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Second Reading Speech for the Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act
Posted on Wednesday, September 19, 2007 - 07:00 PM

The text of the Second Reading Speech for the Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act by Associate Professor Ho Peng Kee, Senior Minister of State for Law and Home Affairs n Parliament is below.

1. Mr Speaker, Sir, I beg to move that the Bill be now read a second time.

INTRODUCTION

2. Sir, in 1999, the Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act, or CDSA, was created with the amalgamation of the Drug Trafficking (Confiscation of Benefits) Act and the Corruption (Confiscation of Benefits) Act. The CDSA is the primary instrument to criminalise the laundering of benefits derived from corruption, drug trafficking and other serious crimes, as well as to allow for the investigation and confiscation of such benefits.

3. Since 1999, when the Act was first introduced, the global security climate has undergone significant changes. There is an urgent need for us to address the increasingly complex challenges posed by the abuse of our financial systems by terrorists and money launderers. The devastating 9/11 attacks underscores the urgent need for Governments around the world to implement measures to suppress terrorist financing as part of the global effort to combat terrorism. At the same time, law enforcement agencies worldwide are combating the financial aspects of crime which have also become more complex due to rapid advances in technology and the globalisation of the financial services industry.

4. To keep pace with these changes, MHA reviewed the CDSA to update and amend some of the provisions. These amendments will enable the Commercial Affairs Department or CAD to carry out its functions more effectively to meet these new and demanding challenges.

5. The amendments cover three broad areas. First, to enhance our current anti-money laundering and counter-terrorism financing regime; second, to enhance anti-money laundering measures; and third, to augment the Suspicious Transaction Reporting or STR regime. At the same time, my Ministry will also take the opportunity to streamline and regularise our current ground practices. I will now touch on the key amendments proposed in this Bill.

Key Amendments

Cash Courier Regime

6. In 1991, Singapore joined the Financial Action Task Force on Money Laundering (FATF) to demonstrate that we are a committed and responsible partner to the international initiatives to combat crime. FATF is an inter-Governmental body formed in 1989 by the G-7 to combat money laundering globally. In the aftermath of the 9/11 terrorist attacks, the FATF introduced 9 Special Recommendations to deny terrorists’ access to the international financial system.

7. One of these Special Recommendations introduced in October 2004 requires countries to implement a Cash Courier regime. After studying the Cash Courier regime implemented in other FATF member countries such as the United States and Australia, we are now ready to implement a similar requirement in Singapore to enhance our counter-terrorism and anti-money laundering measures.

8. Clause 11 of the Bill makes it mandatory for anyone physically carrying currency and bearer negotiable instruments or CBNI, above S$30,000, into or out of Singapore, to declare this to the authorities at the checkpoints. The Declaration forms will be made available on board planes, ferries and cruise ships entering Singapore, as well as at locations such as all our checkpoints, branches of Singapore Post and Neighbourhood Police Centres. But let me say that the new regime is not meant to be a form of currency control as travellers are entitled to bring in or out as much CBNI as they desire so long as an accurate declaration is made in the appropriate circumstances.

9. The threshold amount of S$30,000 is based on the recommendation by the FATF, and includes not only currency in circulation, but also bearer negotiable instruments such as travellers cheques, money orders, cheques, bonds and promissory notes.

10. A bearer negotiable instrument is one that allows any person holding any of the instruments mentioned, to receive the monetary value stated in it. Hence, anyone who brings in or leaves Singapore with any instruments that are indorsed without restriction, or made out to a fictitious payee, or with the payee’s name omitted, for example, a signed cheque with the amount filled in but with the payee’s name left blank, or otherwise payable to order or bearer, must declare it to the ICA officers before leaving or entering Singapore. Hence, for clarity, a crossed cheque made payable to a specific person with the word “bearer” deleted is not considered a bearer negotiable instrument because only the person named on the cheque can receive the amount stated on it.

11. The new measure would be non-discriminatory and will be imposed on all travellers, including citizens, residents and foreigners, entering and exiting the country. The penalties for non-declaration and false declaration are a maximum fine of S$50,000 or a term of imprisonment of up to 3 years or both. However, I would like to reassure the House that my Ministry will work with the relevant agencies to educate the public and all travellers arriving and departing at our checkpoints before the new law takes effect.

12. The obligation to make a declaration would also apply to entities that send and receive CBNI above S$30,000 through the postal system and cargo. These measures serve to ensure that no checkpoints in Singapore would be vulnerable to being exploited for the movement of CBNI for illicit purposes.

13. In addition, entities in Singapore that receive more than S$30,000 in CBNI, and know that such CBNI was directly moved to them from overseas, would also have to make a declaration. Examples of such recipients would be those who receive CBNI via cargo and post, or have made arrangements to receive CBNI from cash couriers, prior to the physical movement of CBNI into Singapore. The declaration in such instances can be made to the Commercial Affairs Department.

