Money laundering

Criminal enforcement

Which government entities enforce your jurisdiction’s money laundering laws?

The Commercial Affairs Department (CAD) is a department within the Singapore Police Force (SPF) that has the principal responsibility for investigating and taking enforcement action in respect of money laundering and other white-collar crimes.

The CAD enforces the AML regime through the detection of money laundering activities, the investigation and prosecution of money laundering offences and the seizure and confiscation of illegal proceeds. Singapore’s financial intelligence unit is the Suspicious Transaction Reporting Office (STRO), which is a unit within the CAD. Officers of the CAD are authorised officers for the purposes of the Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act (CDSA).

The CAD works closely with other SPF units and law enforcement agencies, such as the Central Narcotics Bureau (CNB) and the Corrupt Practices Investigation Bureau (CPIB). Officers of the CNB and CPIB are also authorised officers for the purposes of the CDSA.

Defendants

Can both natural and legal persons be prosecuted for money laundering?

Yes.

The offence of money laundering

What constitutes money laundering?

The term ‘money laundering’ is not used as such within the CDSA.

Part VI of the CDSA criminalises the laundering of proceeds generated by criminal conduct and drug trafficking via the following principal offences:

  • the assistance of another person in retaining, controlling or using the benefits of drug dealing or criminal conduct under an arrangement (whether by concealment, removal from jurisdiction, transfer to nominees or otherwise) (section 43(1)/44(1));
  • the concealment, conversion, transfer or removal from the jurisdiction, or the acquisition, possession or use of benefits of drug dealing or criminal conduct (section 46(1)/47(1));
  • the concealment, conversion, transfer or removal from the jurisdiction of another person’s benefits of drug dealing or criminal conduct (section 46(2)/47(2));
  • the acquisition, possession or use of another person’s benefits of drug dealing or criminal conduct (section 46(3)/47(3)); and
  • the possession or use of any property that may be reasonably suspected of being benefits of drug dealing or criminal conduct, without a satisfactory account as to how the property had been occasioned (section 47AA(1)).

 

The offences relating to concealment, conversion, transfer or removal (sections 46(1) and 47(1)) are strict liability offences, on the basis that the defendant is him or herself the author of the predicate offence.

In relation to the other money laundering offences, a person will be liable if he or she performed the act knowing or having reasonable grounds to believe in the existence of the relevant facts or that the property represents another person’s proceeds of crime.

The meaning of the phrases ‘reasonable grounds to believe’ and ‘reason to believe’ has been considered by the Singapore courts. In Ang Jeanette v PP (2011) 4 SLR 1, the High Court, in considering an offence under section 44(1)(a) of the CDSA, agreed with an earlier High Court decision in Ow Yew Beng v PP (2003) 1 SLR(R) 536 that having ‘reason to believe’ involved a ‘lesser degree of conviction than certainty but a higher one than speculation’. This approach has been affirmed in the High Court case of Huang Ying-Chun v PP (2019) 3 SLR 606.

The test to determine whether a person had ‘reason to believe’ is partly objective and partly subjective. The court assumes the position of the defendant (including taking account of his or her experience and what he or she knows) but must reason from that position as an objective, reasonable person to infer the facts that ought to be known to the defendant (Koh Hak Boon v PP (1993) 2 SLR(R) 733 and PP v Wang Ziyi Able (2008) 2 SLR(R) 61).

Where the defendant is a legal person, criminal liability for money laundering may be established by proof that a director, employee or agent had committed, directed or consented to the act within the scope of his or her actual or apparent authority (section 52 CDSA). If a legal person or corporate body is found guilty, and the offence had been committed with the consent or connivance of, or is attributable to the neglect of, its key officer, both the officer and the legal person or corporate body are guilty of the offence (section 59 CDSA). In Abdul Ghani bin Tahir v PP (2017) 4 SLR 1153, the High Court held that the element of attributability was satisfied as long as it was shown that the officer’s neglect was one of the reasons for the commission of the offence by the body corporate. To prove neglect, it must be shown that the officer knew or ought to have known (given the circumstances and the nature and functions of his or her office) of the existence of facts requiring him or her to take steps that fall within the scope of the functions of his or her role to prevent the commission of the offence by the company, and that he or she had failed to take those steps.

Legal persons subject to criminal liability for money laundering may face parallel criminal, civil and administrative proceedings and actions.

Qualifying assets and transactions

Is there any limitation on the types of assets or transactions that can form the basis of a money laundering offence?

There are no limitations.

Money laundering offences under the CDSA are defined in relation to ‘property’, which is a term that includes money and all other forms of property, whether movable or immovable, and includes things in action and other intangible or incorporeal property, whether situated in Singapore or elsewhere (sections 2(1) and 3(5) CDSA). No value threshold is imposed.

Predicate offences

Generally, what constitute predicate offences?

