CATEGORY: NEWS AND ANNOUNCEMENTS, SPEECHES
Mr Raymond Lam, Chairman of Chartered Secretaries Institute of Singapore (CSIS)
Mr Victor Lai from Institute of Singapore Chartered Accountants (ISCA)
Mr Abdul Jabbar Bin Karam Din from The Law Society
Ladies and gentlemen
I am happy to join you this morning at CSIS 7th annual conference for Corporate Service Providers (CSPs). We had the last 2 conferences virtually. It is indeed a pleasure to be able to attend the conference in-person and meet with you face-to-face this year.
2 As you may have heard, the World Health Organisation (WHO) said that the COVID-19 pandemic is “nowhere near over”. But in Singapore, we have eased most of our COVID-19 measures, and life is returning to almost pre-pandemic norms. However, we are not returning to business-as-usual. There are challenges that we have to deal with -- rising inflation, disruptions in energy and food supply chains in the wake of the pandemic and the war in Ukraine; the great resignation or the great reshuffle -- yet there are new opportunities awaiting us – green economy, and digitalisation.
3 Against this backdrop, today’s conference, themed “New Chapter for CSPs”, is an apt and timely reminder that the CSP sector needs to continue to build capability, accelerate digital transformation efforts, and create better customer experience so as to be better able to bring greater value to your clients.
4 ACRA regularly reviews and seeks public feedback on our legislation to foster a trusted and vibrant business environment in Singapore. We do this to keep in touch with changing operating environment to better support our business community with up-to-date policies and rules. Let me give a few examples.
5 Following our public consultation in July 2020 on proposed changes to the Companies Act, we have made additional amendments. One such amendment aims to empower ACRA to obtain data from other agencies and entities so as to improve filing convenience and data accuracy. Other amendments strive to strike a balance between corporate transparency and personal data privacy and facilitate digital correspondence with businesses to improve efficiency and support sustainability efforts.
6 In May this year, we initiated a public consultation on proposed amendments to the Companies Act, ACRA Act, and a new CSP Bill. The proposals aim to improve Singapore’s compliance with the Financial Action Task Force’s (FATF) recommendations, maintain Singapore’s reputation as a trusted financial hub and address key risks like the misuse of nominee arrangements for unlawful activities in Singapore.
7 Let me touch on a few key proposals set out in the new CSP Bill. The Bill proposes to require all entities and individuals providing corporate secretarial services in and/or from Singapore to register with ACRA. This will address an existing gap, highlighted through the Panama and Paradise papers leaks, involving entities operating and providing foreign corporate secretarial services from Singapore. The proposal empowers ACRA to take action against entities operating from Singapore and whose activities could have a significant effect on Singapore’s reputation.
8 The Bill also proposes to increase financial penalties against CSPs for breaches of terms and conditions of their registration. This is intended to align the applicable sanctions for the sector, with those already in place for other similar sectors in Singapore.
9 New requirements to prevent the misuse of nominee arrangements have also been proposed. We aim to improve the quality of individuals who wish to act nominee directors, by way of business, to ensure that they have the capability to discharge their fiduciary duties. To improve the transparency of nominee arrangements, we also intend to impose a requirement for nominee directors and shareholders to disclose their nominee status and the identity of their nominator to ACRA. The nominee status of the director or shareholder will be made publicly available. This proposal is in line with the Financial Action Task Force’s FATF Standards. My colleague Kang Yu from our AML/CFT team will be sharing more details on the CSP Bill later.
10 As the CSP Bill impacts the sector, I strongly encourage everyone present here to submit your views on these legislative proposals before the consultation closes in a few days’ time, on 19 July 2022.
11 As many of you know, the issue of transparency is the subject of intensive international scrutiny. Our law enforcement agencies in Singapore have observed a steep increase in the misuse of shell companies and nominee arrangements by criminals, including foreign syndicates and professional money launderers. Often, these have been facilitated through the misuse of our CSPs. To engender a move towards responsible performance of AML/CFT obligations and to discourage breaches of AML/CFT regulations, including via tacit facilitation of illicit activities, we will be hardening our enforcement stance to tackle the truly recalcitrant. Let me share a case example with you.
12 In October last year, my investigations team identified an individual, who was observed to have been appointed as a director for 255 companies. Our investigations revealed that this individual had been employed by a CSP firm, to take on the directorships, despite the individual not having the mental capacity to perform his fiduciary duties as a director. I highlight here, that the CSP involved knew of this individual’s lack of mental capacity from the onset. Despite being investigated by ACRA and pledging to cease further activity involving the individual whilst investigations were ongoing, the CSP was found to have continued to misuse the individual’s identity details to incorporate another 200 over companies, and to name him as their registrable controller, this time without his consent or knowledge.
13 My team took swift action to cancel the registration of the CSP and its RQI given their actions and is considering additional enforcement action against the RQI, in partnership with our prosecutors and the Commercial Affairs Department. This is a clear case of egregious behaviour by a CSP and its RQI. Such behaviour is more an exception rather than the norm. Nevertheless, my team will take strong, decisive action against such behaviour, in order to safeguard the integrity of our business environment, and I trust that all present here agree with such action. On this note, I am heartened to share that there has been an overall improvement in both the effectiveness and coverage of CSPs’ prevailing AML/CFT controls since 2015 when the sector was first regulated. You play a critical gatekeeper role for Singapore against money laundering, terrorism financing and other illicit activities. You also play a key role in safeguarding Singapore against new and emerging risks. I thank all of you for your partnership on this front. Let us all continue to work together to uphold Singapore’s reputation as a trusted international financial and business hub.
14 We will continue to work with CSIS to raise the professional standards of CSPs. I strongly believe training is of utmost importance in this respect. For example, CSIS’ existing mandatory AML/CFT programme for filing agents equips CSPs with the essential knowledge of the statutory requirements so that they understand their duties and obligations. ACRA will continue to collaborate with CSIS to upskill the CSP profession and raise the sector’s capabilities.
15 On our part, we are transforming our system and processes to improve customer experience. We will continue to work with our industry partners like yourselves to stay in touch with your needs and to provide easy-to-use, seamless and secure digital services.
16 As shared at the CSP Outreach in February this year, we will be launching our new TrustBar service at the end of the year. This service allows users to verify the authenticity and currency of the ACRA information such as those in our Business Profile and Business Certificate, anytime, anywhere. We thank CSIS members for participating in the UI/UX sessions held in June and August 2021 and providing us with valuable suggestions.
17 We are also in the process of developing and designing the new Registry and Regulatory system, to replace BizFile+. The new system will help us further improve customer experience. You can look forward to seamless filing via APIs; faster search service for business and people information; a dashboard that contains all the digital correspondence with you, etc. We will reach out to you to get your inputs and I look forward to your suggestions on how we can better meet your needs.
18 CSPs are our key partners in creating a trusted and vibrant business environment so that Singapore remains the best place for business. We will continue to work with you to build a better and stronger CSP sector. I wish you all a fruitful conference.