Andy Sim

1. Enhanced Regulatory Regime
for Corporate Service Providers
in Singapore
Andy Sim
Assistant Chief Executive
Accounting & Corporate Regulatory
Authority (ACRA), Singapore

2. Agenda
1 Overview of the corporate service providers (CSP)
sector in Singapore
2
3 The need to enhance the regulatory framework for
the CSP sector
4 The new statutory obligations that CSPs face
5 The new CSP Enforcement & Regulation
Department in ACRA
6 Monitoring and supervision
2
Money laundering (ML)/ terrorism financing (TF)
risks facing the CSP sector
Pending initiatives7

3. 3
The CSP sector in Singapore
Corporate Secretarial Firms Accounting Firms Law Firms
Provide range of corporate secretarial services, including filing of corporate
and financial information with ACRA and the following:
Forming corporations or
other legal persons
Providing a registered
office, business address,
correspondence or
administrative address or
related services
Acting/Arranging for person to act as:
1. Director/secretary of a corporation
2. Partner of partnership
3. Similar position with regard to
another legal person
Acting/arranging for
another person to act as
shareholder for a customer

4. 4
Enhancing the CSP regulatory framework
FATF identified CSP sector as requiring regulation
Introduction of
enhanced CSP regime
We have identified some ML/FT risks in our NRA that
CSPs can help us mitigate
FATF
To meet FATF’s
Recommendations Internal Policies,
Procedures and
Controls (IPPC)
i
Customer Due
Diligence
(CDD)
On-going
Monitoring
Record
Keeping
Compliance Management | Training
Raising Professional
Standards
ADD VALUE COMPLIANTQUALITY
NRA

5. 6
New legislation implemented on 15 May 2015
Amended ACRA Act with
supporting Regulation
 To require CSPs to register as Filing
Agents (FA) and Qualified Individuals
(QI)
 Subject to AML/CFT obligations
 Sanctions for non-compliance
Note: 18 outreach sessions to 5,000
attendees with Guidelines issued on
application of the new law
Filing
Agent
Qualified
Individual
Individuals employed,
engaged or appointed
by RFA (e.g. lawyers,
public accountants,
corporate secretarial
agents)
Business entities
registered with ACRA
to file business
transactions for their
customers using
ACRA’s electronic filing
system (BizFile+)
2,700 registered Filing Agents (RFA) and 3,000
registered Qualified Individuals (RQI)*
* Figures as at Jan 2017

6. 7
New legislation regulating FA & QI
Sets out registration/renewal requirements for FA/QI
Provide exemptions for certain persons or categories of person
from registration
Contains the range of sanctions that can be imposed against
FA/QI for breaches
FA must abide by statutory obligations including FATF
Recommendations and T&Cs of registration
QI must abide by statutory obligations including T&Cs of
registration

7. 8
Fit and Proper Criteria for FA & QI
• No conviction for any offence involving fraud or dishonesty punishable
with imprisonment of 3 months or more
• Not bankrupt
• Previous conduct and compliance history satisfactory. (i.e. no adverse
complaint)
• Applicant has not acted in a manner that adversely reflects on the
commercial integrity of the applicant
• Applicant has the capacity and capability to properly fulfill the
obligations of a registered FA or QI
• Not contrary to the national or general public interest
Note: If factors not met, ACRA may refuse application, or cancel
registration

8. 9
Statutory Obligations of FA
Establish Internal
Policies,
Procedures and
Controls (IPPCs)
Risk Assessment &
Documentation
Applying risk-
based approach
Informed Decision
Identify and verify
customers, agents
and beneficial
owners
Screen customers,
agents and
beneficial owners*
Establish business
relationship if no
adverse results
Decline business if
adverse results and
file Suspicious
Transaction Report if
necessary
On-going monitoring
and record keeping
* Using UN sanction lists /
Ministry of Home Affairs
website etc.
Audit Function
Compliance Management (Compliance Officer)
Screening and Training of Employees

9. 11
Indicators of Suspicious Transactions
Indicators relating to incorporation of shell companies
• Companies registered in Singapore with no apparent business and low paid up capital
• Addresses of the registered FA or PO Box addresses are used by companies as their
registered/mailing addresses
• Multiple bank accounts opened with various banks for no apparent economic or business
reasons
• Authorised bank signatories are usually foreign directors and shareholders located overseas
• Bank accounts are opened at around the same period foreign directors are in Singapore to
incorporate their companies
• Frequent large incoming remittances into bank accounts from different individuals and
companies, located mainly overseas
• After receipt of funds in the bank accounts, the funds are usually moved out of Singapore
within the next few days. These bank accounts generally have low balances
• Transaction patterns in the bank accounts are often not in line with the company’s principal
business