Singapore has adopted a list approach when defining predicate offences. The list of predicate offences is set out in the First and Second Schedules of the CDSA. These include certain tax offences.

In addition, an overseas offence that corresponds to a local offence that is listed within the First or Second Schedules of the CDSA would also be considered to be a predicate offence. This is achieved by means of the CDSA defining the terms 'drug dealing’ and ‘criminal conduct’ to include, respectively, a foreign drug dealing offence and a foreign serious offence, which in turn are defined to refer to offences against a foreign law that consists of or includes conduct that, if it had occurred in Singapore, would have constituted a drug dealing offence or a serious offence, respectively. An act committed in a foreign country shall be presumed, until the contrary is proved, to constitute a foreign drug dealing offence or foreign serious offence under section 47A(3) of the CDSA where the prosecution can adduce evidence that a foreign drug dealing offence or foreign serious offence had indeed been committed in the foreign country. 

Defences

Are there any codified or common law defences to charges of money laundering?

Certain codified defences to charges of money laundering are provided for in sections 43 and 44 of the CDSA. It is a defence that (1) the defendant did not know and had no reasonable ground to believe that the arrangement was related to proceeds from drug dealing or criminal conduct or would facilitate the retention, control or use of such proceeds; (2) the defendant had intended to disclose his or her suspicion, and there is reasonable excuse for failing to do so; or (3) the defendant had disclosed his or her suspicion to the appropriate person designated by his or her employer for making such disclosures.

There are also provisions under the CDSA that provide protection from liability for money laundering if certain disclosures are made to the authorities (sections 43(3) and 44(3)). If a person discloses to an authorised officer his or her suspicion or belief that any property is derived from or used in connection with drug dealing or criminal conduct, he or she is protected from criminal liability for money laundering in respect of his or her acts if these are done with the consent of the authorised officer. Alternatively, if a person discloses his or her suspicion or belief to an authorised officer after he or she commits the act but the disclosure is made on his or her initiative and as soon as it is reasonable for him or her to do so, he or she is similarly protected from criminal liability. 

Section 40 of the CDSA contains a broader disclosure and protection mechanism that offers protection from money laundering offences to a person who files a suspicious transaction report (STR) under section 39 of the CDSA. Where a person or his or her officer, employee or agent provides information to the STRO as soon as practicable after acquiring the knowledge that obliges him or her to file an STR, he or she shall be deemed not to have been in possession of that information at any time. The effect of section 40 is, therefore, to remove the mental element of a potential money laundering charge, without which the offence of money laundering may not be made out.

In WBL Corp Ltd v Lew Chee Fai Kevin (2012) 2 SLR 978, the Court of Appeal noted that section 40 effectively exonerated a party that had filed an STR from potential liability for money laundering. This decision appears to have had an anomalous effect in that a party that has committed a money laundering offence could absolve itself of liability by filing an STR, even without having to rely on the disclosure and consent exception provided in section 44(3) or 44(4).

Apart from the above, there are general exceptions provided in the Penal Code that are available as defences in respect of any criminal prosecution.

Resolutions and sanctions

What is the range of outcomes in criminal money laundering cases?

The outcome of a money laundering case depends on the specific offence under which the prosecution has filed charges. Upon conviction for a money laundering offence under Part VI of the CDSA, natural persons are liable to a maximum fine of S$500,000 or imprisonment for a term of up to 10 years, or both, while legal persons are liable to a maximum fine of S$1 million or twice the value of the benefits of drug dealing or criminal conduct in respect of which the money laundering offence was committed, whichever is higher.

In addition to any criminal liability, a confiscation, restraint or charging order may also be made by the court in respect of realisable property. The term ‘realisable property’ includes any property held by the defendant, as well as any property gifted directly or indirectly by the defendant to a person and that is caught by the CDSA (section 2 CDSA).

Forfeiture

Describe any related asset freezing, forfeiture, disgorgement and victim compensation laws.

Confiscation orders

Upon conviction for one or more predicate offences, the court may, on the application of the Public Prosecutor, make a confiscation order against the defendant in respect of benefits derived by him or her from drug dealing (section 4 CDSA) or criminal conduct (section 5 CDSA) if it is satisfied that the benefits have been so derived. For this purpose, a person who holds any property or interest therein that is disproportionate to his or her known sources of income, the holding of which cannot be explained to the satisfaction of the court, is presumed, until the contrary is proven, to have derived benefits from drug dealing or criminal conduct.

A confiscation order is an order for the defendant to pay an amount of money assessed to correspond to the value of the benefit he or she derived from drug dealing or criminal conduct. The court will first determine the amount to be recovered from the defendant under a confiscation order, which will generally be the amount that the court assesses to be the benefit derived by the defendant. However, if the court is satisfied that the amount that might be realised from the confiscation order is less than the amount that it assesses to be the value of the benefits, then the amount to be recovered from the defendant under the confiscation order will be the amount that the court assesses might be realised. If the amount that might be realised is greater than the amount taken into account in making the confiscation order, the court is to issue a certificate giving its reasons, and, thereafter, an application can be made to increase the amount to be recovered under the confiscation order.

