In April 2005, Singapore lifted its ban on casinos, 
paving the way for the development of integrated resorts 
with casinos; total investment in two planned resorts, both 
of which are expected to open in 2009, is estimated to 
exceed US$4 billion.  In October 2005, Singapore released 
for public comment draft legislation for the Casino Control 
Act.  The Act calls for creation of a Casino Regulatory 
Authority and mandates certain cash reporting requirements. 
Internet gaming sites are illegal in Singapore. 
 
¶11.  As a matter of policy, Singapore strongly opposes money 
laundering and terrorist financing.  Some structural gaps 
remain in financial regulation, however, which may hamper 
efforts to control these crimes.  The Corruption, Drug 
Trafficking, and Other Serious Crimes (Confiscation of 
Benefits) Act of 1999 (CDSA) criminalizes the laundering of 
proceeds from narcotics and 184 other categories of serious 
offenses, including ones committed overseas, which would be 
serious offenses if they had been committed in Singapore. 
As part of amendments to the CDSA that came into effect in 
September 2005, Singapore added two more categories of 
offenses.  Despite these changes, Singapore's current list 
of designated predicate offenses does not include many of 
those in line with FATF Recommendation One. 
 
¶12.  Beginning in 2000, MAS began issuing a series of 
regulatory guidelines ("Notices") requiring banks to apply 
"know your customer" standards, adopt internal policies for 
staff compliance, and cooperate with Singapore enforcement 
agencies on money laundering cases.  Similar guidelines 
exist for securities dealers and other financial service 
providers.  Banks must obtain documentation such as 
passports or identity cards from all personal customers to 
verify names, permanent contact addresses, dates of birth, 
and nationalities, and to check the bona fides of company 
customers.  The regulations specifically require that 
financial institutions obtain evidence of the identity of 
the beneficial owners of offshore companies or trusts.  They 
also mandate specific record keeping and reporting 
requirements, outline examples of suspicious transactions 
that should prompt reporting, and establish mandatory intra- 
company point-of-contact and staff training requirements. 
Similar guidelines and notices exist for finance companies, 
merchant banks, life insurers, brokers, securities dealers, 
investment advisors, and futures brokers and advisors. 
 
¶13.  In January 2005, as part of a draft revision of its 
overall AML/CFT regulations for banks, MAS commenced a 
review of Notice 626, which proscribes banks from entering 
into, or continuing, correspondent banking relationships 
with shell banks, in line with the Revised FATF Forty 
Recommendations adopted in June 2003.  Draft Notice 626, 
which is still under review, also mandates originator 
information on cross-border wire transfers, in line with 
FATF's Special Recommendation Seven on wire transfers.  It 
also clarifies procedures for customer due diligence and 
includes a risk-based approach to customer due diligence, 
and mandates enhanced customer due diligence for foreign 
politically exposed persons.  It furthermore extends 
coverage of the regulations to include terrorist financing 
activities.  In addition to the revised Notice 626, 
Singapore is reviewing regulations governing other financial 
institutions and designated non-financial businesses and 
professions to bring them into conformity with FATF 
recommendations. 
 
¶14.  Financial institutions must report suspicious 
transactions and positively identify customers engaging in 
large currency transactions, and are required to maintain 
adequate records.  There are no reporting requirements, 
however, on amounts of currency brought into or taken out of 
Singapore.  Singapore is considering implementation of FATF 
Special Recommendation Nine, which requires either a 
declaration or disclosure system for monitoring cross-border 
movement of currency and bearer negotiable instruments. 
 
¶15.  The Singapore Police's Suspicious Transaction Reporting 
Office (STRO) has served as the country's Financial 
Intelligence Unit (FIU) since January 2000.  In December 
2004, STRO concluded a Memorandum of Understanding (MOU) 
concerning the exchange of financial intelligence with its 
U.S. counterpart, FinCEN.  STRO has also signed MOUs with 
counterparts in Australia, Belgium and Japan, and continues 
to actively seek MOUs with additional FIUs.  To improve its 
suspicious transaction reporting, STRO is developing a 
computerized system to allow electronic online submission of 
STRs, as well as the dissemination of AML/CFT material.  It 
plans to encourage all financial institutions and relevant 
professions to eventually participate in this system. 
Procedural regulations and bank secrecy laws limit STRO's 
ability to provide information relating to financial crimes. 
 
