On 9 May 2023, the Singapore Parliament passed amendments to the Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act 1992 (CDSA) which will introduce significant new offences of rash and negligent money laundering.

Under the current law, the successful prosecution of money mules (i.e., those who assist with the transfer of illicit funds on behalf of others) is generally challenging due to significant difficulties in proving that the money mule had knowledge or reasonable grounds to believe that the monies transacted through his payment account were linked to criminal activity. The legislative amendments are intended to lower the level of culpability required for money laundering offences to be made out.

Key aspects of the amendments

With the amendments to the CDSA, a person (legal or natural) may be liable where, amongst other things, the person enters into or is otherwise concerned in an arrangement under which another person’s retention or control of benefits from criminal conduct is facilitated (or the person conceals, converts, transfers, acquires, possesses or uses property which, in whole or in part, directly or indirectly, represents another person’s benefits from criminal conduct), and the person does so (a) rashly in respect of the circumstance that the arrangement relates to benefits from criminal conduct, or (b) negligently.

A person acts rashly when he does an act knowing that there is a real risk that a particular circumstance exists or will exist and if it would be unreasonable to take that risk. A person acts negligently when he omits to do an act which a reasonable person would do, or does any act which a reasonable person would not do.

For individuals, the offence of rash money laundering is punishable with a maximum fine of S$250,000 or imprisonment of up to five years or both, while the offence of negligent money laundering is punishable with a maximum fine of S$150,000 or imprisonment of up to three years or both. Where any person is not an individual (for example, a company) and commits such offences, the maximum punishment is a fine not exceeding S$1 million or twice the value of the benefits from criminal conduct in respect of which the offence was committed, whichever is higher.

Further, under the proposed new section 55A of the CDSA, a person (A) may be liable for entering into or otherwise being concerned in an arrangement under which another person’s retention or control of benefits from criminal conduct is facilitated, in any of the following circumstances (amongst others) where under the aforesaid arrangement:

• A enables any person to access, operate or control a payment account which A is able to access, operate or control, and at the time A enters into or becomes concerned with the arrangement, A fails to take reasonable steps to ascertain the purpose of that person being able to access, operate or control the payment account;

• money is received in or transferred from a payment account which A is able to access, operate or control, and at the time A enters into or becomes concerned with the arrangement, A fails to take reasonable steps to ascertain the source or destination of the money.

For individuals, the offence of assisting another to retain benefits from criminal conduct is punishable with a maximum fine of S$50,000 or imprisonment of up to three years or both. Where any person is not an individual (for example, a company) and commits such offence, the maximum punishment is a fine not exceeding S$1 million or twice the value of the benefits from criminal conduct in respect of which the offence was committed, whichever is higher.

Practical takeaways

The amendments to the CDSA will enlarge the exposure to criminal liability for companies and individuals. In particular, companies may be liable for negligent money laundering offences where they continue with a transaction despite the presence of suspicious indicators that would have been noticed by a reasonable person.

As the amendments are expected to come into force in approximately six months’ time, companies should in the interim review their internal compliance policies and processes to ensure that such additional risks are appropriately addressed and mitigated and that their employees are trained to be alert to red flags.