14. The reporting obligation of recipients applies only to the first recipient and does not extend to the second or subsequent recipients.

15. CAD has briefed the various stakeholders such as the Association of Banks in Singapore, Money Changers Association, National Association of Travel Agents Singapore, Singapore Aircargo Agents Association, Singapore Logistics Association, Singapore Business Federation, etc of this new requirement and will also be providing more operational details to the public in the next few weeks. The new regime will come into force on 1 Nov 07.

Money Laundering Offences

16. Money laundering is a problem of global proportions. Unchecked, money laundering can undermine the rule of law and legal systems, erode financial markets’ integrity and damage countries’ reputations. Money laundering is not only a law enforcement problem; it poses a serious national and international security threat as well.

17. Mr Speaker, to further enhance Singapore’s overall anti-money laundering and counter terrorism financing regime and to enable CAD to investigate such cases more effectively, my Ministry proposes to criminalise the “acquisition” and “possession” of property known to be derived from predicate offences.

18. Clauses 9 and 10 will amend sections 46 and 47 to enable CAD to investigate into and prosecute anyone who is only involved in the receipt and onward transmission of property derived from serious offences, as well as confiscate proceeds of crime in the possession of a third party. The new offences would also enable us to comply with the obligations under the Vienna and Palermo Conventions, and in line with the recommendations by FATF.

19. Sir, given today’s global security climate, my Ministry proposes to increase the penalties for money laundering offences in the CDSA. Currently, money laundering offences carry a maximum term of imprisonment of 7 years and/or fine of up to only $200,000, and it applies to either a corporate entity or legal person. To deter the abuse of Singapore’s financial system, clause 17 will raise the fine for money laundering offences to a maximum of $500,000 for individuals, and a maximum of S$1 million for such offences committed by institutions/corporations. This brings us in line with penalties imposed for similar offences in other financial jurisdictions such as Hong Kong and Switzerland, where the penalties for money laundering offences are also about S$1 million.

Suspicious Transaction Reporting

20. Sir, in 1999, section 39 was created in the CDSA to make it mandatory for all persons, including financial and non-financial institutions, to report suspicious financial transactions, as long as the person knows or has reason to suspect that any property is directly or indirectly connected to criminal conduct, and the knowledge or suspicion arose during the course of the person’s trade, profession, business or employment. However, some have misinterpreted this section to mean that the suspicion must relate to a specific predicate offence under the CDSA before it is reportable. This is not necessary. A suspicious transaction report should be made when there is knowledge or reason to suspect that something is amiss with a particular transaction, and there is no requirement to link this to a specific CDSA predicate offence. A suspicious transaction report is not a specific complaint or allegation of criminal wrongdoing.

21. To correct this misinterpretation, clause 6 will amend section 39 to clarify that the reporting obligation would be triggered so long as there are reasonable grounds to suspect that any property represents the proceeds of, or was or is intended to be used in connection with, any act which may constitute drug trafficking or criminal conduct. Thus, the duty to make a report under the section will arise if, for example, a person reasonably suspects the property to be the proceeds of any offence, so long as the possibility that they may be the proceeds of a drug trafficking offence, serious offence, foreign drug trafficking offence or foreign serious offence cannot be ruled out.

22. Clauses 6 and 7 would also make clear that STR makers would be protected by law as long as the STRs are lodged in “good faith”. The level of protection accorded to STR makers, including legal persons, would be raised to the level similar to informers, as found in the Misuse of Drugs Act and the Prevention of Corruption Act.

23. Sir, everyone has a role in upholding and maintaining the rule of law and the reputation and integrity of Singapore’s financial sector. The due diligence of Suspicious Transaction Reporting by financial and non-financial institutions has paid dividends in our fight against crime.

24. CAD has successfully detected many instances of crime from STRs. In certain instances, CAD was able to detect crimes that were on-going, where the victims were unaware that they have been affected. The proceeds of crime were successfully seized and restored back to the victims, whenever there were identifiable victims.

25. Hence, to send a strong signal to highlight the importance of STRs in Singapore’s overall anti-money laundering and counter-terrorism financing regime, clause 6 will amend section 39(2) to double the maximum fine for non-disclosure of a STR from the current $10,000 to $20,000.

Other Amendments

26. My Ministry has also taken this opportunity to make other administrative and technical amendments to clarify and regularise current ground practices.

CONCLUSION

27. Combating money laundering and terrorism financing are complex and dynamic challenges for all Governments. Indeed, the global nature of such activities requires law enforcement agencies to constantly benchmark their security initiatives against global standards. International cooperation is also necessary to reduce the avenues available to criminals and terrorists to launder their criminal proceeds and further their criminal activities.

28. Mr Speaker, sir, I beg to move.

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