VZCZCXRO0245
RR RUEHCHI RUEHDT RUEHHM RUEHNH
DE RUEHGP #3547/01 3100911
ZNR UUUUU ZZH
R 060911Z NOV 06
FM AMEMBASSY SINGAPORE
TO RUEHC/SECSTATE WASHDC 1822
INFO RUEATRS/DEPT OF TREASURY WASHDC
RUEAWJA/DEPT OF JUSTICE WASHDC
RUCNASE/ASEAN MEMBER COLLECTIVE

UNCLAS SECTION 01 OF 05 SINGAPORE 003547 
 
SIPDIS 
 
STATE FOR EB/ESC/TFS AND INL GWILLIAMS AND ERINDLER 
JUSTICE FOR OIA, ARMLS, AND OPDAT 
TREASURY FOR FINCEN MHAFNER 
 
SENSITIVE BUT UNCLASSIFIED 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: KCRM EFIN KTFN PTER KSEP ETTC SNAR SN
SUBJECT: SINGAPORE 2006-2007 INTERNATIONAL NARCOTICS CONTROL 
STRATEGY REPORT (INCSR) PART II, MONEY LAUNDERING AND FINANCIAL 
CRIMES 
 
REF:  STATE 157136 
 
¶1.  Per reftel instructions, Post submits its draft 2006-2007 
International Narcotics Control Strategy Report, Part II Q Money 
Laundering and Financial Crimes.  Part I was transmitted septel. 
 
¶2.  Begin text of the draft report: 
 
Singapore 
 
As a significant international financial and investment center, 
and, in particular, as a major offshore financial center 
Singapore is vulnerable to potential money launderers.  Bank 
secrecy laws and the lack of routine currency reporting 
requirements make Singapore an attractive destination for drug 
traffickers, transnational criminals, terrorist organizations 
and their supporters seeking to launder money, as well as for 
flight capital. 
 
Structural gaps remain in financial regulation that may hamper 
efforts to control these crimes.  To address some of these 
deficiencies, Singapore is beginning to map out legal and 
regulatory changes to implement the Financial Action Task 
Force's (FATF) recommendations on anti-money laundering (AML) 
and countering the financing of terrorism (CFT). 
 
Singapore amended the Corruption, Drug Trafficking, and Other 
Serious Crimes (Confiscation of Benefits) Act (CDSA) in May 2006 
to add 108 new categories to its "Schedule of Serious Offenses." 
The CDSA criminalizes the laundering of proceeds from narcotics 
transactions and other predicate offenses, including ones 
committed overseas that would be serious offenses if they had 
been committed in Singapore.  Included among the new offenses 
are crimes associated with terrorist financing, illicit arms 
trafficking, counterfeiting and piracy of products, 
environmental crime, computer crime, insider trading, and 
rigging in commodities and securities markets.  With an eye on 
Singapore's two new multibillion-dollar casinos slated to be 
operational in 2009, the list also addresses a number of 
gambling-related crimes.  However, tax and fiscal offenses are 
absent from the expanded list. 
 
Singapore has a sizeable offshore financial sector.  As of 
September 2006, there were 109 commercial banks in operation, 
including five local and 24 foreign-owned full banks, 45 
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.  The 
Monetary Authority of Singapore (MAS), a semi-autonomous entity 
under the Prime Minister's Office, serves as Singapore's central 
bank and financial sector regulator, particularly with respect 
to Singapore's AML/CFT efforts.  MAS performs extensive 
prudential and regulatory checks on all applications for banking 
licenses, including whether banks are under adequate home 
country banking supervision.  Banks must have clearly identified 
directors.  Unlicensed banking transactions are illegal. 
 
Singapore has increasingly become a center for private banking 
and asset management.  Total assets under management in 
Singapore grew 26 percent between 2004 and 2005 to $450 billion, 
according to MAS.  Private wealth managers estimate that total 
private banking and asset management funds increased nearly 300 
percent between 1998 and 2004. 
 