Confiscation orders operate as though they were a fine imposed by the court. In the case of a default of payment, the defendant may be subject to a term of imprisonment.

A third party that asserts an interest in any property for which a confiscation order is sought may make an application to the court, which may, if satisfied that the third party was not involved in the defendant’s drug dealing or criminal conduct and had acquired the property for sufficient consideration and without knowledge or reasonable suspicion of its illicit origins, make an order declaring the nature, extent and value of his or her interest in the property.

A confiscation order may still be made, even for a person that may have absconded if he or she is taken to have been convicted of drug dealing or a serious offence, as provided for under section 26 of the CDSA and if the court is satisfied on the evidence before it that the evidence would have warranted his or her conviction if it was unrebutted.

It is also possible for a court to make a substitute property confiscation order under section 29B of the CDSA if it is satisfied that the defendant had used or intended to use an instrumentality for the commission of the offence but the instrumentality is no longer available for confiscation. In such a case, the defendant is liable to pay the government an amount the court assesses to be the value of the instrumentality, as specified in the substitute property confiscation order.

In relation to organised crime activity, the Organised Crime Act 2015 (OCA) provides for a confiscation regime that is independent from the CDSA. Under section 61, material or financial gains from organised crime activity can be confiscated without the need for a criminal conviction. The Public Prosecutor can apply to the court in civil proceedings for a confiscation order, and the order may be granted if the court is satisfied, on a balance of probabilities, that the subject has carried out an organised crime activity and has derived benefits from the organised crime activity. For this purpose, the expression ‘organised crime activity’ refers to any activity carried out by a person in (or outside) Singapore that amounts to a serious offence specified in the Schedule to the OCA and is carried out at the direction of or in furtherance of the illegal purpose of a group that the person knows or has reasonable grounds to believe is an (locally linked) organised criminal group. The expression also includes an activity carried out by a person that amounts to an offence under Part 2 of the OCA. Part 2 contains a group of provisions that criminalise being a member of an organised criminal group, instructing or facilitating the commission of an offence by such a group, and recruiting members and expending property to support these groups.

Restraint orders and charging orders

To assist in the enforcement of confiscation orders, the General Division of the High Court of Singapore is empowered to make, upon application by the Public Prosecutor, a restraint order under section 16 of the CDSA or a charging order under section 17 of the CDSA, where proceedings for confiscation orders are contemplated. A restraint order serves to prohibit any person from dealing with realisable property, while a charging order (applicable to immovable property and to capital markets products) serves to secure payment of any amount payable under a confiscation order.

Where realisable property is held by a company that is in the process of winding up (whether voluntarily or compulsorily), the liquidator may not exercise its functions in relation to property that is subject to a restraint order made before the passing of the winding-up resolution or the making of the compulsory winding-up order (the relevant time), or any proceeds realised by the public trustee or a receiver appointed by the court. This is unless payment out of the property is made towards expenses properly incurred in the winding up of the property (section 24 CDSA).

After the relevant time has passed, the court may not exercise its power to make restraint orders and charging orders in relation to any realisable property held by the company if the effect of the orders would be to inhibit the liquidator from making distributions to the company’s creditors or to prevent the making of payments towards expenses incurred in the winding up of the property. To avoid doubt, charging orders made before the relevant time, as well as property subject to a restraint order made at the relevant time, remain enforceable.

Similar provisions on restraint orders and charging orders are provided under the OCA in support of confiscation orders made under the OCA.

Limitation periods on money laundering prosecutions

What are the limitation periods governing money laundering prosecutions?

As a general rule, prosecution for criminal offences is not subject to enforcement limitation periods. The court may, however, take into consideration delayed or protracted prosecution or enforcement as a factor in deciding a case.

Extraterritorial reach of money laundering law

Do the money laundering laws applicable in your jurisdiction have extraterritorial reach?

Yes, the CDSA has some extraterritorial reach. The concept of drug dealing encompasses local drug dealing offences and foreign drug dealing offences. Likewise, the concept of criminal conduct encompasses both local serious offences and foreign serious offences; therefore, an overseas predicate offence can form the basis for a prosecution in Singapore for money laundering.

Furthermore, the CDSA also applies to any property situated in Singapore or elsewhere; therefore, in confiscation proceedings where a court has to consider whether a defendant holds property or interests therein that are disproportionate to his or her known sources of income, the holding of which cannot be satisfactorily explained, it does not matter whether these are situated in Singapore or elsewhere.

Law stated date

Correct on

Give the date on which the above information is accurate

30 March 2020.