Legislation introducing AML/CFT regime for precious stones and precious metals dealers in force from 10 April 2019
29 April 2019
On 10 April 2019, the Precious Stones and Precious Metals (Prevention of Money Laundering and Terrorism Financing) Act 2019 (“Act”) took effect to establish an anti-money laundering and countering the financing of terrorism (“AML/CFT”) regulatory regime for precious stones and precious metals dealers (“PSMD”) in Singapore. The Act levels up AML/CFT standards in the PSMD sector.
Previously, PSMDs were subject to the cash transaction reports (“CTR”) requirements set out in the Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act (“CDSA”) and its Regulations. They were 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 did not have to meet other AML/CFT requirements, such as conducting assessment of the money laundering and terrorism financing (“ML/TF”) risks.
Scope of the PSMD AML/CFT regulatory regime
The Act provides for the regulation of any person who carries on a business of dealing in precious stones, precious metals, precious products or asset-backed tokens (“regulated dealing”). Asset-backed tokens refer to instruments backed by precious stones, precious metals or precious products.
The Act also regulates any person who carries on a business as an intermediary for such regulated dealing and this includes an auction house and a provider of trading platform services for PSMD. Pawnbrokers, which are already subject to AML/CFT provisions under the Pawnbrokers Act, are excluded from the purview of the Act.
Registration with Registrar
A person who carries on a business of regulated dealing or business as an intermediary for regulated dealing (“regulated dealer”) is required to register with the Registrar of Regulated Dealers (“Registrar”), unless exempted.
Registrations for regulated dealers commenced on 10 April 2019. A person who was carrying on the business of regulated dealing, or business as an intermediary for regulated dealing, immediately before 10 April 2019, may continue to do so without being registered until 9 October 2019. The Act provides for a transition period of up to six months to allow sufficient time for regulated dealers to register with the Registrar.
All regulated dealers must obtain a Certificate of Registration by 9 October 2019. After 9 October 2019, it will be an offence to act as or hold out to be a regulated dealer without being registered.
AML/CFT measures applicable to regulated dealers
Regulated dealers are required to implement and comply with the following requirements when conducting any part of their business in Singapore involving precious stones, precious metals or precious products:
- To perform CDD measures under prescribed circumstances, in addition to the existing requirement to do so for cash transactions above S$20,000;
- To submit a copy of the CTR to the Registrar, in addition to existing requirements to file a CTR;
- To keep records of transactions where CDD measures are performed, and information obtained through these CDD measures;
- To submit a copy of the information of suspicious transactions to the Registrar, in addition to the existing requirement already under the CDSA to disclose suspicious transactions and also under the Terrorism (Suppression of Financing) Act to report terrorism financing information.
Regulated dealers are required to implement adequate programmes and measures to prevent ML/TF, such as the introduction of internal policies, procedures, and controls. The Act adopts a risk-based approach to prevent ML/TF. Therefore, regulated dealers are only required to develop procedures to address the risks identified in their risk assessment, in addition to the principal obligations prescribed.
Registered regulated dealers will receive the latest guidance and circulars on the requirements of the PSMD AML/CFT regulatory regime.
Contravention of these requirements under the Act is punishable by a range of administrative and criminal penalties, including the suspension or cancellation of registration.
Exemptions from the Act
Regulated dealers who are already covered under other AML/CFT regimes are exempted from the Act or certain provisions of the Act. For example, all financial institutions licensed, approved, registered or regulated by the Monetary Authority of Singapore (“MAS”) are exempted from registration and AML/CFT requirements under the Act as they are already subject to MAS regulation.
The following materials can be viewed on the Ministry of Law website www.mlaw.gov.sg or by clicking the titles below:
- Ministry of Law press release: Commencement of Precious Stones and Precious Metals Dealers (Prevention of Money Laundering and Terrorism Financing) Act on 10 April 2019
- Ministry of Law brochure on registration of precious stones and precious metals dealers
The following materials can be accessed from the Singapore Statutes Online website sso.agc.gov.sg:
- Precious Stones and Precious Metals (Prevention of Money Laundering and Terrorism Financing) Act 2019
- Precious Stones and Precious Metals (Prevention of Money Laundering and Terrorism Financing) Act 2019 (Commencement) Notification 2019