Speech by Minister of State, Ministry of Law and Ministry of Transport, Mr Murali Pillai SC, on the Second Reading of the Mutual Assistance in Criminal Matters (Amendment) and Other Matters Bill

11 November 2024 Posted in Parliamentary speeches and responses

Mr. Speaker,

1.          Sir, I beg to move that “The Bill be now read a Second time.”

INTRODUCTION

2.          Sir, as this House is well aware, the Government is committed to upholding Singapore’s status as an international financial centre and key trading and transhipment hub, built on a clean, robust and credible system.

3.          Our system would be undermined if criminals were to abuse our system to carry out illicit activities.

4.          Singapore thus needs to be vigilant. To this end, Singapore has taken a resolute stance against money laundering, terrorism financing and proliferation financing. The measures which have been taken include:  

(1)        Adopting the three key pillars of prevention, detection and enforcement, as set out in the report by the Inter-Ministerial Committee on Anti-Money Laundering published recently in October 2024. These 3 strategies are also used to combat terrorism financing and proliferation financing.

(2)        Continuously reviewing our processes and updating our laws to ensure that they remain effective and in line with international standards. For instance, the Government has passed the Anti-Money Laundering and Other Matters Act 2024, which will enhance the ability of the Government to detect and act against money laundering with enhanced data sharing and strengthened prosecutorial levers.

(3)        Supporting global trends to combat money laundering, terrorism financing and proliferation financing. To this end, Singapore has been an active member of the Financial Action Task Force, or FATF for short, since 1992. The FATF sets the international standards for tackling money laundering, terrorist financing and proliferation financing. Singapore has been assessed by the FATF to have a strong legal and institutional framework, and we are determined to maintain our good standing.

5.          This Bill is in line with the Government’s consistent approach, as it seeks to strengthen our international cooperation regime and framework for trusts.  There are two main components to this Bill.

(1)        First, Singapore’s international criminal cooperation regime will be updated to ensure it remains efficient, effective and in line with international standards. This will enhance our ability to cooperate with other jurisdictions to combat crime.

(2)        Second, the Trustees Act will be updated to better support Singapore’s legal regime by revising the trustees’ obligations, and imposing effective, proportionate and dissuasive sanctions.

6.          I will take Honourable Members through these two components of the Bill.

DESCRIPTION OF THE BILL

I. Key changes to the international criminal cooperation regime

7.          First, let me begin with the changes to the Mutual Assistance in Criminal Matters Act, or MACMA for short. Mutual legal assistance is a process where States seek and provide assistance to one another for the purposes of criminal investigations, prosecution and other proceedings.

8.          A strong international cooperation framework is especially vital in our world today, as crime is increasingly transnational in nature. In this regard, it is in our interests to ensure that our laws are updated to allow us to cooperate effectively with other countries to prevent and punish crime.

9.          Mr Speaker, the feedback that we have received from FATF is that our quality of assistance is generally high, often supporting complex investigations and helping to secure convictions. We, however, do not rest on our laurels. The Bill will further improve our processes and capabilities to assist. I will highlight four key amendments that the Bill will make to the MACMA.

(i)         Taking of statements for foreign criminal investigations

10.       First, the Bill will empower our law enforcement authorities to take statements from persons for the purposes of assisting foreign criminal investigations.

11.       Currently, section 21 of the MACMA requires that criminal proceedings have commenced in the foreign country before a witness may be compelled to give evidence to aid in those proceedings. This generally means that prosecution must have been initiated. As such, if the foreign country is still investigating and has yet to commence proceedings, then Singapore would be unable to assist with the taking of evidence under section 21 of the MACMA. In contrast, our domestic authorities are empowered, under our Criminal Procedure Code, to take statements from persons for the purpose of domestic investigations, before the matter reaches our courts.

12.       A new section 21A will address this issue to ensure that powers available for domestic authorities are also available for use in response to requests for mutual legal assistance.

(ii)        Covering instrumentalities “intended to be used”

13.       Second, with this Bill, Singapore can assist to identify, freeze, seize or confiscate property “intended to be used” in connection with the commission of a foreign offence. This will add to our current powers, which pertain to property “used” in the commission of such offence.

14.       This expands the scope of property covered under the MACMA, and strengthens our ability to deprive criminals of their property. This is in line with FATF’s definition of “criminal property”, which covers instrumentalities used and intended for use in money laundering and other offences.

(iii)       Clarifying conclusion of proceedings

15.       Third, the Bill will clarify when foreign proceedings are deemed concluded for the purposes of enforcement of a foreign confiscation order.

