Singapore Issues Guidelines to Help Accountants Fight Money Laundering, Terrorist Financing

With effect from 1 November 2014, professional accountants in Singapore, including public accountants will need to abide by enhanced mandatory requirements on implementing controls and procedures for anti-money laundering (AML) and countering the financing of terrorism (CFT).

The enhanced requirements are contained in the new Ethics Pronouncement 200 - “Anti-Money Laundering and Countering the Financing of Terrorism – Requirements and Guidelines for Professional Accountants in Singapore” issued by the Institute of Singapore Chartered Accountants (ISCA).

This pronouncement is also being adopted by the Accounting andCorporate Regulatory Authority (ACRA) and will be applicable to public accountants and accounting entities registered under the Accountants Act who are regulated by ACRA.

With money laundering and terrorist financing activities becoming increasingly sophisticated, the pronouncement will further strengthen Singapore’s strong reputation as a trusted international financial and business centre.

The comprehensive AML and CFT requirements contained in the new pronouncement are benchmarked to international best practices and the latest Financial Action Task Force1 (FATF) Recommendations.

Since 1992, Singapore has been a member of FATF, the global standard-setter for AML and CFT which requires all members to have effective systems for preventing and addressing money laundering and terrorist financing.

Currently, all professional accountants are required by existing legislations to report suspicious transactions.

Public accountants must also abide by the guidelines issued by ISCA4 that detail similar AML and CFT obligations. On top of this, public accountants need to adhere to the Code of Professional Conduct and Ethics for Public Accountants and Accounting Entities under the Accountants Act which requires them to undertake certain client assessment procedures relating to illegal activities such as money laundering.

In addition, accounting entities generally have processes in place to monitor for unusual and/or suspicious transactions and file suspicious transaction reports.

The pronouncement follows the completion of a national risk assessment5 of money laundering and terrorist financing in Singapore in January 2014. That assessment noted that while many sectors have in place a robust AML and CFT regime, there were a number of areas where controls could be strengthened, including within the professional accountancy sector.

The new pronouncement covers existing and enhanced requirements governing all professional accountants, including public accountants and professional accountants in business, and accounting entities. Non-compliance with the requirements under the new pronouncement may result in an investigation into the public accountant’s or professional accountant’s conduct by ACRA or ISCA respectively.

The new pronouncement takes a risk-based approach so that the required procedures are applied proportionately to the individual money laundering/ terrorist financing (ML/TF) risks faced by professional accountants and accounting entities.

Besides reiterating the statutory responsibilities of all professional accountants to report suspicious transactions, the new pronouncement includes enhancements on requirements for accounting entities to have the systems and controls in place to address ML/TF concerns.

It also enhances requirements for public accountants and accounting entities to have specific customer due diligence and records keeping measures when providing certain services; and offers recommendations on reporting procedures, training, compliance, hiring and audit.

The pronouncement was developed by an ISCA Working Group comprising representatives from across the public accounting sector and in consultation with the relevant regulators such as the Monetary Authority of Singapore, ACRA and the Commercial Affairs Department of the Singapore Police Force (See Annex B for the composition of the ISCA Working Group). Public feedback was also sought by ISCA through a public consultation exercise conducted from May to June 2014.

"With increasing calls internationally for professional accountants to do more to combat money laundering and terrorist financing, the pronouncement will be very useful to the accountancy profession in Singapore," says Gerard Ee, President of ISCA.

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