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, futures brokers and advisors, trust companies, 
 
SINGAPORE 00003547  002 OF 005 
 
 
approved trustees, and money changers and remitters. 
 
Singapore is in the process of revising its AML/CFT regulations 
for banks and other financial institutions.  The relevant 
Notices should further align certain parts of Singapore's 
AML/CFT regime more closely with FATF recommendations.  Among 
the proposed regulations are new provisions that would 
proscribe banks from entering into, or continuing, correspondent 
banking relationships with shell banks; require originator 
information on cross-border wire transfers; clarify procedures 
for customer due diligence (CDD), including adoption of a risk- 
based approach; and mandate enhanced CDD for foreign politically 
exposed persons.  Terrorist financing activities will also be 
addressed in the Notices for the first time.  As part of this 
process, MAS issued for public comments draft regulations for 
banks in January 2005.  In August 2006, it issued for public 
comments revised draft regulations for banks and new draft 
regulations for other financial institutions.  Singapore is also 
considering regulations governing designated non-financial 
businesses and professions to bring them into conformity with 
FATF recommendations. 
 
In addition to banks that offer trust, nominee, and fiduciary 
accounts, Singapore has 12 trust companies.  All banks and trust 
companies, whether domestic or offshore, are subject to the same 
regulations, record-keeping, and reporting requirements, 
including for 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.  In August 2006, MAS issued for public comments draft 
regulations that would require approved trustees and trust 
companies to complete all mandated CDD procedures before they 
could establish relations with customers.  Other financial 
institutions are allowed to establish relations with customers 
before completing all CDD-related measures. 
 
Singapore amended its Moneylenders Act in April 2006 to require 
moneylenders under investigation to provide relevant information 
or documents.  The Act imposes new penalties for giving false or 
misleading information and for obstructing entry and inspection 
of suspected premises. 
 
In April 2005, Singapore lifted its ban on casinos, paving the 
way for development of two integrated resorts scheduled to open 
in 2009.  Combined total investment in the resorts is estimated 
to exceed $5 billion.  In June 2006, Singapore implemented the 
Casino Control Act.  The Act establishes the Casino Regulatory 
Authority of Singapore, which will administer the system of 
controls and procedures for casino operators, including certain 
cash reporting requirements.  Internet gaming sites are illegal 
in Singapore. 
 
Any person who wishes to engage in for-profit business in 
Singapore, 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. 
 
Financial institutions must report suspicious transactions and 
positively identify customers engaging in large currency 
transactions and are required to maintain adequate records. 
However, there is no systematic reporting of large currency 
transactions.  There are no reporting requirements on amounts of 
currency brought into or taken out of Singapore.  Singapore is 
considering legal changes that would allow for 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. 
 
The Singapore Police's Suspicious Transaction Reporting Office 
(STRO) has served as the country's Financial Intelligence Unit 
(FIU) since January 2000.  Procedural regulations and bank 
secrecy laws limit STRO's ability to provide information 
relating to financial crimes.  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, 
Brazil, Canada, Greece, Hong Kong, Italy, Japan and Mexico.  To 
 
SINGAPORE 00003547  003 OF 005 
 
 
improve its suspicious transaction reporting, STRO has developed 
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 participate in this system 
 
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.  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. 
 
The International Monetary Fund/World Bank assessment of 
Singapore's financial sector published in April 2004 concluded 
that, because it is a party to the UN International Convention 
for the Suppression of the Financing of Terrorism, the country 
imposes few restrictions on intergovernmental terrorist 
financing-related mutual legal assistance, even in the absence 
of a Mutual Legal Assistance Treaty.  However, the IMF urged 
Singapore to improve its mutual legal assistance for other 
offenses, noting serious limitations on assistance through the 
provision of bank records, search and seizure of evidence, 
restraints on proceeds of crime, and the enforcement of foreign 
confiscation orders. 
 
Based on regulations issued in 2002, MAS has broad powers to 
direct financial institutions to comply with international 
terrorist financing obligations.  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 located in Singapore.  The regulations are periodically 
updated to include names of suspected terrorists and terrorist 
organizations listed on the UN 1267 Sanctions Committee's 
consolidated list. 
 
