What is money laundering?

The process of making a large amount of money through illegal means

We have all heard of the term before, but what exactly is money laundering? It is certainly not the act of throwing your money into the laundry machine but something far darker and sinister. From calculative white-collar criminals to street thugs looking for a quick buck, we will explore what is money laundering, the penalties if you are caught with the act, and how the Singapore government tackles the issue head-on.

What is money laundering?

In short, money laundering is the process where large amounts of money obtained by criminals or illegitimate means are converted, making it appear as if it had come from legal or legitimate sources. In layman’s terms, basically making the money acquired illegally look like it came from a legitimate source. Singapore is vulnerable to such acts due to the country’s bank privacy laws that safeguard the client's data and make it difficult to track, and the lack of routine currency reports. The Lion City’s prosperous and globally driven economy has become an attractive destination for criminals, drug traffickers, and even terrorist organisations alike for money laundering.

The penalties of money laundering

To overcome the threat of money laundering, the Commercial Affairs Department (CAD) is a special department within the Singapore Police Force (SPF) that bears the responsibility for investigating and taking enforcement action in respect of money laundering and other white-collar crimes. Under their watchful eyes, they enforce the AML (Anti Money Laundering) regime through the detection of money laundering activities, the investigation and prosecution of money laundering offences and the seizure and confiscation of illegal proceeds. Officers of the CAD are authorised officers under the Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act (CDSA) and could also charge those indicted with drug trafficking, terrorism and other serious crimes of money laundering should they commit the offence.

Of course, the CAD works closely with other SPF units and law enforcement agencies to combat threats such as drug trafficking and domestic terrorism. The Central Narcotics Bureau (CNB) and the Corrupt Practices Investigation Bureau (CPIB), often work closely with the CAD to ensure such illegal practices would be curbed and the culprits behind such heinous acts reprimanded.

However, what is peculiar within the CDSA is that the term “money laundering” doesn’t exist. Instead, part VI of the CDSA criminalises the laundering of proceeds generated by criminal conduct, drug trafficking, and the monetary benefits that come with the crime conducted, but not the act of money laundering itself. The following principal offences are:

  • The assistance of another person in retaining, controlling or using the benefits of drug dealing or criminal conduct under an arrangement (whether by concealment, removal from the jurisdiction, transfer to nominees or otherwise).
  • The concealment, conversion, transfer or removal from the jurisdiction, or the acquisition, possession or use of benefits of drug dealing or criminal conduct.
  • The concealment, conversion, transfer or removal from the jurisdiction of another person’s benefits of drug dealing or criminal conduct.
  • The acquisition, possession or use of another person’s benefits of drug dealing or criminal conduct.
  • The possession or use of any property that may be reasonably suspected of being benefits of drug dealing or criminal conduct, without a satisfactory account as to how the property had been occasioned.

A lot to take in isn’t it? But to simplify things, any form of involvement in monetary benefit you gained via criminal conduct is subjected to being charged with money laundering. While the outcome of a money laundering case depends on a case by case basis, the specific offences ultimately decide the prosecution and charges. Upon conviction for a money laundering offence under Part VI of the CDSA, natural persons (single individuals) are liable to a maximum fine of S$500,000 or imprisonment for a term of up to 10 years, or even both.

Legal persons (a group of people viewed as one entity) are liable to a maximum fine of S$1 million or twice the value of the money laundry offence committed by said legal persons, whichever amount is higher.

In addition to any criminal liability, other charges such as confiscation, restraint or charging order may also be made by the court in respect of the realisable property. Realisable property includes any property held by the defendant, and any property gifted directly or indirectly by the defendant to a person and that is caught by the CDSA (section 2 CDSA).

Singapore’s solution to money laundering

Sometimes your sincere intention to help others with their money transfer needs turns out to be assisting a criminal in the illegal act of money laundering. That was precisely what the Singapore government thought of too. Which is why in 2002, the Parliament of Singapore passed the Suppression of Financing, criminalising the financing of terrorism and issuing notices to bank employees to report any activity related to this crime to the police immediately.

Subsequently, in 2007, the Monetary Authority of Singapore (MAS), which regulates banking and other financial services, issued a notice entitled Prevention of Money Laundering and Countering the Financing of Terrorism to banks. The act was to address the need for enhanced Customer Due Diligence (CDD) measures in all financial transactions to prevent criminal behaviour. A training program was even implemented to all bank employees that teaches them how to maintain appropriate records, detect any suspicious transactions and report them to the relevant authorities.

But more importantly, the MAS serves as Singapore's Central Bank that helps oversee the financial institution in Singapore and ensure they follow the government guidelines and policies. The MAS creates and implements financial policies, strong corporate governance framework and accounting standards to help combat the act of money laundering and reduce corruption from within financial institutions to promote Singapore as a regional and international financial centre.

The threat of money laundering is real and with how advanced technology is today, acts of money laundering are “washed” clean thoroughly through online platforms. It is important to find trustworthy and reliable money transfer services to prevent any complications and troubles that you might run into.

At TranSwap, we are fully licensed and regulated as a Major Payment Institution by MAS in Singapore, as a Money Service Operator by the Hong Kong Customs and Excise Department (HKCED) and as a Fund Transfer Operator by Bank Indonesia (BI). We have also won prestigious awards such as the EtNet Fintech Award 2020, Hong Kong Impetus Fintech Award, and iFTA award, among many others. Meaning, your funds and personal data are safe and secure with us.

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