Optimal strategies for financial institutions to mitigate the risks of money laundering, terrorism financing, and proliferation financing linked to referrals received from corporate service providers.
Addressing the misuse of Legal Persons and Arrangements (LPA) stands as a key risk priority in Singapore. To bolster the industry’s awareness of the associated risks, the LPA Working Group (WG) was established under the Anti-Money Laundering and Countering the Financing of Terrorism Industry Partnership (ACIP). This best practices document is a product of the ongoing efforts of the LPA WG to tackle such risks.
International and domestic typologies have highlighted instances where Corporate Service Providers (CSPs) have been exploited by criminal entities to facilitate the creation of shell and front companies, often through the provision of nominee directors. Furthermore, CSPs have been implicated in aiding these companies in opening bank accounts to facilitate the movement of illicit funds. Globally, there have been cases where CSPs, alongside other professionals, have either knowingly or unknowingly facilitated money laundering, terrorism financing, proliferation financing, and other financial crimes. Domestically, the Commercial Affairs Department (CAD) has observed various types of companies, including front, shelf, and shell companies, being misused in both domestic and international money laundering cases involving fraud, tax evasion, trade-based money laundering, and sanctions evasion. In numerous instances, the incorporation of Singaporean companies and the establishment of bank accounts were facilitated by CSPs.
Consequently, the LPA WG has examined the role of CSPs and compiled a set of best practices for banks and the wider financial sector to consider when receiving referrals from CSPs for the establishment of banking relationships with their clients. This document outlines the gathered best practices.
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By FCCT Editorial Team
