SINGAPORE ANTICIPATES FAVORABLE FATF REVIEW

C O N F I D E N T I A L SECTION 01 OF 02 SINGAPORE 000703

SIPDIS

SIPDIS

STATE PASS TREASURY FOR PDEGARABEDIAN
FINCEN FOR RMILLER

E.O. 12958: DECL: 04/05/2017
TAGS: ETTC KTFN EFIN KCRM ECON ETRD EINV SN
SUBJECT: SINGAPORE ANTICIPATES FAVORABLE FATF REVIEW

REF: A. A) SINGAPORE 585

B. B) SINGAPORE 357

C. C) STATE 16120

D. D) 06 SINGAPORE 3547

Classified By: Deputy Chief of Mission Judith R. Fergin; reasons 1.4 (b
)(d).


1. (U) This is an action request. Please see para 11.


2. (C) Summary: GOS officials claim they are well prepared
for an upcoming Financial Action Task Force (FATF) peer
review to assess Singapore's anti-money laundering and
countering the financing of terrorism (AML/CFT) regime.
Recent steps to implement FATF's recommendations include new
and revised AML/CFT regulations for banks and other financial
institutions. Singapore plans to institute additional
measures before two multi-billion dollar casinos open in 2009
and 2010. Singapore currently lacks reporting requirements
for cash couriers and is still considering how to address
this deficiency. Given our mixed record with Singapore in
terms of law enforcement cooperation, we strongly urge USG
participation in FATF's on-site assessment of Singapore in
September. End Summary.

USG Engagement in the Mutual Evaluation Process
-------------- --


3. (SBU) In preparation for its third Mutual Evaluation,
Singapore must submit required paperwork to FATF, including
questionnaire responses, by June 1, 2007. A two-week on-site
evaluation will follow in September and FATF will issue its
final report in February 2008. The FATF Secretariat, in
conjunction with the Asia/Pacific Group on Money Laundering
(APG),will establish an evaluation team consisting of
representatives from four other FATF member economies a few
weeks before the on-site assessment.


4. (U) FATF last conducted a Mutual Evaluation of Singapore
in 1998. Since then, the GOS has relied on a permanent
inter-agency team consisting of twelve agencies to implement
FATF's recommendations -- currently forty for AML and nine
for CFT. These agencies report to a Steering Committee
headed by the Monetary Authority of Singapore (MAS),the
Ministry of Finance (MOF),and the Ministry of Home Affairs
(MHA).

Banks and Other Financial Institutions
--------------


5. (U) MAS recently issued new or revised AML/CFT
regulations (in the form of "Notices" and "Guidelines") for
banks and other financial institutions, most of which took
effect March 1, 2007. Affected institutions include banks,
finance companies, money changers and remitters, life
insurers, capital market intermediaries, and financial
advisers. Revised regulations for trust companies took
effect April 1, and new reporting requirements for
cross-border wire transfers will take effect on July 1. The
above regulations for the first time address some of FATF's
CFT recommendations as well as further implement its AML
recommendations.


6. (U) In addition to requiring originator information for
cross-border wire transfers, the regulations include
provisions related to customer due diligence (CDD);
"politically exposed persons"; prohibitions against
correspondent banking relationships with shell banks; and
additional suspicious transactions reporting requirements in
line with the Corruption, Drug Trafficking and Other Serious
Crimes (Confiscation of Benefits) Act and the Terrorism
(Suppression of Financing) Act.


7. (U) Revised MAS Notices and Guidelines:

MAS 626 ) Banks
MAS 3001 ) Money Changers and Remitters
MAS 824 ) Finance Companies
MAS 1014 ) Merchant Banks
MAS 314 ) Life Insurers
SFA04-N02 ) Capital Markets Intermediaries
FAA-N06 ) Financial Advisers
SFA13-N01 ) Approved Trustees

SINGAPORE 00000703 002 OF 002


TCA-N03 ) Trust Companies

Details are available at the MAS website: www.mas.gov.sg )-
"Legislations, Notices and Guidelines."

Anticipating a Favorable Report Card
--------------


8. (SBU) Deputy Prime Minister and Minister for Home Affairs
WONG Kan Seng told the Ambassador March 23 that he was
confident Singapore would comply with all FATF core
requirements in time for the assessment team's September
visit (ref A). MAS and other MHA officials have similarly
asserted in separate conversations that they were "well
prepared."

But Also Some Concerns
--------------


9. (C) However, MAS has also acknowledged some concerns,
including that FATF might take issue with its implementation
of Recommendation V concerning CDD, which states that CDD
requirements must be codified in law and not just regulation.
If challenged, MAS intends to argue that its Notices have
the effect of law. They take some comfort in the fact that
FATF deemed Portugal's similar implementation of
Recommendation V to be acceptable during its peer review last
year. Additionally, MAS is unsure how FATF will react to
some of Singapore's AML/CFT regulations for designated
non-financial businesses and professions (DNFBP). MAS
believes that the GOS has implemented adequate regulations
for casinos, attorneys, accountants, and trusts, but is still
uncertain how to proceed with those for real estate agents.
It has yet to address professions such as jewelers, but, MAS
noted, neither have most other FATF-members due to the
complexities involved.

Cash Couriers: Closing the Gap
--------------


10. (C) Singapore is still considering how to close a
significant gap in its AML/CFT regime -- the lack of
reporting requirements for cash couriers involved in the
physical cross-border transportation of currency and bearer
negotiable instruments. The GOS told us in recent meetings
that it is undecided about which of FATF's recommended
reporting requirement options (declaration or disclosure) to
pursue. DPM Wong told the Ambassador March 23 that his
biggest concern with a declaration system (which we have
repeatedly advocated) was the effect it might have on
Singapore's ability to efficiently screen individuals
entering the country. (Note: With the exception of an
arrival/departure card, Singapore does not require travelers
to fill out other forms such as a customs declaration. A
declaration system for cash couriers would therefore require
additional resources and potentially slow down processing
times at border checkpoints. End Note.) MHA officials told
us they intend to finalize a proposal for cash courier
reporting requirements in time for the FATF assessment in
September. They advised that implementation would still take
several more months due to the need for parliamentary
approval of amendments to existing laws.

Comment and Action Request
--------------


11. (C) Singapore's FATF peer review offers an outstanding
opportunity to strengthen our law enforcement relationship.
While we have seen recent improvement in cooperation,
Singapore's reluctance to share data from financial records
(except under our Drug Designation Agreement) continues to be
an obstacle. It is also an unparalleled chance to persuade
the GOS to adopt an AML/CFT regime that conforms to
international best practices, which is especially important
as Singapore's banking sector booms and the casino openings
approach. Action request: We strongly urge USG
participation in the upcoming FATF assessment, particularly
the on-site visit.
HERBOLD