On 14 January 2019, a new bill setting out a risk-based anti-money laundering and countering-the-financing-of-terrorism (AML/CFT) regime for precious stones and precious metals dealers (the Bill) was tabled for first reading in the Singapore parliament. The Ministry of Law (MinLaw) had consulted on the Bill in September and October 2018.
The Bill will apply to a broad range of persons who deal in, or who intermediate dealings in, precious metals, precious stones, precious products (being products that contain a specific proportion of precious metals or stones) and asset-backed tokens which provide an entitlement to such metals, stones or products. The Bill will impose wide-ranging requirements, including (among others) an obligation to register with a new Registrar of Regulated Dealers (the Registrar), report certain cash transactions exceeding S$20,000 in value, conduct customer due diligence (CDD) and maintain AML/CFT controls.
We set out below some key considerations for persons who will come within the scope of the Bill (which will likely include, for example, mining and other commodity groups), as well as a more detailed overview of the Bill.
Key considerations for dealers
The AML/CFT framework set out in the Bill complements Singapore’s broader efforts to combat financial crime. Indeed, under the Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act (Cap. 65A) (CDSA), dealers of precious stones, metals and products are already subject to transaction reporting, CDD and record-keeping requirements in relation to certain cash transactions exceeding S$20,000 in value.
While these requirements relating to cash transactions are most likely to affect dealers such as jewellery retailers, second-hand goods dealers and auction houses, the Bill will apply equally to other types of dealers, such as mining corporations and commodity houses. Even if they do not routinely undertake cash transactions, these dealers will need to comply with all other requirements under the Bill relating to regulated dealing, including the registration and record-keeping obligations and the requirement to establish an appropriate internal AML/CFT compliance framework.
In anticipation of the new framework taking effect, all dealers should therefore conduct a gap analysis between the requirements in the Bill and their internal controls, to ensure they are able to meet the attendant compliance standards. For dealers with a broad range of diversified activities, this may require a detailed scoping exercise to ascertain which activities will fall under the new framework. This may give rise to interpretative issues in some contexts – for example, it is unclear whether asset-backed tokens would include units in collective investment schemes (such as exchange-traded funds) which invest in precious stones, metals or products.