India tightens AML laws by widening definition of proceeds of crime

The Indian government has tightened the anti-money laundering (AML) laws by passing amendments to the Finance Bill, widening the ambit of the meaning of "proceeds of crime".

The government introduced eight amendments to clauses of the Prevention of Money Laundering Act 2002 (PMLA). One amendment broadens the definition of "proceeds of crime" to include not only property derived or obtained from a scheduled offence, but also that derived from any criminal activity on the basis of which a money laundering case has been filed. This will now be considered a "relatable offence". Another amendment ensures that where there are concurrent hearings or proceedings in different courts, the two cases cannot be clubbed together and treated as a single one.

The amendments are introduced through the Finance Bill, and are explanations to the PMLA's existing clauses, addressing grey areas, confusion or ambiguity surrounding the PMLA.

SEBI publishes revised guidance note on insider trading norms

In order to resolve difficulties in interpreting or applying provisions of the Prohibition of Insider Trading (PIT) norms, the Securities and Exchange Board of India (SEBI) published a revised guidance note on 5 July 2019 to provide more clarity on the requirements of maintaining a structured digital database of persons and entities with whom unpublished price-sensitive information (UPSI) is shared.

In the revised guidance note, the SEBI clarified that the requirement to maintain a structured digital database which contains the names of all such persons or entities with whom UPSI is shared, applies to listed companies, intermediaries and fiduciaries who handle UPSI of a listed company in the course of business operations. In addition, the SEBI clarified that the term "investment company" is intended to include only those non-individual corporate promoters of intermediaries or fiduciaries as designated person, whose main object or principal activity is investing in securities of other companies.

The guidance note on PIT norms was first published by SEBI on 24 August 2015 to assist in the interpretation or application of the provisions. The last amendment was made on 17 February 2016.

10-year jail term proposed for dealing in crypto-currency

According to the new draft "Banning of Cryptocurrency and regulation of Official Digital Currency Bill 2019", holding, selling or dealing in crypto-currencies could now lead to 10 years' imprisonment.

The draft bill has proposed a jail term of 10 years for anyone who "mines, generates, holds, sells, transfers, disposes of, issues or deals" in crypto-currencies. In addition, the bill has made the holding of crypto-currencies an offence to which bail would not be available. The banning of crypto-currencies has been endorsed by various government bodies including the Income Tax Department and the Central Board of Indirect Taxes and Customs due to the high risks of crypto-currencies being misused for money laundering. Despite the new draft bill, the government is currently in consultation with the Reserve Bank of India on launching its own digital currency, the digital rupee.


MAS extends AML/CFT requirements to insurers and payment service providers

The Monetary Authority of Singapore (MAS) has issued the "Guidelines on Prevention of Money Laundering and Countering the Financing of Terrorism – Direct General Insurance Business, Reinsurance Business, and Direct Life Insurance Business (Accident & Health Policies)" , together with a set of FAQs for the Guidelines.

Insurers are required to have in place clear and detailed anti-money laundering and countering the financing of terrorism (AML/CFT) policies and procedures that include customer due diligence and screening procedures; documentation of screening results; assessment, escalation and reporting of suspicious transactions; and frequency and recipients of AML/CFT related training. These Guidelines will apply to all insurers licensed under Section 8 of the Insurance Act and to all foreign insurers operating in Singapore under a foreign insurer scheme under Part IIA of the Insurance Act.

On 6 June 2019, the MAS also issued a Consultation Paper on proposed AML/CFT requirements which will apply to most payment service providers.

The relevant AML/CFT requirements are set out in the following Notices to be issued by MAS and come after the passing of the Payment Services Act on 14 January 2019 (see our previous e-bulletin here):

(a) Notice to Payment Services Providers (Specified Payment Services) on Prevention of Money Laundering and Countering the Financing of Terrorism (applies to all activities that carry money laundering/financing of terrorism risks except digital payment token (DPT) services); and

(b) Notice to Payment Services Providers (Digital Payment Token Service) on Prevention of Money Laundering and Countering the Financing of Terrorism (applies to DPT services).

We have prepared an e-bulletin providing an overview of the regulated activities, key requirements and exceptions under the AML/CFT Notices, DPT services and practical tips. The e-bulletin can be accessed here.