¶16.  In 2005, Singapore announced the detention of three 
members of the regional terrorist group Jemaah Islamiya (JI) 
under the Internal Security Act (ISA).  As of November 2005, 
36 people with links to terrorist groups were in detention. 
Detainees include members of JI, who plotted to carry out 
attacks in Singapore in the past, and members of the Moro 
Islamic Liberation Front (MILF). 
 
 
¶17.  Singapore is an important participant in the regional 
effort to stop terrorist financing in Southeast Asia.  The 
Terrorism (Suppression of Financing) Act that took effect 
January 29, 2003 criminalizes terrorist financing, although 
the provisions of the Act are actually much broader.  In 
addition to making it a criminal offense to deal with 
terrorist property (including financial assets), the Act 
criminalizes the provision or collection of any property 
(including financial assets) with the intention that the 
property be used, or having reasonable grounds to believe 
that the property will be used, to commit any terrorist act 
or for various terrorist purposes. 
 
¶18.  The Act also provides that any person in Singapore, and 
every citizen of Singapore outside Singapore, who has 
information about any transaction or proposed transaction in 
respect of terrorist property, or who has information that 
he/she believes might be of material assistance in 
preventing a terrorism financing offense, must immediately 
inform the police.  The Act gives the authorities the power 
to freeze and seize terrorist assets. 
 
¶19.  Based on an assessment of Singapore's financial sector 
published in April 2004, the International Monetary Fund and 
World Bank concluded that the country imposes few 
restrictions on intergovernmental terrorist financing- 
related mutual legal assistance, even in the absence of a 
Mutual Legal Assistance Treaty, because it is a party to the 
UN International Convention for the Suppression of the 
Financing of Terrorism.  The IMF, however, urged Singapore 
to improve its mutual legal assistance, noting serious 
limitations on assistance with the provision of bank 
records, search and seizure of evidence, restraining 
proceeds of crime, and the enforcement of foreign 
confiscation orders. 
 
¶20.  MAS has broad powers to direct financial institutions 
to comply with international terrorist financing 
obligations.  These include UN Security Council Resolutions 
1267, 1333, 1373, and 1390.  In 2002, the MAS issued 
regulations to implement this authority.  The regulations 
bar banks and financial institutions from providing 
resources and services of any kind that will benefit 
terrorists or terrorist financing.  Financial institutions 
must notify the MAS immediately if they have in their 
possession, custody or control any property belonging to 
designated terrorists or any information on transactions 
involving terrorists' funds.  The regulations apply to all 
branches and offices of any financial institutions 
incorporated in Singapore or incorporated outside of 
Singapore, but which are located in Singapore.  The 
regulations include a periodically updated list of the 
entities and individuals on the UNSCR 1267 Sanctions 
Committee's consolidated list. 
 
¶21.  Singapore is party to the UN International Convention 
for the Suppression of the Financing of Terrorism; the 
Terrorism (Suppression of Financing) Act provides for mutual 
legal assistance in cases where there is no treaty, MOU or 
other agreement in force between Singapore and another 
country that is a party to this Convention.  It is also 
party to the 1988 UN Drug Convention and has signed, but has 
not yet ratified, the UN Convention against Transnational 
Organized Crime.  In addition to FATF, Singapore is a member 
of the Asia/Pacific Group on Money Laundering, the Egmont 
Group, and the Offshore Group of Banking Supervisors. 
Singapore hosted the June 2005 Plenary meeting of the FATF, 
the first time a FATF Plenary was convened in Southeast 
Asia.  FATF is slated to review Singapore's AML/CFT regime, 
most likely in 2007. 
 
¶22.  To regulate law enforcement cooperation and facilitate 
information exchange, Singapore enacted the Mutual 
Assistance in Criminal Matters Act (MACMA) in March 2000. 
The MACMA provides for international cooperation on any of 
the 184 predicate "serious offenses" listed under the CDSA. 
The provisions of the MACMA apply to countries that have or 
have not concluded treaties, MOUs or other agreements with 
Singapore. 
 
