Bill passed to introduce AML/CFT regime for precious stones and precious metals dealers

26 February 2019

On 11 February 2019, the Precious Stones and Precious Metals (Prevention of Money Laundering and Terrorism Financing) Bill (“Bill”) was passed in Parliament. The Bill was introduced for first reading on 14 January 2018.

The Bill will establish a regulatory regime for anti-money laundering and countering the financing of terrorism (“AML/CFT”) with regard to precious stones and precious metals dealers (“PSMD”) in Singapore and to level up AML/CFT standards in the PSMD sector.

Background

Currently, PSMDs are 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 are 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 do not have to meet other AML/CFT requirements, such as conducting assessments of money laundering and terrorism financing (“ML/TF”) risks.

Scope of PSMD AML/CFT regulatory regime

The Bill provides for the regulation of any person who carries on a business of dealing in precious stones, precious metals, precious products and asset-backed tokens (“regulated dealing”). Asset-backed tokens refer to instruments backed by precious stones, metals or products.

The Bill will also regulate any person who carries on a business as an intermediary for such regulated dealing, including auction houses and providers of trading platform services for PSMD.

Registration with Registrar

A person who carries on a business of related dealing or as an intermediary for regulated dealing (collectively, “regulated dealers”) will be required to register with the Registrar of Regulated Dealers (“Registrar”), unless exempted.

AML/CFT measures applicable to regulated dealers

Regulated dealers will be 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:

  • Perform CDD measures under prescribed circumstances, in addition to the existing requirement to do so for cash transactions above S$20,000;
  • Submit a copy of the CTR to the Registrar, in addition to existing requirements to file a CTR;
  • Keep records of transactions where CDD measures are performed, and information obtained through these CDD measures;
  • Submit a copy of the information of suspicious transactions to the Registrar, in addition to the existing requirements in the CDSA to disclose suspicious transactions and in the Terrorism (Suppression of Financing) Act to report terrorism financing information.

Regulated dealers will be required to implement adequate programmes and measures to prevent ML/TF, such as the introduction of internal policies, procedures, and controls. The Bill adopts a risk-based approach to prevent ML/TF. Therefore, regulated dealers will only be required to develop procedures to address the risks identified in their risk assessment, in addition to the principal obligations prescribed. The Ministry of Law will provide further guidance on the obligations and procedures to address the varying degrees and levels of risks, to help regulated dealers mitigate risks of ML/TF whilst, at the same time, also managing compliance costs.

Penalties

Contravention of the requirements in the Bill will be punishable with fines and/or imprisonment, depending on the nature and severity of the particular contravention.

Exemptions from the Bill

Regulated dealers who are already covered under other AML/CFT regimes will be exempted from the Bill or certain provisions of the Bill. For example, it is intended for all MAS-regulated financial institutions to be exempted from registration and AML/CFT requirements under the Bill where they are already subject to MAS regulation.

Transitional period

The Bill provides for a transition period of up to six months upon the commencement of the Bill to provide sufficient time for regulated dealers to register with the Registrar. The Registrar will work with the industry, including conducting outreach to raise AML/CFT awareness, as well as issuing guidance to regulated dealers to ensure that they are well-placed to comply with the new requirements in this Bill.

Reference materials

The following reference materials are available on the Singapore Parliament website www.parliament.gov.sg and the Ministry of Law website www.mlaw.gov.sg:

 

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