Executive penalised S$336,000 for insider trading

The non-executive vice-chairman (Raphael Tham) of Auhua Clean Energy (ACE), a company listed on the London Stock Exchange, has been penalised by the MAS for insider trading in the shares of ACE. The penalty was paid by Tham having admitted his breach under the Securities and Futures Act without a court action. A voluntary undertaking not to be a company director, nor to be involved in the management of a company for two years, was also imposed.

Singapore collaborates with OCBC to quicken financial crime detection

The Singapore law enforcement agencies announced a collaboration with OCBC Bank that will allow the former to more quickly detect and investigate financial crimes.

Project Poet, which stands for “Production Orders: Electronic Transmission”, is a solution which automates data retrieval from the bank to shorten turn-around time. Information that used to take up to three months to process will now be available to law enforcement agencies within one or two working days.

Project Poet also makes use of artificial intelligence and data analytics to improve Singapore's anti-money laundering risk management scheme.

333 counts for insider trading offences against three individuals

Pursuant to a release from the MAS, three individuals have been sentenced to imprisonment on 333 counts of insider trading offences. Among them, two were senior equity dealers accountable for executing trades. They generated the profit by front-running portfolio managers from First State Investment, conspiring to trade based on insider information tipped by intended orders from the said managers. A total of $1.8 million has been seized by the MAS during investigations following orders from The State Court of Singapore.

Directors' bribery charges disrupted parent's IPO

Investigations against three IG Aviation Singapore Pte Ltd (IGA) directors have disrupted its parent company, IG Logistics Group Pte Ltd's plan to seek a listing on the Singapore Exchange (SGX). The three directors were charged with bribery, which caused the parent company to shelve the bid to raise public funds for expansion. Investors were not exposed to the risk of losing their money as the company's shares would have plummeted after news on the suspected illegal acts. Following this, IGA changed its name to Xpress Aviation Pte Ltd and SGX undertook more thorough measures to ensure that IPO review and due diligence process is robust.

25 years and 10 months imprisonment for $41m embezzlement

Ewe Pang Kooi, a certified public accountant was convicted in March of 50 charges of criminal breach of trust as an agent. For over a decade, Ewe siphoned close to $41 million from his clients to feed his gambling addiction.

In sentencing, the judge noted the large scale of the misappropriation involving funds of 22 companies and an individual, Ewe's careful planning in devising a complex scheme of payments, and the steps he took that allowed the embezzlement to go undiscovered.

On 16th July 2019, Ewe was sentenced to a jail term of 25 years and 10 months.

Singapore eyes on shell companies to fight money laundering

The MAS has made clear its supervisory expectation on banks for pro-active detection and disruption of illicit finance through shell companies.

This is prompted by the increase in Singapore-incorporated shell companies being used as fronts to channel illicit cash flows. The regulator acknowledged that although shell companies have legitimate business purposes, they can be abused for criminal purposes.

Jailed men receive ban for insider trading

Three Singaporean men who ran an illegal share trading scheme were issued with prohibition orders which bar them from any regulated activity under the Securities and Futures Act (SFA). They are also banned from taking part in the management, acting as a director or becoming a substantial shareholder of any capital market services firm under the SFA. It is reported that the illegal trading scheme had netted each of them more than SGD 2 million (USD 1.4 million).

The trading scheme persisted for seven years and involved front-running pending trades using confidential information obtained through their professional positions. They were sentenced to jail ranging from 20 to 36 months for committing insider trading offences in July 2019. This was the first front-running case prosecuted as an insider trading offence in Singapore.


New reporting requirement for digital asset trading

Parties involved with digital asset transactions worth above 5 million baht will have to report their trades to the Anti-Money Laundering Office, according to acting secretary-general Preecha Jaroensahayanon.

This new reporting requirement is expected to take effect in early August.

On 15th July 2018, the Anti-Money Laundering Office (Amlo), the Department of Special Investigation and Thailand's Securities and Exchange Commission (SEC) signed a memorandum of understanding on investigation and information collection for wrongdoing falling under the digital asset royal decree, aiming to enhance the speed and efficiency of cases pending investigation.

