New CSP bill seeks to tighten rules on business services
Last updated on 15 May 2024
The Monetary Authority of Singapore (MAS) and Accounting and Corporate Regulatory Authority (ACRA) recently proposed a new Corporate Service Provider (CSP) Bill to tighten its rules regulating money laundering, terrorism financing, and the financing of the proliferation of weapons of mass destruction.
Under the new proposed Bill, which recently completed a public feedback exercise, all entities that provide corporate services in Singapore must be registered as CSPs with ACRA. These services include the provision of corporate secretarial, registered office address, nominee director or nominee shareholders, accounting, and Singapore company incorporation services. Furthermore, these CSPs must renew their registration every two years and have at least one registered qualified individual. Non-compliance with these regulations may result in a fine or imprisonment.
Foreigners setting up company in Singapore must engage CSPs, who are required to conduct due diligence on these foreigners before providing incorporation services in Singapore. These include verifying the authenticity of documents provided, conducting know-your-client checks, and performing checks to prevent the financing of terrorism and money laundering. Nominee directors for foreign directors cannot be appointed without engaging a CSP.
CSPs that provide nominee director and shareholder services are required to assess individuals who will be acting as nominee directors and shareholders for their clients. These individuals must be fit and proper and consent to act for these clients. Furthermore, all nominees must declare their nominee status and nominators to ACRA under the Register of Registrable Controllers and Register of Nominee Directors requirements.
As many CSPs are also accounting firms in Singapore, the new legislation is aimed at strengthening Singapore’s anti-money laundering and anti-terrorism financing regime and attracting the right type of business to the Republic. As such, greater scrutiny is needed for fund administration and accounting services in Singapore to protect the country’s reputation as a business and financial hub. The new legislations aim to prevent corporate structures from being abused by money launderers and strengthen the government’s ability to detect suspicious activities.
