VZCZCXRO4359
RR RUEHCHI RUEHDT RUEHHM RUEHNH
DE RUEHGP #2037/01 3170713
ZNR UUUUU ZZH
R 130713Z NOV 07
FM AMEMBASSY SINGAPORE
TO RUEHC/SECSTATE WASHDC 4394
INFO RUEATRS/DEPT OF TREASURY WASHDC
RUEAWJA/DEPT OF JUSTICE WASHDC
RUCNASE/ASEAN MEMBER COLLECTIVE

UNCLAS SECTION 01 OF 05 SINGAPORE 002037 
 
SIPDIS 
 
STATE FOR EB/ESC/TFS AND INL GWILLIAMS, ERINDLER AND JSHOWELL 
JUSTICE FOR OIA, AFMLS, AND OPDAT 
TREASURY FOR FINCEN TOTT 
 
SENSITIVE BUT UNCLASSIFIED 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: KCRM EFIN KTFN PTER KSEP ETTC SNAR SN
SUBJECT: SINGAPORE 2007-2008 INTERNATIONAL NARCOTICS CONTROL 
STRATEGY REPORT (INCSR) PART II, MONEY LAUNDERING AND FINANCIAL 
CRIMES 
 
REF:  STATE 137250 
 
¶1.  (U) In response to reftel instructions, this message is Post's 
draft chapter on Singapore for the 2007-2008 International Narcotics 
Control Strategy Report, Part II - Money Laundering and Financial 
Crimes.  We also have emailed to INL the text of the draft report in 
MS Word format showing changes from last year's version.  Part I was 
transmitted septel. 
 
¶2.  (SBU) 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 money launderers.  Stringent bank secrecy laws and the 
lack of routine currency reporting requirements make Singapore a 
potentially 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 regulations that may hamper 
efforts to control these crimes.  To address some of these 
deficiencies, Singapore is implementing  legal and regulatory 
changes to better align itself with the Financial Action Task 
Force's (FATF) revised recommendations on anti-money laundering 
(AML) and countering the financing of terrorism (CFT).  FATF will 
conclude a peer review of Singapore's AML/CFT regime in February 
¶2008. 
 
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 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 still 
absent from the expanded list. 
 
Singapore has a sizeable offshore financial sector.  As of October 
2007, there were 112 commercial banks in operation, including six 
local and 24 foreign-owned full banks, 42 offshore banks, and 40 
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 offshore private 
banking and asset management.  Total assets under management in 
Singapore grew 24 percent between 2005 and 2006 to S$891 billion 
(US$581 billion), according to MAS. 
 
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 individual customers to 
verify names, permanent contact addresses, dates of births and 
nationalities.  Banks must also 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, approved trustees, and money changers and remitters. 
 
 
SINGAPORE 00002037  002 OF 005 
 
 
Singapore is in the process of revising its AML/CFT regulations for 
banks and other financial institutions.  MAS has issued new or 
revised AML/CFT regulations (in the form of "Notices" and 
"Guidelines") for banks and other financial institutions, most of 
which took effect March 1, 2007.  Affected institutions include 
banks, finance companies, merchant banks, money changers and 
remitters, life insurers, capital market intermediaries, and 
financial advisers.  New reporting requirements for originator 
information on cross-border wire transfers took effect July 1.  The 
relevant regulations further align certain parts of Singapore's 
AML/CFT regime more closely with FATF recommendations and 
specifically address CFT concerns for the first time.  Among the 
recently implemented regulations are new provisions that would 
proscribe banks from entering into, or continuing, correspondent 
banking relationships with shell banks; clarify and strengthen 
procedures for customer due diligence (CDD), including adoption of a 
risk-based approach; mandate enhanced CDD for foreign politically 
exposed persons; and additional suspicious transactions reporting 
requirements.  Effective November 1, 2007, Singapore increased the 
maximum penalty for financial institutions that fail to comply with 
AML/CFT regulations from S$100,000 (US$71,000) to S$1 million 
(US$714,000).  The Act also empowers MAS to prosecute financial 
institution managers in cases where non-compliance is attributable 
to their consent, connivance or neglect.  MAS is considering new 
regulations for holders of stored value facilities (SVF) to limit 
the risk of their use for illicit purposes. 
 
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 
regulation, 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.  MAS issued revised 
regulations that took effect April 1, 2007 that require approved 
trustees and trust companies to complete all mandated CDD procedures 
before they can 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.  Singapore is considering further amendments to 
strengthen the Act's AML/CFT provisions. 
 
Singapore has issued additional regulations and guidelines governing 
designated non-financial businesses and professions.  The Internal 
Revenue Authority of Singapore issued AML/CFT guidelines for real 
estate agents in July 2007.  The Law Society of Singapore in August 
2007 amended its Legal Profession (Professional Conduct) Rules to 
strengthen its AML guidelines.  Among its provisions, the new rules 
prohibit attorneys from acting on the behalf of anonymous clients to 
open or maintain bank accounts or to hold cash or cash instruments. 
 
 
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 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.    Since 
November 1, 2007, Singapore has begun requiring in-bound and 
out-bound travelers to report cash and bearer-negotiable instruments 
in excess of S$30,000 (US$20,675), in accordance with FATF Special 
 
SINGAPORE 00002037  003 OF 005 
 
 
Recommendation Nine.  Violators are subject to a fine of up to 
S$50,000 (US$34,459) and/or a maximum prison sentence of three 
years. 
 
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 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 in January 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 
Singapore 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 the 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 obligations 
related to terrorist financing.  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 757,000 foreign guest workers are the main 
users of alternative remittance systems.  As of October 2007, there 
were 380 money-changers and 92 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 July 2007, MAS 
issued regulations that require licensees to establish the identity 
of all customers.  MAS must approve any non face-to-face 
transactions. 
 
SINGAPORE 00002037  004 OF 005 
 
 
 
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. 
 
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 1,900 
registered charities as at end 2006.  All charities must register 
with the Commissioner of Charities which reports to the Minister for 
Community Development, Youth and Sports.  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. 
 
Changes to the Charities (Registration of Charities) Regulations 
that came into effect in May 2007 authorize the Commissioner to 
deregister charities deemed to be engaged in activities that run 
counter to the public interest.  Singapore has also implemented 
tighter rules under the Charities Act that govern public 
fund-raising by charities, effective May 1, 2007.  Charities 
authorized to receive tax-deductible donations are required to 
disclose the amount of funds raised in excess of S$1 million 
(approximately $690,000), 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, amounts transferred 
to persons outside Singapore, and names of recipients.  The 
government issued 26 permits in 2006 and 18 permits as of November 
2007 related to fundraising 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. 
 The DDA, which came 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. 
 
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, India in 2005, 
and Laos in 2007.  Singapore is a party to the ASEAN Treaty on 
Mutual Legal Assistance in Criminal Matters along with Malaysia, 
Vietnam, Brunei, Cambodia, Indonesia, Laos, the Philippines, 
Thailand, and Burma.  The treaty will come into effect after 
ratification by the respective governments.  Singapore, Malaysia, 
Vietnam and Brunei have ratified 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 
 
SINGAPORE 00002037  005 OF 005 
 
 
FATF, Singapore is a member of the Asia/Pacific Group (APG) on Money 
Laundering, the Egmont Group, and the Offshore Group of Banking 
Supervisors. 
 
Singapore should continue close monitoring of its domestic and 
offshore financial sectors.  The government should add tax and 
fiscal offenses to its schedule of serious offenses.  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 to enhance its law enforcement cooperation 
in areas such as information sharing and to conform to international 
standards and best practices. 
 
SHIELDS