The SEC also signed a separate memorandum of understanding in June with the Central Institute of Forensic Science to enhance investigation efficiency by using forensic science.

Ministers jailed for embezzlement

The former deputy education minister, Chavarin Latthasaksiri was sentenced to a two-year prison sentence by Thailand's Supreme Court for the theft of 11 million baht.

Chavarin was convicted of embezzling US$352,781 (11.43 million baht) for deliberately changing the details of a recipient bank account and misdirecting the sum into his own account. Despite being convicted, Chavarin adamantly denied having embezzled the sum, claiming that the transferred money he received was to be used for the construction of a Buddhist statute for the Buddhist culture association that he chaired.

Senior anti-corruption official accused of hiding millions in assets

The National Anti-Corruption Commission Deputy Secretary, Prayat Puangjumpa, was charged with concealing assets. The undeclared assets were held under his wife's name including a USD 6.9 million apartment in London. The official claims that the charges were based on a misunderstanding as his wife held the assets on behalf of others.

Members of Parliament charged over alleged corruption linked with construction project

The National Anti-Corruption Commission has charged three Palang Pracharath Party Members of Parliament alleging interference with budgetary matters to divert funds toward the construction of futsal fields at schools in the Northeast.


Party founder and members charged with illegal gains

Founder of the China Unification Promotion Party (CUPP), Chang An-le (張安樂), as well as five other CUPP members, have been charged with illegally taking political donations, embezzlement, tax evasion and forgery of financial documents.

Airport official and engineer detained over kickback scandal

An official and an engineer from the Taoyuan International Airport Corp. (TIAC) have been arrested on allegations of collusion, bid-rigging and receiving kickbacks from companies involved in the on-going expansion programme at the airport.

The individuals have been arrested under the Anti-Corruption Act and Government Procurement Act on allegations that they had taken kickbacks from companies seeking to take part in the expansion programme at the airport's second terminal and assisting them in winning bids. The biggest kickback received by the pair was reported to be NT$6 million on a single project. The arrests followed raids by prosecutors and law enforcement agents at 27 locations.

Both have been detained on the basis that they pose a flight risk and pose a risk of tampering with evidence. The Department of Government Ethics has announced plans to launch an awareness campaign to remind employees of the importance of following regulations in handling government procurement projects and complying with anti-corruption guidelines set by the Ministry of Justice.

Taiwan earns promotion to most favourable AML status

The Asia/Pacific Group on Money Laundering (APG) members have approved a previous peer review, which would officially put Taiwan in the most favourable "regular follow-up" category in the mutual evaluation.

Earlier in June this year, the APG issued a preliminary report that placed Taiwan on the "regular follow-up" list after a third round of peer assessment by group members. At the 22nd annual meeting of APG held from August 18 to 23 in Canberra, the assessment was formally approved. This means that Taiwan will officially be placed in the top rank amongst the 41 APG members for anti-money laundering efforts by the government.

The APG undertakes a "mutual evaluation" or peer review exercise in order to assess the degree to which its members comply with international standards in combating money laundering and terrorist financing. The various categories of status from highest to lowest are "regular follow-up", "enhanced follow-up", "transitional follow-up" and "non-cooperation". Taiwan's status has been elevated to "regular follow-up" following its efforts in successfully securing seven "substantial" ratings out of the eleven factors used in assessing a country's effectiveness in fighting money laundering and terrorist financing.


Trade misinvoicing causes loss of US$ 6.5 billion

Global Financial Integrity (GFI) recently published a comprehensive study estimating the amount of revenue losses Indonesia incurred as a result of trade misinvoicing in 2016. The organisation estimates that the figure is approximately US$ 6.5 billion.

Trade misinvoicing predominantly occurs in two ways – over-invoicing and under-invoicing, which can result in government losses and illicit inflows and outflows from a country. Trade misinvoicing could be done as a way to launder money or to avoid paying corporate income tax.

GFI concluded the report by providing recommendations for curtailing revenue losses associated with trade misinvoicing and recapturing revenue needed to reach United Nation's Sustainable Development Goals (SDGs).

