MONEY LAUNDERING AND TERRORISM FINANCING IN THE CORPORATE SERVICE PROVIDERS SECTOR. Domestic Trends

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1 MONEY LAUNDERING AND TERRORISM FINANCING IN THE CORPORATE SERVICE PROVIDERS SECTOR Domestic Trends 31 May 2016

2 AGENDA ML/TF Trends National Risk Assessment Findings Sector Vulnerabilities Shell companies involved in wire transfer fraud AML/CFT Tools Lodging a Suspicious Transaction Report (STR) Reference Materials

3 MONEY LAUNDERING VS TERRORISM FINANCING MONEY LAUNDERING Shopping Criminal A s Account Criminal s Account Casino Fertilizer A s Account Terrorist TERRORISM FINANCING (TF) Bus Bomb

4 ML/TF TRENDS IN SINGAPORE

5 NATIONAL RISK ASSESSMENT Entities should consider the NRA s higher risk crime type results when performing on-going monitoring of the conduct of customers account and scrutiny of customers transactions

6 NATIONAL RISK ASSESSMENT

7 SUSPICIOUS TRANSACTION REPORTS (STRs) SUBMITTED TO STRO 30,000 Total Number of STRs Submitted 29,082 25,000 22,417 20,000 17,975 15,000 12,158 11,004 11,934 13,557 10,000 7,621 5, Year

8 SUSPICIOUS TRANSACTION REPORTS (STRs) SUBMITTED TO STRO Number of STRs Submitted in 2014 by Sector Banks Money Changers and Remittance Agents Insurance Companies Casinos 4,359 5,922 5,714 10,212 Other Payment Method Providers Capital Markets Intermediaries Others Finance Companies Trust and Company Service Providers 1,335 1, YOU Other filers include the auditors, accountants, precious stones and metals dealers, moneylenders, pawnshops, real estate agents/developers, lawyers

9 STRs SUBMITTED BY YOU No. of STRs filed by CSPs Total (All sectors) 17,975 22,417 29,082 % of total STRs 0.01% 0.15% 0.04%

10 IMPORTANCE & USEFULNESS OF STRs Financial Intelligence Reports that have Direct and Immediate Impact on Investigations in 2014 Dissemination /collation Enforcement agencies Foreign counterparts Intelligence Investigation Commenced 12% Intelligence Developed 40% Supported Ongoing Investigation 48% Between 2011 to 2014, information from STRs directly or indirectly led to about $200 million seized in relation money laundering investigations.

11 CORPORATE SERVICE PROVIDERS - VULNERABILITIES TO ML/TF Professional knowledge Complex structures Nominees Shell companies

12 VULNERABILITIES TO ML/TF USE OF SHELL COMPANIES Companies have little or no business activity and low paid up capital Nominee resident local director & foreigner who is the sole shareholder Bank account opened to receive proceeds from wire transfer frauds EMPHASISING THE ROLE OF NOMINEE DIRECTORS A nominee director was charged under Section 157 Companies Act and Section 47(1) (b) read with Section 59(1) CDSA

13 CASE STUDY: CORPORATE MONEY MULE Subject Y Subject X Stolen monies Company A Bank Account Singapore Stolen monies SINGAPORE BANK ACCOUNT USED FOR MONEY LAUNDERING ACTIVITIES High ML/TF risk posed by anonymity. Difficulty in funds tracing increases Convicted

14 AML / CFT TOOLS

15 SUSPICIOUS TRANSACTION REPORTING OBLIGATIONS Section 39 Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act (CDSA) Mandatory for anyone to inform STRO, when there are reasonable grounds to suspect that any property may be connected to drug trafficking and/or other serious offences Section 8 Terrorism (Suppression of Financing) Act (T(SOF)A) Every person in Singapore, and every Singapore citizen overseas, to inform the Police of any property or information relating to any terrorist or terrorist entity Lodge a Police Report if urgent. If not urgent, you may make a Suspicious Transaction Report Violation: Maximum $20,000 fine Violation: Maximum $50,000 fine, or 5 years imprisonment, or both