10. 12
Indicators of Suspicious Transactions
Indicators relating to other crimes
• Customers give false/misleading information for CDD purposes
• Customers unwilling/unable to provide information for CDD purposes
• Customers use forged/fraudulent/false identity documents for CDD purposes
• Customers uncontactable for CDD purposes
• Customers featured in adverse news
• Transactions involving politically exposed persons
• Unrealistic turnover in customer’s financial statements
• Unusual/uneconomical movement of funds

11. 13
CERD and its key functions
• CSPs Enforcement & Regulation Department
(CERD) was set up in Nov 2013
• Comprises Compliance Managers and
Investigators to:
• conduct outreach and education programmes
• process new and renewal applications
including screening to ensure applicants are
“fit & proper”
• supervise, monitor, inspect and regulate FA
and QI
• investigate into breaches of law and impose
sanctions against errant FA and QI
• conduct regular industry survey
• represent ACRA at international AML/CFT
forums and assessments. e.g. FATF

12. 14
Monitoring and Supervision
• ACRA adopts a risk-based approach in supervising and monitoring the RFAs
• Risk factors considered for RFAs include:
– Legal, reputational and regulatory risk
– Business activity and services risk
– Resource constraint and operational limitation risks
– Other dynamic factors (e.g. compliance review outcome unsatisfactory,
complaint received against RFA, adverse publicity against RFA)
• Based on ACRA’s assessment of the risk factors, a RFA is then internally risk-
tiered
• The risk category assigned to a RFA is dynamic and a RFA can be re-
categorised pursuant to inspection outcome or other events

13. 15
Compliance Reviews
• ACRA conducts on-site compliance reviews for RFAs to:
– monitor the extent of AML/CFT compliance in the CSP industry
– provide guidance to RFAs to improve their level of AML/CFT compliance
– address the ML/TF risks and weaknesses of the CSP industry
• ACRA engages AML/CFT specialists as Reviewers to perform on-site compliance reviews (½
day per review)
• Reviewers conduct compliance reviews in accordance to compliance review methodology
approved by ACRA
• Prior to on-site compliance review, RFAs have to complete a Self-Assessment Form on its
level of understanding of ML & TF before the onsite visit takes place
• Reviewer will inform RFA of preliminary findings at the close of the compliance review and
subsequently send an assessment report to both the RFA and ACRA
• Reviewer does not impose any sanction
• Depending on the outcome of the compliance review, ACRA may follow up with inspection

14. 16
If sanction is intended
• Notice to show cause
• Opportunity to explain
• Review response by RFA
• Sanction may ultimately be
imposed
Inspection Findings
• Consider findings from
inspection
• Notify RFA of outcome of
inspection
3
Pre-inspection
• Letter to notify RFA on:
- upcoming inspection
- documents to be sent to
ACRA prior to inspection
1
On-site Inspection
• ½ day or more
• Interview
• Review customer files
• Closing meeting
2
Inspection
Process 4
Inspection Process

15. 17
Sanctions that ACRA may impose
against RFA and RQI
• Cancel registration*
• Suspend for a period not exceeding 12 months
• Impose financial penalty of up to S$25,000 (for RFA) or S$10,000 (for
RQI) for each breach
• Restrict access to ACRA’s electronic filing system – BizFile+
• Censure
*Note: If registration cancelled, cannot re-apply within 2 years

16. 18
• Completed 476 compliance reviews and inspections
Compliance Review and Inspection Outcome
Compliant 262
Satisfactory but improvements needed 145
Non-compliant 69
Overview of ACRA’s Compliance Reviews and
Inspections
* Figures as at Jan 2017
Sanctions Imposed till date
Suspension Financial Penalty Censure Advisory
1 7 1 1

17. 19
Pending initiatives
• Development Training for FA, QI and employees
 New applicants and incumbents to attend
mandatory AML/CFT training at regular intervals
 New applicants and incumbents to pass an online
proficiency test before they can be
registered/renewed
 Allow option of 2 years registration period instead
of 1 year
 e-learning module to enable employees of RFA to
learn about AML/CFT measures and the statutory
obligations RFA and RQI

18. Accounting and Corporate Regulatory Authority
10 Anson Road #05-01/15
International Plaza
Singapore 079903
www.acra.gov.sg
www.facebook.com/SG.ACRA
www.twitter.com/ACRA_SG
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