Singapore's approximately 600,000 foreign guest workers are the 
main users of alternative remittance systems.  As of September 
2006, there were 395 money-changers and 95 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 provide information concerning their 
business and overseas partners.  Unlicensed informal networks, 
such as hawala, are illegal.  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 
(approximately $60,000).  In August 2006, MAS issued for public 
comments regulations that would require licensees to establish 
the identity of all customers; currently, no such identification 
is mandatory for transactions in aggregate of up to S$5,000 
(approximately US$3,000).  MAS would also be required to approve 
any non face-to-face transactions. 
 
Singapore has five free trade zones (FTZs), four for seaborne 
cargo and one for airfreight, regulated under the Free Trade 
Zone Act.  The FTZs may be used for storage, repackaging of 
import and export cargo, assembly and other manufacturing 
activities approved by the Director General of Customs in 
conjunction with the Ministry of Finance. 
 
SINGAPORE 00003547  004 OF 005 
 
 
 
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 1,807 registered charities as of December 2005.  All 
charities must register with the Commissioner of Charities 
which, since September 1, 2006, has reported to the Minister for 
Community Development, Youth and Sports instead of the Minister 
for Finance.  Charities must submit governing documents 
outlining their objectives and particulars of 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 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. 
 
Singapore will implement tighter regulations under the Income 
Tax Act governing public fund-raising by charities, effective 
January 1, 2007.  Charities authorized to receive tax-deductible 
donations will be required to disclose the amount of funds 
raised in excess of S$1 million (approximately $600,000), 
expenses incurred, and planned use of funds.  Under the 
Charities (Fund-raising Appeals for Foreign Charitable Purposes) 
Regulations 1994, any charity or person that 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 or disbursement, amounts 
transferred to persons outside Singapore, and names of 
recipients.  The government issued 36 permits in 2005 related to 
fund raising for foreign charitable purposes.  There are no 
restrictions or direct reporting requirements on foreign 
donations to charities in Singapore. 
 
To regulate law enforcement cooperation and facilitate 
information exchange, Singapore enacted the Mutual Assistance in 
Criminal Matters Act (MACMA) in March 2000.  Parliament amended 
the MACMA in February 2006 to allow the government to respond to 
requests for assistance even in the absence of a bilateral 
treaty, MOU or other agreement with Singapore.  The MACMA 
provides for international cooperation on any of the 292 
predicate "serious offenses" listed under the CDSA.  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 (Drug Designation Agreement or DDA).  This was the 
first agreement concluded pursuant to the MACMA.  In force since 
early 2001, the DDA 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.  Singapore has not prosecuted any drug-money 
laundering cases under the DDA. 
 
In May 2003, Singapore issued a regulation pursuant to the MACMA 
and the Terrorism Act 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 mutual legal assistance agreements with Hong Kong in 
2003 and with India in 2005.  In November 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; Thailand and Burma 
signed in January 2006.  The treaty will come into effect after 
ratification by the respective governments.  Singapore, 
Malaysia, Vietnam and Brunei have ratified the treaty thus far. 
 
In addition to the UN International Convention for the 
Suppression of the Financing of Terrorism, Singapore is also 
party to the 1988 UN Drug Convention and has signed, but 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 held in Southeast Asia.  FATF is slated to review 
 
SINGAPORE 00003547  005 OF 005 
 
 
Singapore's AML/CFT regime, most likely in 2007. 
 
Singapore should continue close monitoring of its domestic and 
offshore financial sectors.  As a major financial center, it 
should also adopt measures to regulate and monitor large 
currency and bearer negotiable instrument movements into and out 
of the country, in line with FATF Special Recommendation Nine, 
adopted in October 2004, that mandates countries to 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.  Singapore should lift its rigid bank 
secrecy restrictions in order to enhance its law enforcement 
cooperation in areas such as information sharing and to conform 
with international standards and best practices. 
 
HERBOLD