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Cablegate: Imf On Singapore's Money Laundering and Terrorist

This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SECTION 01 OF 02 SINGAPORE 001301

SIPDIS

SENSITIVE

STATE FOR EB/ESC, INL, EAP/PMBS, L/LEI, S/CT
JUSTICE FOR INTERNATIONAL AFFAIRS

E.O. 12958: N/A
TAGS: ETTC EFIN PTER KCRM SN
SUBJECT: IMF ON SINGAPORE'S MONEY LAUNDERING AND TERRORIST
FINANCING REGIME: GOOD, BUT ROOM FOR IMPROVEMENTS

REF: SINGAPORE 1183

Summary
-------

1. (U) An IMF assessment praised Singapore's framework for
anti-money laundering and terrorist financing (AML/TF),
saying it provides a strong framework in terms of the FATF 40
recommendations and eight special recommendations. However,
the IMF said there remain areas requiring attention. Key are
limitations on mutual legal assistance and extradition, and a
lack of customer identification for wire transfers. The IMF
recommended that Singapore narrow the range of bases for
refusal of assistance under its mutual legal assistance law,
which may limit the effectiveness of the law in supporting
mutual legal assistance. The IMF also encouraged Singapore
to reassess whether a list approach to designating predicate
offenses serious crimes is the most effective choice, and to
make extradition for money laundering possible with a wider
range of countries. In response, Singapore noted that FATF
recognizes the list approach, and Singapore is reconsidering
its list in light of the FATF revised 40 recommendations.
Singapore said it will implement customer identification
requirements for wire transfers by the FATF deadline. End
summary.

Comment
-------

2. (SBU) The IMF's assessment is useful, especially in
pointing out deficiencies in Singapore's Mutual Assistance in
Criminal Matters Act and recommending changes, particularly
to narrow the basis for refusing assistance and to reconsider
its list based approach. While Singapore is unlikely to
change its approach, the IMF critique bolsters U.S. efforts
in the MLAT negotiations to address exactly these same
points. Post is sending by email a copy of the IMF
assessment to EAP/PMBS and L/LEI. End comment.

IMF Assesses Singapore's AML/TF Performance as Good...
--------------------------------------------- -------------

3. (U) The IMF's Financial System Stability Assessment of
Singapore, carried out between November 2002 and December
2003, and released in April, concludes that Singapore has a
sound and comprehensive legal, institutional, policy and
supervisory framework for AML/TF. The assessment said
Singapore has taken systematic and effective steps to address
many of the recommendations of the last Financial Action Task
Force (FATF) evaluation, in 1998-1999, and stated that
implementation measures are well-monitored and generally
effective.

...But Notes Areas Requiring Greater Attention
--------------------------------------------- -

4. (U) However, the assessment also identified several areas
that require attention, most notably mutual legal assistance.
Stating that Singapore could improve the effectiveness of
cross-border legal assistance, the assessment observed that
there are limitations on Singapore's ability to provide
particular kinds of mutual legal assistance, such as bank
records, restraint of proceeds, and confiscation orders. The
assessment team commented that Singapore "could widen the
possibilities for providing mutual legal assistance by making
compulsory measures available absent a treaty, and by
ratifying the UN Convention Against Transnational Organized
Crime (the Palermo Convention).

Mutual Legal Assistance
-----------------------

5. (U) The team also opined that the Mutual Assistance in
Criminal Matters Act's (MACMA) wide range of mandatory and
discretionary bases for refusing assistance "may limit the
effectiveness of the Act in supporting international
requests", recommending that Singapore consider narrowing the
range of bases for refusal of assistance in the MACMA. In
addition, the team said Singapore should take measures to
ensure timely response to mutual assistance requests related
to terrorist financing, by designating all parties to the
Financing of Terrorism Convention under its own law
(Singapore has currently only designated the US and UK).
Finally, the assessment also urged Singapore to continue
efforts toward concluding further MOUs between Singapore's
Suspicious Transactions Reporting Office (STRO) and foreign
counterparts. In its response to the recommendations,
Singapore stated that it "will continue to expedite current
negotiations".

6. (SBU) The IMF noted that in Singapore, predicate offenses
for money laundering are based on a list approach. The list
does not include all those specified in the Palermo
Convention, which Singapore has signed but not yet ratified.
The IMF recommended that Singapore ratify the Palermo
Convention on an expedited basis, urged Singapore to reassess
whether a list approach is the most effective choice for
Singapore, stating that an "all serious crimes approach"
would be preferable to a limited list. The Singapore
government largely rebuffed the suggestion, saying that FATF
recognizes the list approach. However, Singapore said it
will reconsider its list in light of the revised 40
recommendations. (Comment: As noted in Reftel, Singapore is
working internally on a longer list, consistent with the
categories of predicate offenses included in the Revised 40
recommendations. End comment.)

Other Areas for Work
--------------------

7. (U) The assessment team also made suggestions in other
areas:


-- Extradition. The IMF recommended that Singapore should
act to make extradition for money laundering available to a
wider range of countries.

-- Confiscation and Seizure. The IMF said that while
adequate powers exist to restrain and freeze assets, specific
provisions addressing identification and tracing are needed.
In reply, Singapore said it would review and update the
current overall scheme for confiscation and seizure.

-- Asset Sharing. Noting that a treaty relationship may be
needed for asset sharing, the assessment recommends that
Singapore consider a formal mechanism for sharing confiscated
property and also consider extending beyond terrorism
financing a forfeiture scheme based upon civil law.

-- Wire transfers. The assessment team said customer
identification measures for wire transfers need to be put in
place, and recommended that Singapore impose such a
requirement within the time frame set forth under FATF
Special Recommendation VII. In reply, Singapore said
financial institutions will be required to obtain full
originator information within the timeframe set out in FATF.


8. (U) Finally, the IMF recommended that the Monetary
Authority of Singapore (MAS) make the provisions of its AML
regulations more detailed and direct, supplementing current
statements of principle with firm provisions and explicit
guidance. For example, the IMF said MAS should make more
explicit its regulatory Notices regarding the conduct of
transactions with those failing to provide complete
documentation of identity, and make more explicit the duty to
identify persons authorized to operate accounts in the names
of legal entities. MAS should also include in the Notices
requirements that financial institutions have adequate
screening procedures to ensure high standards when hiring
employees. Replying, Singapore said that it believes that
the strong compliance culture of Singapore financial
institutions is evidence of the effectiveness of its policy
of issuing principles-based Notices, supplemented by thorough
inspections and follow-up.
LAVIN

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