27 September 2018

From 13 September 2018 to 12 October 2018, the Ministry of Law (“MinLaw”) is inviting feedback on the proposed anti-money laundering and countering the financing of terrorism (“AML/CFT”) regulatory regime for precious stones and metals dealers (“PSMD”) in Singapore.

Currently, PSMDs are subject to the cash transaction reports (“CTR”) requirements set out in Part VIB of the Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act and the Corruption, Drug Trafficking and Other Serious Crimes (Cash Transaction Reports) Regulations 2014 (“Regulations”). They are required to, among other things, conduct customer due diligence (“CDD”) measures before entering into any cash transactions exceeding S$20,000. However, unlike other designated non-financial sectors, PSMDs do not have to meet other AML/CFT requirements, such as conducting assessment of the money laundering and terrorism financing (“ML/TF”) risks.

MinLaw proposes to enact a new law to establish an AML/CFT regulatory regime for PSMDs to, among others, level up AML/CFT standards in the PSMD sector.

Scope of the proposed PSMD AML/CFT regulatory regime

The proposed regime will apply to a PSMD, namely an individual person or entity who, in the course of the person’s business, manufactures, sells, offers for sale, imports for sale or possesses for sale, any precious stone, metal or product. Auctioneers and providers of trading platform services for other PSMDs will also be regulated.

Registration with AML/CFT Registrar under MinLaw

It is proposed that all PSMDs will be required to register with the AML/CFT Registrar under MinLaw. Registration is expected to commence in the second quarter of 2019. As part of the registration process, PSMDs will be required to, among other things:

  • submit a prescribed list of basic information on their business (e.g. business particulars (registered name, UEN, registered address), directors, substantial shareholders and beneficial owners (if different from shareholders)); and
  • declare if they will or will not conduct cash transactions exceeding S$20,000 during the period of registration.

Each registration will be granted for three years.

AML/CFT requirements under the proposed PSMD AML/CFT regulatory regime

All PSMDs will be required to implement and comply with the following requirements when conducting transactions (where payment is partly or wholly made in Singapore) involving precious stones, metals or products:

  • To perform CDD when:
    • carrying out cash transactions exceeding S$20,000;
    • there is suspicion of ML/TF; or
    • there are doubts about the veracity or adequacy of previously obtained customer identification data.
  • To perform enhanced due diligence for customers whom the PSMD assesses to be of higher ML/TF risk (e.g. politically exposed persons and their family members and close associates, persons from higher risk countries, etc.);
  • To keep records of all cash transactions exceeding S$20,000 for five years, including any relevant information obtained through CDD measures;
  • To file suspicious transaction reports (“STRs”) when there are reasonable grounds for suspecting that any property is linked to criminal activity; and
  • To file CTRs for cash transactions exceeding S$20,000.

PSMDs will be required to take appropriate steps to identify, assess and understand the ML/TF risks faced by the business, and document these risk assessments and develop and implement internal policies, procedures and controls (“IPPC”) to monitor, manage and mitigate the risks identified in the risk assessment.

PSMDs which conduct cash transactions exceeding S$20,000 will be required to:

  • Include an independent audit function as part of their IPPC;
  • Implement group-wide programmes against ML/TF; and
  • Ensure that foreign branches and majority-owned subsidiaries apply AML/CFT measures consistent with Singapore’s requirements if the host country’s requirements are less strict.

Exemptions from the proposed PSMD AML/CFT regulatory regime

Pawnbrokers will not be subject to the proposed PSMD AML/CFT regulatory regime but will be required to file CTRs for cash transactions exceeding S$20,000.

Foreign PSMDs (namely dealers which are not registered as businesses in Singapore, but conduct business in Singapore on a temporary basis, for example, during a trade fair) will also not be subject to the proposed PSMD AML/CFT regulatory regime. However, if they conduct a transaction where payment is partly or wholly made in Singapore, they are required to:

  • Perform CDD during the transaction;
  • Keep records of the CDD transactions and relevant documents;
  • File STRs if the trade or business is conducted physically in Singapore; and
  • File CTRs for cash transactions exceeding S$20,000.

Reference materials

The following materials are available on the MinLaw website www.mlaw.gov.sg:

 

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