Enhanced Regulatory Framework – KYC “Know-Your-Customer”

The Accounting and Corporate Regulatory Authority (ACRA) of Singapore implemented Enhanced Regulatory Requirements in May 2015. The aim of this is to strengthen measures against money laundering activities as well as the financing of terrorism. ACRA is calling out to Corporate Service Providers (CSPs) to Know-Your-Customer before proceeding with company registration services and continuing corporate filings. CSPs are required to register with ACRA as a Filing Agent and adhere to the given requirements. As a client, it is important to choose your CSP wisely so as to avoid affecting your business due to legal issues from non-compliant ones.

Aim of the Added Regulations

ACRA created these regulations in accordance with the recommendations from the Financial Action TAsk Force (FATF). They are an inter-governmental body with the objectives to “set standards and promote effective implementation of legal, regulatory and operational measures for combating money laundering, terrorist financing and other related threats to the integrity of the international financial system”.

These regulations are in place to protect CSPs from playing a part in illegal activities unknowingly as well as ensure that such illegal activities are discovered and reported early on. 

Know-Your-Customer (KYC) Certificate

With ACRA’s enhanced regulatory requirements, entrepreneurs today must obtain a KYC certificate to prevent banks from being used, intentionally or unintentionally, for money laundering activities.

KYC certificate components:

• Full Name, Identification Proof (such as NRIC or Passport copy) and Nationality of each of the Directors, shareholders, and the Ultimate Beneficial Owners of the company;
• A resolution by the company’s board of directors;
• Copy of Company’s certificate of incorporation;
• Copy of the company’s business profile; and
• Copy of the company’s M&AA

Although this might appear to lengthen the process, it is an additional layer of precaution that adds to our secure and conducive environment. Furthermore, other countries are also starting to or have already followed suit.

Non-compliance Penalty

If CSPs are found to be non-compliant, ACRA can suspend or cancel their registration and deny them access to ACRA’s Bizfile business portal. Financial penalties might be imposed as well. This would disrupt both the CSP as well as their clients. As such, it is of utmost importance to engage the right CSP to avoid being stuck is such situations.