On 14 May 2018, the Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) Industry Partnership of Singapore issued two papers, namely Best Practices for Countering Trade Based Money Laundering (the TBML Paper) and Legal Persons – Misuse Typologies and Best Practices (the Legal Persons Paper). The papers set out best practices for financial institutions to combat trade-based money laundering and the misuse of legal entities for illegal activities. The Anti-Money Laundering and Countering the Financing of Terrorism Industry Partnership of Singapore was formed in April 2017 by the Monetary Authority of Singapore (MAS) and the Commercial Affairs Department (CAD) of the Singapore Police Force as a government-industry partnership to strengthen Singapore’s resilience against financial crime.
The TBML Paper defines trade-based money laundering as “the process of disguising the proceeds of crime and moving value or money through the use of trade in an attempt to legitimise their illicit origin”. The best practices set out in that paper address topics such as risk assessment, due diligence, transaction surveillance, screening, and training. The TBML Paper also provides case studies to illustrate the utility of red flags and best practices in identifying suspicious transactions.
The Legal Persons Paper also contains case studies of certain transaction and behavioural patterns that have been adopted in illegal financial transactions. Examples include pass-through transactions, round-tripping activities, use of non-bank intermediaries to facilitate movement of cash across borders, undisclosed relationships and concealment of beneficial ownership and use of similar name entities. The best practice guidelines are also relevant for professional intermediaries such as law firms, professional advisors and company service providers.
Whilst the papers set out best practices to combat illicit activities through trade and legal entities, they are not legally-binding. However, MAS and the CAD strongly encourage all relevant firms to implement the recommended measures to collectively strengthen Singapore’s resilience against money laundering and terrorism-financing risks.
The TBML Paper can be found here and the Legal Persons Paper can be found here.