16 IMPACT OF NON-REPORTING CASE STUDY: FAILURE TO LODGE STR Money Laundering & corruption charges Rahman - Politically Exposed Person Lim Siew Cheng PENALTY: $12,000 fine Incorporated companies for Politically Exposed Person (PEP) Held monies for client in his personal account Turned a blind eye to adverse news on the client

17 INTERNATIONAL COOPERATION 1 FIU CHANNEL Argentina Australia Bangladesh Belgium Brazil Canada China Finland France Greece Guernsey Hong Kong India Indonesia Isle of Man Italy Japan Liechtenstein Macao, SAR Malaysia Mexico Monaco Netherlands New Zealand Norway Papua New Guinea Portugal Russia South Africa South Korea Switzerland United Kingdom United States 2 INTERPOL CHANNEL 3 MUTUAL LEGAL ASSISTANCE CHANNEL

18 INTERNATIONAL COOPERATION FIU CHANNEL Number of Spontaneous Provision of Information to Foreign FIUs Number of Requests for Assistance from Foreign FIUs

19 CASE STUDY: INTERNATIONAL COOPERATION Accounts in County Z USD 75,000 Bank E Bank F Victim In Country X Company A In Singapore Director of Shell Company A In Singapore Accounts in County Y International Cooperation with foreign FIU Foreign director set up a shell company A in Singapore Bank account received fraudulent funds from Country X Funds received were immediately transferred to other accounts STRO provided information to financial intelligence unit in Country X Police report received and investigations commenced

20 CASE STUDY: INTERNATIONAL COOPERATION TO COMBAT ML Foreign nationals Subject B $4.4 million Shares purchase $4.8 million Company B International Cooperation with Interpol CAD investigation unit received complaints that Company B s account in Singapore had received funds from fraud STRO disseminated STR information to investigation unit Investigation unit requested for assistance via Interpol Channel Subject B was prosecuted with 99 counts of money laundering offences

21 CASE STUDY: INTERNATIONAL COOPERATION TO COMBAT TF Transactions In 2006 In 2014 FIU Country A In Country A Subject Y Account In Singapore In Country B International Cooperation with Foreign FIU STRO received a request for assistance from the FIU of Country A following a terrorist attack in Country A Suspected terrorist had transferred funds to a bank account of Subject Y in Singapore STRO provided financial information to FIU of Country A

22 WHAT TO DO WHEN YOU DETECT A SUSPICIOUS TRANSACTION? POST: Head, Suspicious Transaction Reporting Office Commercial Affairs Department 391 New Bridge Road, # Police Cantonment Complex Block D Singapore STROLLS (Online filing of STRs) STRO stro@spf.gov.sg

23 TIPS FOR LODGING STRs DON T Merely lodge a STR without elaborating on why something is suspicious DOs Explain reason for suspicion Identify unusual activities and behaviours Provide information on the company in question Provide us with relevant supporting documents

24 BACKGROUND ON SUSPICIOUS TRANSACTION REPORTING OFFICE (STRO)

25 BRIEF FACTS ON SUSPICIOUS TRANSACTION REPORTING OFFICE (STRO) Formed in January 2000 Singapore s Financial Intelligence Unit Receive, analyze and disseminate - Suspicious Transaction Reports (STRs) - Cross border Cash Movement Reports (CMRs) - Cash Transaction Reports (CTRs)

26 STR ANALYSIS PROCESS Financial information STRs CTRs CMRs Analysis by STRO Enforcement Databases Commercial databases Others Dissemination /collation Enforcement agencies Foreign counterparts Intelligence

27 Additional AML/CFT Materials

28 AML/CFT RESOURCES ( SPF Home > About us > Organisational structure > Commercial Affairs Department > AML/CFT > Suspicious Transaction Reporting Office > Suspicious Transaction Reporting)

29 TRAINING PLATFORM BY CSIS E-Learning module on AML/CFT Comprehensive contents: AML/CFT concepts (e.g. ML/ TF definitions) AML/CFT compliance concepts (e.g. CDD, record keeping) AML/CFT regulations in Singapore, Hong Kong, Malaysia, UK and US (and 3-4 other countries in the Asia Pacific region) Financial crimes (e.g. insider trading)

30 THANK YOU