On 1 October 2018, the Bill on the Serious Crimes and Counter-Terrorism (Miscellaneous Amendments) (“the Bill”) was introduced for First Reading in Parliament. This Bill proposes amendments to the Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act (“CDSA”) and the Terrorism (Suppression of Financing) Act (“TSOFA”) to inter alia enhance the legal framework for preventing money laundering and combating terrorism financing, and to raise the maximum punishments for certain offences.
This note will seek to briefly summarise some of the key changes to the law proposed in the Bill. We will also a highlight a lacuna in the current AML/ CTF regime in respect of legal professional privilege which the Bill does not address.
CDSA
The main publicity regarding the Bill has been on the enhanced sentencing powers:
|
Offence |
Present penalties (amongst others) |
Amended penalties |
|
Section 39: Failure to make a Suspicious Transaction Report (“STR”) |
Fine of up to $20,000 |
Individuals: Fine of up to $250,000 / Imprisonment of up to 3 years / both Non-Individuals: Fine of up to $500,000 |
|
Section 43 / 44 / 46 / 47: Money laundering offences |
Non-Individual: Fine of up to $1,000,000 |
Non-Individual: Higher of $1,000,000 or twice the value of the benefits of drug dealing / criminal conduct in respect of which the offence was committed. Punishments for individuals remains at a fine of up to $500,000 or imprisonment of up to 10 years or both. |
|
Section 48: Tipping-off |
Fine of up to $30,000 |
Fine of up to $250,000 |
In respect of the punishments for failing to make an STR, the increase in the quantum of fine by more than 10 times and the introduction of imprisonment indicates how serious the authorities now view the obligation to report suspicious transactions.
New offence: Possessing or using property reasonably suspected to be benefits from drug dealing / criminal conduct – Section 47AA
Perhaps the most significant proposal is the proposal to create a new offence of possessing or using any property that may be reasonably suspected of being or representing benefits from criminal conduct or drug dealing,
47AA (1) Any person who possesses or uses any property that may be reasonably suspected of being, or of in whole or in part, directly or indirectly, representing, any benefits of drug dealing or benefits from criminal conduct shall, if the person fails to account satisfactorily how the person came by the property, be guilty of an offence.
(2) Any person who commits an offence under subsection (1) shall be liable on conviction —
(a) if the person is an individual, to a fine not exceeding $150,000 or to imprisonment for a term not exceeding 3 years or to both; or
(b) if the person is not an individual, to a fine not exceeding $300,000.
Under the present legal framework, to prove money laundering, the prosecution has to prove the property in question was in fact the benefits of criminal conduct (see Ang Jeanette v PP [2011] SGHC 100). This requirement remains for the existing money laundering offences, but for an offence under Section 47AA, the prosecution will only have to prove that the property “may be reasonably suspected” of being the proceeds of criminal conduct. This now opens up the possibility for standalone money laundering cases, i.e. prosecution for money laundering without evidence of the predicate offence, e.g. by reason of inconsistency between the accused’s legitimate income sources and his assets.
The proposed section does envisage that the defendant will be given an opportunity to account for how he came to have the property. This will be most relevant in self-laundering cases (i.e. where the person in possession asserts beneficial ownership) whereby the defendant will have knowledge of the providence of the money. However, in third-party laundering cases, i.e. those cases where the person in possession does not claim beneficial ownership of the monies; e.g. for a banker with customer’s money in an account, or a lawyer with funds in the client account, the defendant is unlikely to be able to adduce any explanation or evidence of the providence of the money. It will thus be interesting to see how this case will impact on such third party laundering cases.
The punishment here will be a fine up to $150,000 or imprisonment of up to 3 years or both for an individual, or a fine up to $300,000 for a Non-Individual. These are less severe than for the existing money laundering offences, possibly reflecting the lower culpability of the defendant.
TSOFA
Immunity from civil proceedings
The Bill will introduce immunity from civil proceedings for persons who act reasonably to avoid committing an offence under TSOFA. This will protect parties who may have to breach their contractual obligations to third parties if they decline to continue with a transaction so as to avoid committing a terrorism financing offence.
Harsher penalties for existing offences
|
Offence |
Present penalties (amongst others) |
Amended penalties |
|
Section 6A:
|
Non-Individuals: Fine of up to $1,000,000 |
Non-Individuals: Higher of $1,000,000 or twice the value of the property, financial services or other related services, or financial transaction (as the case may be) in respect of which the offence was committed |
|
Section 8: Failure to disclose information or property belonging to any terrorist or terrorist entity
Section 10: Failure to disclose information about acts of terrorism financing
|
All: Fine of up to $50,000 / Imprisonment of up to 5 years / both |
Individuals: fine up to $250,000 / imprisonment of up to 5 years / both Non-Individuals: Higher of $1,000,000 or twice the value of the property, financial services or other related services, or financial transaction (as the case may be) in respect of which the offence was committed |
|
Section 10B: Tipping-off on ongoing investigations |
Fine of up to $30,000 / imprisonment for up to 3 years / both |
Fine of up to $250,000 / imprisonment for up to 5 years / both |
The proposed penalties are in line with those proposed for the CDSA.
Legal Professional Privilege?
There is a lacuna in both the CDSA and TSOFA in respect of how it treats the issue of legal professional privilege. The Financial Action Task Force (who sets the standards for Anti Money Laundering and Countering the Financing of Terrorism) recognises that legal professionals are not required to disclose information which was obtained in circumstances where the information is subject to legal professional privilege.
This is partially recognised in the CDSA which creates an exception to the obligation to report suspicions of money laundering in the case of advocates and solicitors and legal counsel in respect of matters that are subject to legal privilege (Section 39(4) read with Section 2A, CDSA). However, the drafting of this exception excludes registered foreign lawyers practicing in Singapore. Over the years, the number of foreign lawyers in Singapore has increased (there are probably about 1,000 currently practicing in Singapore) and there is no compelling reason why communications with them are not subject to legal professional privilege. It is noted that in the recent amendments to the Companies Act, the legal privilege exception applied to a ”solicitor or professional legal adviser” (see Section 386AE Companies Act). This should be sufficient to include foreign registered lawyers. The anomaly in the CDSA should be addressed.
A similar obligation to report suspicions is also found in TSOFA. However, there is no equivalent legal privilege exception available under TSOFA. Instead, a legal adviser has to rely on the defence in Section 8(4) TSOFA, that he had a reasonable excuse for not reporting. There is thus unnecessary uncertainty as to the position of the legal adviser and the status of legal professional privilege. The suspicious transaction reporting regime under TSOFA should be consistent with that under the CDSA. TSOFA should be amended to include an exception for legal professional privilege in respect of communications with professional legal advisers.
Author:
S Suressh
Partner, Eversheds Harry Elias
Zhuang Changzhong
Associate, Eversheds Harry Elias