¶23.  In November 2000, Singapore and the United States 
signed the Agreement Concerning the Investigation of Drug 
Trafficking Offenses and Seizure and Forfeiture of Proceeds 
and Instrumentalities of Drug Trafficking.  This was the 
first agreement concluded pursuant to the MACMA.  This 
agreement, which entered into force in early 2001, 
facilitates the exchange of banking and corporate 
information on drug money laundering suspects and targets, 
including access to bank records.  It also entails 
reciprocal honoring of seizure/forfeiture warrants.  This 
agreement applies only to narcotics cases, and does not 
cover non-narcotics-related money laundering, terrorist 
financing, or financial fraud. 
 
¶24.  In May 2003, Singapore issued a regulation pursuant to 
the Terrorism Act and the MACMA that enables the government 
to provide legal assistance to the United States and the 
United Kingdom in matters related to terrorism financing 
offenses.  Singapore concluded a mutual legal assistance 
agreement with Hong Kong in 2003.  In 2004, it signed a 
treaty on mutual legal assistance in criminal matters with 
seven other members of ASEAN -- Brunei, Cambodia, Indonesia, 
Laos, Malaysia, the Philippines and Vietnam.  The treaty 
will come into effect after ratification by the respective 
governments; to date, Singapore, Malaysia, and Vietnam have 
ratified the treaty.  In 2005, Singapore and India signed a 
similar treaty. 
 
¶25.  Charities in Singapore are subject to extensive 
government regulation, including close oversight and 
reporting requirements, and restrictions that limit the 
amount of funding that can be transferred out of Singapore. 
Singapore had a total of 1,747 registered charities as of 
December 2004.  All charities must register with the 
Commissioner of Charities and submit governing documents 
outlining the charity's objectives and particulars on all 
trustees.  The Commissioner of Charities has the power to 
investigate charities, search and seize records, restrict 
the transactions into which the charity can enter, suspend 
charity staff or trustees, and/or establish a scheme for the 
administration of the charity.  Charities must keep detailed 
accounting records and retain them for at least seven years. 
 
¶26.  Beginning January 1, 2007, Singapore will implement 
tighter regulations under the Income Tax Act governing 
public fund-raising by charities.  Charities authorized to 
receive tax-deductible donations will be required to 
disclose the amount of funds raised in excess of S$1 million 
(US$600,000), expenses incurred, and planned use of funds. 
 
¶27.  Under the Charities (Fund-raising Appeals for Foreign 
Charitable Purposes) Regulations 1994, any charity or person 
who wishes to conduct or participate in any fund raising for 
any foreign charitable purpose must apply for a permit.  The 
applicant must demonstrate that at least 80 percent of the 
funds raised will be used in Singapore, although the 
Commissioner of Charities has discretion to allow for a 
lower percentage.  Permit holders are subject to additional 
record keeping and reporting requirements, including details 
on every item of expenditure disbursed, amounts transmitted 
to persons outside Singapore, and names of recipients.  The 
government issued 34 permits in 2004 related to fund-raising 
for foreign charitable purposes.  There are no restrictions 
or direct reporting requirements on foreign donations to 
charities in Singapore. 
 
¶28.  Any person who wishes to engage in for-profit business, 
whether local or foreign, must register under the Companies 
Act.  Every Singapore-incorporated company is required to 
have at least two directors, one of whom must be a resident 
in Singapore, and one or more company secretaries who must 
be resident in Singapore.  There is no nationality 
requirement.  A company incorporated in Singapore has the 
same status and powers as a natural person.  Bearer shares 
are not permitted. 
 
¶29.  Singapore has eight free trade zones (FTZs) for 
seaborne cargo and two for airfreight regulated under the 
Free Trade Zone Act.  The FTZs may be used for storage, 
repackaging of import an export cargo, assembly and other 
manufacturing activities approved by the Director General of 
Customs in conjunction with the Ministry of Finance. 
 
HERBOLD