Various new offences have been prescribed as "serious offences" under the Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act with effect from 3 June 2015. Several of these newly prescribed serious offences--including fraudulent trading under the Companies Act and sanctions violations under, amongst others, the United Nations (Sanctions - Iran) Regulations 2014---have important implications for banks, financial institutions, directors, and employees of companies.
Clients should note that these changes to the AML/CFT regime would make it necessary to file Suspicious Transaction Reports where they suspect fraudulent trading, sanctions violations, or any of the other newly prescribed serious offences. This is because the effect was to essentially make the enumerated offences reportable offences under section 39(1) of the Corruption, Drug Trafficking and other Serious Crimes (Confiscation of Benefits) Ad as from 3 June 2015.
Of the newly prescribed "serious offences" listed in the Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act (Amendment of First and Second Schedules) Order 2015 ("Order"), we would highlight the following in particular:
- Companies Act
- Section340(5):Fraudulent trading by responsible person
- Section 404(3): Obtaining payment of moneys, etc., to company by false promise of officer or agent of company
- Section 406(a): Fraud by officer of company to induce person to give credit to the company
- Employment Agencies Act
- Section6(4):Carrying on employment agency,or performing employment agency-related work or activity, without valid licence
- Employment of Foreign Manpower Act
- Section 22A(2):Restrictions on receipt,etc., moneys in connection with employment of foreign employee
- Section 228(1):Obtaining pass for foreign employee for non-existent trade or business and failing to employ the foreign employee
- IncomeTax Act
- Section 37J(3):Giving false information to Comptroller of Income Tax,etc.,to obtain,or assist an other person to obtain,cash payout or PIC bonus (or both),
- Section 37J(4): Falsifying records or using contrivances, etc., to obtain, or assist another person to obtain, cash payout or PIC bonus (or both), etc.
- Monetary Authority of Singapore Act
- Section 27A(5):Failure or refusal to comply with direction,or contravention of regulations,issued or made to discharge Singapore's obligation virtue of decision of Security Council the United Nations.
Banks and financial institutions might need to consider whether their internal processes need to be updated accordingly. The inclusion of fraudulent trading under section 340(5) of the Companies Act should be particularly noted. Fraudulent trading for the purposes of section 340(5) arises where, among other things, "any business of the company has been canied on with intent to defraud creditors. This might include situations where a company is in financial diflicuties and carries on business knowing that creditors cannot reasonably expect to be repaid. In considering this, it should be noted that the obligation to report under section 39(1) arises, among other things, where a person has reasonable grounds to suspect that any property was used in connection with the specified serious offence.
With regards to sanction violations, in addition to specifying the commission of an offence under section 27A(5) of the Monetary Authority of Singapore Act, the Order also specifies breaches of the following to be predicate offences:
- United Nations (Anti-Terrorism Measures) Regulations;
- United Nations (Freezing of Assets of Former President of Liberia and Connected Persons) Regulations 2004;
- United Nations (Freezing of Assets of Persons - Coted'lvoire) Regulations 2006;
- United Nations (Freezing Assets of Persons - Democratic Republic the Congo) Regulations 2006;
- United Nations (Freezing Assets of Persons - Sudan) Regulations 2006;
- United Nations (Sanctions - Democratic People's Republic of Korea) Regulations 2010; and
- United Nations (Sanctions - Iran) Regulations 2014.
Employees and directors of companies involved in the prohibited practices might possibly also come under an obligation to report under section 39(1). even if they are not themselves involved in the prohibited practices but are simply aware of them or suspect them of having occurred.
The First and Second Schedules of the Mutual Assistance in Criminal Matters Act have been similarly amended with effect from the same date pursuant to the Mutual Assistance in Criminal Matters Act (Amendment of First and Second Schedules) Notification 2015.