16.       While the MACMA already contains examples of when proceedings are considered concluded, such as discontinuance of proceedings or acquittal, the Bill will further clarify that proceedings are concluded when there is no right of appeal following the acquittal, for example, or that all rights of appeal have expired or are exhausted. This clarifies a grey area in determining when proceedings are concluded, such as where the defendant has been acquitted but the foreign State is still pursuing an appeal.

(iv)       Enforcement of foreign confiscation orders made by competent authorities

17.       Fourth, Singapore will be able to enforce foreign confiscation orders made by “a competent authority”, in addition to such orders made by a court. A foreign confiscation order is an order made in connection with the foreign offence for the recovery, forfeiture or confiscation of any payment or property.

18.       Currently, we can only enforce foreign confiscation orders made in judicial proceedings. However, not all countries follow this system.

19.       A number of jurisdictions, especially those with civil law systems, have confiscation orders which may be issued by an authority other than a court. There is thus a need to take a broader approach. Recognising confiscation orders made by a “competent authority” will enhance Singapore’s ability to deprive criminals of their illicit proceeds.

(v)        Extradition Act and other amendments

20.       Mr Speaker, in addition to amending the MACMA, the Bill also covers a couple of amendments to the Extradition Act. We have updated the amendment of “foreign State” to clarify that it is within Singapore’s sovereign power to make an extradition request to any territory, and not only those listed in the Third Schedule.

21.       The Bill also contains other technical amendments, all intended to improve Singapore’s international cooperation regime – to make it clearer, smoother and more efficient.

22.       For example, the Bill will allow an overseas document to be deemed to be authenticated under the MACMA or the Extradition Act, when it is sealed with an official or public seal, or stamped with an official stamp, of that country, or of a Minister, a department or official of the government, of that country. This is in line with our intent, as mentioned earlier, to take into account the varying practices of foreign countries, where processes for sealing or stamping may differ.

23.       Sir, we will continue to review Singapore’s international cooperation regime to ensure that our processes remain relevant and effective. As we continue to do so, we will ensure that robust safeguards are in place to ensure that Singapore will only act in meritorious cases.

24.       With that, I conclude the first part of my speech on international criminal cooperation. I now turn to my next part on key changes to the trust regime.

II. Key Changes to the Trust Regime

25.       I will first explain the background of how trusts may be misused.  I will then detail how our legal regime aims to combat such misuse. I will end by going through the amendments that the Bill seeks to make to bolster our legal regime.

(i)         Background

26.       Generally, a trust is created when a person, the settlor, transfers legal title of certain identified property to another person, the trustee. The trustee is obliged to deal with that property for the benefit of another, the beneficiary.    

27.       Trusts can be used for a wide variety of legitimate purposes, including succession planning, protection of vulnerable persons and charitable giving.

28.       However, trusts can also be misused by criminals. While the trustee is the legal owner of the trust assets, the trust assets are held for the benefit of the beneficiary. Trusts can thus be used to conceal the person who is ultimately entitled to benefit from the asset, particularly when they are used as part of a complex structure.

29.       How do we combat such misuse?

30.       As part of our three-pillar framework, we have enacted laws which require gatekeepers of the financial system, such as banks and other financial institutions, to obtain information as part of customer due diligence (“CDD”) checks, thereby detecting and preventing misuse. Where the customer is a trustee, the CDD checks should also be applied to persons with ownership or control over the trust, such as the settlor and the protector, as well as the beneficiaries, or persons who will benefit from the trust. These CDD checks would include enhanced measures such as checking on the source of funds for the settlor, in cases of higher money laundering or terrorist financing risks.

31.       For these CDD checks to work, and for the banks to be able to obtain the information needed to prevent money laundering, financing of terrorist and proliferation activities, trustees must be required to obtain and hold information about the trust that they administer.

32.       Similarly, if a law enforcement agency is conducting an investigation and wishes to find out more about the source of certain funds, and who the ultimate beneficiary is, their investigations would be facilitated if trustees are required to hold the relevant information.

33.       Thus, an obligation on trustees to hold such information complements the gatekeepers’ CDD obligations and the powers of investigation of the law enforcement agencies.

34.       The obligations imposed on trustees depends on the type of trust and their risk profile.

35.       Some trustees, such as trust companies that are in the business of providing trust services professionally, are licensed and regulated by the MAS. This is to ensure that the trust companies adhere to high standards of integrity, professionalism and business conduct, and observe anti-money laundering and counter-financing of terrorism requirements similar to other financial institutions providing wealth management services. Trust companies may be involved in administering complex trust structures and dealing with high value assets and transactions, which expose them to greater risk of being used for money laundering and other financial crimes.  Trust companies’ obligation to obtain and hold relevant information is found under the Trust Companies Act, the supporting subsidiary legislation and binding Notices issued by the MAS.