Six years imprisonment for DPR deputy speaker for bribery

Indonesia House of Representatives deputy speaker and Senior national Mandate Party politician, Taufik Kurniawan was found guilty of violating Article 12a of Law No. 31/1999 on corruption by the Semarang Corruption Court for embezzling Rp 3.65 billion (USD 255,000) from the revised 2016 national budget and Rp. 1.2 billion (USD 84,000) from the allocation funds from the revised 2017 national budget.

He was sentenced with 6 years' imprisonment and a fine of Rp 200 million (USD14,000) and ordered to return the embezzled funds to the state. His political right to run for office was revoked for a period of three years commencing on completion of his term of imprisonment.


Amendment to Anti-Corruption Act 2009 takes effect on 1 June 2020

We have previously reported on the new amendment to the Malaysian Anti-Corruption Act 2009, in particular, the introduction of Section 17A which penalises commercial organisations for corrupt acts by associated persons, subject to a reasonable procedures defence.

The amendment obtained royal assent on 27 April 2019 and will take effect on 1 June 2020. In light of this, the Malaysian Anti-Corruption Commission (MACC) launched the Guidelines on Adequate Procedures on 10 December 2018. The Guidelines largely echo the Adequate Procedures Guidance issued by the UK Ministry of Justice for the UK Bribery Act 2010.

Ministers to declare asset or subject to jail

Following a unanimous decision from Malaysia's Dewan Rakyat (Lower House of Parliament) that requires all members of parliament (MPs) to declare their assets, all MPs must declare their assets apart from their wife or husband, children as well as trustee holders made under statutory declaration. The statutory declaration would then be sent to the chief commissioner of the MACC for investigation.

Any MPs who fail to comply will be referred to the Parliamentary Rights and Privileges Committee for violating the rights and privileges of the house. If an MP is found to have made a false declaration, he or she will be subject up to three years in jail and fine.

Update on 1MDB

Former Malaysian prime minister, Najib Razak, will be facing several trials in connection to 1MDB starting on 19 August 2019. Najib Razak is charged with 42 criminal charges for receiving gratification and money laundering in relation to 1MDB.

Najib Razak's stepson, Riza Aziz - a co-founder of Hollywood production company Red Granite Pictures which was behind the Oscar-nominated film, The Wolf of Wall Street - is concurrently charged with five counts of money laundering, involving approximately USD 248 million in 1MDB funds. Aziz pleaded not guilty to all the charges and was granted bail.

Malaysian prosecutors allege that Aziz appropriated $248m linked to state investment fund 1MDB.

Aziz pleaded not guilty to all the charges and was granted bail at one million ringgit.

US prosecutors have said Red Granite financed three films using funds they suspect were stolen from 1MDB.

It is also reported that compliance costs, which have risen 9 to 10% in the past 24 months in Southeast Asia, are set to increase further as financial institutions and regulators continue to grapple with the fallout of the 1MDB scandal, according to LexisNexis Risk Solutions.

US prosecutors are also currently seeking to sell luxury homes owned by Aziz.

SCM to implement anti-corruption action plan

The Securities Commission Malaysia (SCM) has announced that it will implement an anti-corruption action plan with the main objectives of supporting the National Anti-Corruption Plan (2019-2023), and with the view to improving Malaysia’s ranking in the biennial Corporate Governance Watch survey by the Asian Corporate Governance Association.

The Cabinet Special Committee on Anti-Corruption (JKKMAR) approved the SCM’s recommendations to require listed companies to put in place anti-corruption measures, and for the SC to develop a framework to promote the effective discharge of directors’ responsibilities. JKKMAR also agreed that several other measures proposed by the SCM are to be discussed further with the Debt Management Office.

In view of the corporate liability provision in the Malaysian Anti-Corruption Commission Act 2009 coming into effect in June 2020, the SCM urged listed companies to prepare themselves and take the necessary measures to establish an effective anti-corruption framework in line with the Guidelines on Adequate Procedures.

Malaysia plans increased anti-money laundering enforcement

Malaysia is in the process of finalising revisions to guidelines relating to Anti-Money Laundering and Counter Financing of Terrorism compliance. Public consultation is planned to open in September. The Bank Negara Malaysia has said it will increase resources dedicated to supervision and enforcement and has plans to pursue more deterrent action. This is part of a focus on AML compliance following the 1MDB scandal.

