Singapore Proposes Tougher Laws to Crack Down on Money Mules

On April 18, 2023, Singapore’s Ministry of Home Affairs (MHA) and the Smart Nation and Digital Government Office (SNDGO) proposed stricter laws to strengthen the country’s defense against scams facilitated by money mules. While the police investigated more than 19,000 money mules between 2020 and 2022, the MHA notes that fewer than 250 cases were eventually prosecuted.  

The proposed legislative updates take the form of amendments to the Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) (Amendment) Bill (CDSA Bill) and the Computer Misuse (Amendment) Bill (CMA Bill) that would hold money mules criminally liable for their actions. This follows remarks from Law and Home Affairs Minister K. Shanmugam in February 2023 when he was asked whether penalties should be increased to deter money muling activity. Shanmugam said, “The issue is not with the penalties in our current laws, but our laws need to be enhanced to make it easier to make out money laundering offenses in such scam cases.”

Legislative Amendments

In essence, the amendments aim to make it easier for law enforcement to prosecute money mules with lower culpability. As it stands, money mules can only be charged if it can be proven they had knowledge or reasonable grounds to believe the funds transacted through their bank account were linked to criminal activity. It is the difficulty in proving intent that has resulted in a disproportionate amount of prosecutions in relation to police investigations. 

Regarding the CDSA Bill, the new provisions include the following:

• The introduction of two new offenses: rash and negligent money laundering. Rash money laundering is ​​when a person acts rashly by proceeding to carry out transactions despite having some suspicion of the funds’ illicit origin. Negligent money laundering is when a person continues with a transaction despite noticeable red flags. 
• Widening the scope of money laundering liability by including circumstances where someone assists another to retain the benefits from criminal conduct. This could refer to instances where a person allows someone else to access, operate, or control their payment account but fails to take reasonable steps to determine the purpose of this arrangement. 
• Increasing financial penalties. The offense of rash money laundering will carry a maximum fine of up to $250,000 or five years imprisonment, or both. The offense of negligent money laundering will carry a fine of up to $150,000 or three years imprisonment, or both. The offense of assisting another to retain benefits from criminal conduct will carry a maximum fine of up to $50,000 or three years imprisonment, or both.

Regarding the CMA bill, the new provisions relate to the misuse of Singpass accounts. According to the MHA, there is an emerging trend of Singpass users freely disclosing their Singpass credentials, such as a Singpass password or one-time password, usually for money. Using these credentials, fraudsters can register businesses, open bank accounts, and sign up for new phone lines, to facilitate the perpetration of fraud or other offenses. 

In short, the proposed amendments to the CMA bill make it an offense to disclose a Singpass password, access codes, or provide any other means of access to a Singpass account. It also makes it an offense to obtain, retain, supply, offer to supply, or transmit the Singpass credentials of another person. However, the bill would still protect vulnerable persons, such as seniors requiring family members’ help to make Singpass transactions and those genuinely tricked into giving up their credentials.

Money Mule Activity in Singapore

In March 2023, the police announced that over 350 suspects, aged 16 to 75, were under investigation for their alleged involvement in 1,650 scams and money mule operations, resulting in more than $4 million in losses. Some of the commonly reported scam types included:

• Fake-friend calls 
• Investment scam 
• E-commerce fraud
• Fake job offerings 
• Romance scams
• Government official impersonation scams (also known as business email compromise (BEC) scams)

According to the MHA, in 2022, scam victims in Singapore lost $660.7 million to schemes such as these – up from $632 million in 2021. 

To mitigate the risk of money muling activity and improve detection, the Monetary Authority of Singapore (MAS) has encouraged financial institutions to use data analytics and has encouraged firms to share information about emerging mule typologies. 

Key Takeaways

Compliance staff should keep up with legislative developments as these proposed amendments pass through parliament. Additionally, teams should review their reporting processes and procedures to ensure suspicious money muling activity is vigilantly identified and escalated where appropriate. To do this effectively, compliance staff should ensure they are familiar with the following red flag behavioral indicators that may indicate suspicious activity:

• Transaction patterns – Money mules will likely engage in multiple transactions that do not fit their customer risk profile. Firms should implement monitoring protocols to spot suspicious transaction patterns that capture transaction characteristics and the surrounding context, including destinations and recipients. 
• Unusual payment methods – Money mules often use unique payment methods, such as prepaid cards or wire transfers, to move money quickly and anonymously. 
• Unusual customer information – Money mules often use false or incomplete customer information to facilitate transactions. If a customer provides suspicious or incomplete information, firms should investigate further and, when appropriate, employ enhanced due diligence (EDD) measures. 

Shell companies – Money mules often create shell companies to hide the beneficial ownership structures that underpin money laundering networks. Criminals then use shell company accounts to route illicit funds to and from multiple locations.