36.       The risk profiles of trustees that are not regulated by MAS are normally lower. These lower risk trusts are typically not complex, as setting up a complex structure would typically require the assistance of professionals such as a trust company. To illustrate, a trust set up by an aged parent by transferring assets to a trusted family member to provide for a disabled child would fall under this category. Such trustees’ obligations are generally found in the Regulations introduced under Part 7 of the Trustees Act. The amendments to the Trustees Act being moved today are primarily to Part 7 of the Trustees Act.

(ii)        Amendments to the Trustees Act

37.       I will now turn to detail each of the key amendments to the Trustees Act. 

(1)        First, the scope of information which the trustees will need to obtain.

(2)        Second, an update to the sanctions for non-compliance with the obligations introduced under Part 7 of the Trustees Act.

(3)        Third, on the powers to investigate trustees that breach their obligations introduced under Part 7 of the Trustees Act.

(a)        Adequate, Accurate and Up-To Date Information on Trusts

38.       On the first point of the scope of information:

(1)        Part 7 of the Trustees Act requires trustees to obtain and hold information on each person who is a “relevant trust party”. This includes the settlor, the trustee, the beneficiaries and any person who has any power over the disposition of any property that is subject of the trust.

(2)        The amendments to the Trustees Act will expand the scope of the information to be collected.

39.       With the amendments:

(1)        The Trustee will now be required to collect the “basic information” of the trust. This includes the identifier of the trust, for example the name of the trust, or its tax reference number.  It also includes the trust deed, and the place where the trust is administered.

(2)        The term “relevant trust party” will be expanded to include the “class of beneficiaries”, and “natural persons exercising ultimate effective control over the trust”. A “class of beneficiaries” refers to a group of individuals who are not yet known or identified in the trust instrument. One example of a group may be the future descendants of the settlor.

40.       Trustees will likely already have such information. This information will usually be set out in the trust instrument which the trustees would likely have in their possession. The trust instrument is the document setting out the terms of the trust, and how the assets of the trust are to be managed or administered for the beneficiaries.  

(b)       Effective, proportionate and dissuasive sanctions

41.       On the second point – on sanctions for non-compliance – the Trustees Act currently provides that any contravention of the obligations introduced under Part 7 shall be punishable by a fine not exceeding S$1,000.

42.       However, the maximum fines that may be imposed for comparable breaches in other pieces of legislation are higher. In the Accountants Act, as well as other pieces of legislation that this House has passed – the Companies and Limited Liability Partnerships (Miscellaneous Amendments) Act and the Business Trusts (Amendment) Act – the maximum fine for similar breaches is S$25,000.

43.       To ensure alignment with the maximum fine for other similar offences, and that the sanctions for breaches of obligations introduced under Part 7 of the Trustees Act are dissuasive and effective, we will update the maximum fine provided for in Part 7 of the Trustees Act to S$25,000.

44.       The amendments also introduce the power of composition. Thus, in appropriate cases, a composition sum of up to one-half of the amount of the maximum fine may be levied in lieu of prosecution. 

(c)        Investigative Powers

45.       The third set of amendments will grant a public officer called the Commissioner of Trust Enforcement, or CTE, under the Ministry of Law, the power to investigate offences under Part 7 of the Trustees Act. Previously, this power lay with the Police. With these amendments, the CTE, and any authorised officers he may appoint, will be empowered to investigate any breach of the trustees’ obligations introduced under Part 7 of the Trustees Act.

46.       This transfer of investigative functions from the Police to MinLaw will develop MinLaw’s subject matter expertise and allow investigators to more effectively address any breaches of the obligations introduced under Part 7 of the Trustees Act.

(d)        Other Amendments

47.       Beyond this, the CTE will also be empowered to issue codes of practice, guidelines or standards of performance if and when required. These codes, and guidelines or standards, if issued, will help to guide trustees of relevant trusts on how best to comply with their obligations.

48.       Collectively, these amendments will bolster Singapore’s national strategy for anti-money laundering and countering the financing of terrorism and proliferation financing – by preventing trusts from being misused by criminals.

CONCLUSION

49.       In conclusion, Sir, the Bill will strengthen Singapore’s international cooperation regime, bolster its national strategy against money laundering, terrorism financing and proliferation financing, and align itself with international standards.

50.       Sir, I beg to move.

Last updated on 11 November 2024