Joint raid against illegal Money Services Business Operators

Bank Negara Malaysia, the Royal Malaysia Police and the Immigration Department Malaysia have co-operated to combat illegal money services business operators who were suspected of assisting illegal remittance activities for foreign customers or business traders.

The joint operation has resulted in freezing 35 bank accounts and seizure of cash and properties amounting to RM 4 million (approximately USD 950,000).

It was suspected that suspects were carrying out money services business without a license and engaging in money laundering.

Executives face jail terms and heavy fine for money laundering and illegal operation

According to the statement of Bank Negara Malaysia (BNM), MGSB Berhad and four of its directors pleaded guilty for their charges under the Financial Services Act (FSA) and the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001 (AMLA) for illegal deposit taking without licence under the FSA and money laundering.

For the charges under the FSA, MGSB Berhad was fined RM 5 million, and 3 of the directors were fined RM 1million (USD 237,000) each. 2 of the directors were also punished for 2 years' imprisonment while another 1 director was sentenced for 1 year imprisonment.

A heavier fine was imposed for the charges under AMLA, where MGSB Berhad was fined RM 288 million (USD 68.4 million) and 3 directors were each sentenced to two years' jail and fined a total of RM 288 million (USD 68.4 million) (subject to an additional year imprisonment if not paid). Another director was sentenced to 2 years' jail and fined a total of RM 298 million (USD 70.7 million) (also subject to an additional year imprisonment if not paid).


Vietnam issues guide to money laundering regulations

A Resolution (No 03/2019/NQ-HDTP, dated May 24, 2019) to guide the implementation of the 2015 Penal Code's Article 324 on money laundering has been issued by the Supreme People's Court and the State Bank of Vietnam. The Resolution will come into force on 7 July 2019.

Early in 2017, the Penal Code was amended and eventually came into force on 1 January 2018. Although a new money laundering provision was introduced in the Penal Code through this amendment, the lack of guidance in anti-money laundering practice is hindering the provision being fully utilised. This Resolution aims to provide clearance for content and guidance on Vietnam's anti money laundering regime.

Shipbuilding tycoon sentenced to 13 years for embezzlement

The Court of Hanoi has sentenced Nguyen Ngoc Su, the former board chairman of Vietnam Shipbuilding Industry Group (Vinashin), to 13 years' imprisonment for abusing his position and power by appropriating assets. Two other executives, Truong Van Tuyen and Pham Thanh Son, were also sentenced to jail for seven and six years respectively for the same charges. The accused were convicted for their conduct in depositing Vinashin capital into Ocean Bank without the Prime Minister's approval and reportedly pocket $4.5 million.

Vietnam on anti-corruption spree

Hanoi city has built up a non-corruption culture among its party members and officials according to the chair of the Hanoi People’s Committee, Nguyen Duc Chung, at the national online conference on June 27. The Hanoi Party Committee has issued a programme, called Programme 07, on improving the effectiveness of anti-corruption work for the period of 2016 to 2020.

Separately at a conference in Hanoi on 9th July, minister of industry and trade, Tran Tuan Anh called for a stricter penalty for origin fraud. The prevalence of origin fraud affects the execution of free trade agreements and the development of sustainable trade, according to Anh.

Under the plan, the government will tighten the management of import, export and foreign investment activities and raise awareness and the effectiveness of meeting regulations on trade remedies, product origins and customs procedures, as well as mete out strict punishment for any violation.

From July 2019, the 2018 Law on Anti-Corruption has been in force, which expands the scope of anti-corruption activities to the non-state sector. Under the law, cadres, civil servants and public employees have to declare their assets and incomes. Untrue declarations of asset and income information are subject to warning or dismissal.

Jailed senior banker faces further criminal investigation

A former Vietnamese banker currently serving a 30-year jail term for embezzlement will be investigated for abusing trust to misappropriate property. It is alleged that Hua Thi Phan abused her position as majority shareholder at Vietnam Construction Bank to sell the Bank real estate projects at inflated prices. This is alleged to have resulted in misappropriation of approximately USD 56 million and contributed to the need for a bailout by the State Bank of Vietnam.