DRUG TRAFFICKING (CONFISCATION OF BENEFITS) (AMENDMENT) BILL

[Mr Speaker in the Chair]

Order for Second Reading read.

The Minister for Home Affairs (Mr Wong Kan Seng): Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time."

Sir, since the Drug Trafficking (Confiscation of Benefits) Act, or the DTA in short, was enacted in 1993, global efforts to curb money laundering have intensified substantially. As trade and capital flows become increasingly international and as Singapore expands its role as a financial centre, there is increased scope not only for cross-border crimes but also international money laundering to occur here.

Hence, further amendments to the DTA are necessary to enable us to deter and combat money laundering more effectively as well as to deprive criminals of the enjoyment of the benefits of their crime. The amended legislation will give our enforcement agencies and financial regulators sharper tools in their work to help maintain Singapore's reputation as a well-regulated financial centre and a city largely free of crime.

Serious Crimes - Money Laundering

The DTA was enacted to criminalise the laundering of benefits derived from drug trafficking, as well as to allow for the investigation and the confiscation of such benefits. Money laundering, as is commonly known, consists of concealing the origin of moneys derived from illicit activities and passing them off as the legitimate proceeds of lawful activities. When the DTA was enacted, drug trafficking was viewed internationally, and in Singapore, as the primary source of funds for money laundering.

However, since then, there has been overwhelming evidence that transnational crime, which is a growing problem for the world community, is not restricted to drugs or proceeds of drug trafficking. Criminal organisations are multi-faceted and other serious offences constitute an important and growing source of illegal wealth entering legitimate financial channels. This has led to an international trend of criminalising the laundering of not only drug money but also the proceeds of other serious crimes as well.

For example, the Financial Action Task Force (FATF), or an inter-Governmental body formed in 1989 by the G-7 to combat money laundering globally, started first by requiring its members to take measures to combat drug money laundering. Then in June 1996, it required its members to extend money laundering predicate offences to beyond drug trafficking. All Financial Action Task Force members, which include most of the Western developed countries and Hong Kong among others, have already extended or taken measures to extend the scope of their anti-money laundering regime to include the proceeds of serious crimes. Singapore, which joined the Financial Action Task Force in 1991, should do likewise, to demonstrate that we are committed to being a responsible partner in international initiatives to combat crime.

Apart from international trends, it is also important for our local enforcement efforts to target the proceeds of a wide range of serious crimes. Firstly, drug trafficking is not the only crime that results in significant amounts of illegal proceeds. Crimes, such as fraud and criminal breach of trust, do too. We do not want criminals or their families to be able to enjoy the fruits of such crimes. Secondly, our enforcement efforts against money laundering have sometimes been hindered at the investigation stage. For example, to obtain an order to investigate into the accounts of a suspect, the authorities have to be able to satisfy the courts that, among others, there are reasonable grounds for suspecting that the suspect has carried out or has benefited from drug trafficking. This may be difficult to do as criminals, nowadays, can be involved in several crimes, where the proceeds are mixed.

Hence, this Bill seeks to amend the DTA to extend the asset confiscation and anti-money laundering provisions of the DTA beyond drug trafficking to cover other serious crimes. To give effect to this, clauses 23 and 25 of the Bill seek to provide for the money laundering offences arising from benefits of serious offences. These include the conspiracy, incitement, attempt and abetment of these offences. Clause 30 of the Bill inserts a Second Schedule to the DTA to specify the list of serious crimes to be included in the Act. The list includes crimes that are serious in nature but excludes serious crimes that cannot be linked to money laundering (for example, bigamy and incest). Many of the amendments in the Bill merely extend current provisions covering drug trafficking proceeds to serious crimes proceeds. For example, clause 7 of the Bill inserts a new section 4A.

In extending our measures to deal with serious crimes, we are mindful that the Bill should not adversely affect the operations of the financial institutions in Singapore. Hence, the Bill provides similar safeguards, found in the existing DTA for investigations into drug offences, to prevent third parties from being able to pry into a person's financial accounts under frivolous pretext or under the guise of investigations into serious offences. These can be found in the new sections 26A, 26B and 34 and the amendments to section 31. In the case of foreign requests for financial information, some of the safeguards include the need for the existence of a bilateral agreement or treaty with the requesting country, the offence being a crime in both countries and the assistance not being contrary to public interest. The amended legislation is not more liberal than those of other financial centres in releasing information to foreign enforcement agencies.

Sir, the Bill also introduces various amendments to fine-tune the provisions of the DTA to make it a more effective tool to combat money laundering and deprive criminals of their ill-gotten gains. Let me explain the more important ones.

Firstly, clauses 22 to 25 amend the money laundering offences to clarify that the prosecution need not prove that the accused had actual knowledge of the relevant facts, that is, that the person is a drug trafficker, or that his proceeds are derived from drug trafficking or other serious crimes. Instead, the accused can be convicted based on evidence showing that he had "reasonable grounds to believe" that the person trafficked in drugs or the proceeds were derived from drug trafficking or other serious crimes. This would facilitate enforcement because in practice, proof of actual knowledge is difficult to produce. This is in line with the laws of many countries.

We are also increasing the penalties for money laundering from seven years jail and/or $100,000 fine to seven years jail and/or $200,000. As money laundering is primarily a crime involving large amounts of money, the current maximum of $100,000 should be increased.

Secondly, clause 20 inserts a new section to make the reporting of suspicious transactions mandatory for all persons, including financial institutions and non-financial institutions. This means that a person who, in the course of his professional duties, comes to know or suspect that any property represents the proceeds of drug trafficking or serious crimes is obliged to disclose the knowledge or suspicion to the authorities. The maximum penalty for non-disclosure is a $10,000 fine. Some permissible exceptions are mentioned in the new section.

Suspicious transactions reporting is already mandatory for banks under current MAS Guidelines which have the force of law. This new section extends the obligation to non-financial institutions and centralises the provisions in the DTA. Many countries, especially those in the FATF, have already enacted similar provisions as there is worldwide recognition that the reporting of suspicious transactions is a key source of intelligence for law enforcement authorities tackling money laundering.

Thirdly, the new sections 26B and 34 lower the standard required for foreign offences in respect of applying for court warrants or orders to obtain information from financial institutions from "prima facie case" to "reasonable grounds for suspecting". As I have mentioned, money laundering is often an international crime and hence international cooperation is vital. However, in our experience of forging international cooperation with foreign countries, "prima facie case" is too high a hurdle to meet in order to assist other countries in their investigations. "Reasonable grounds for suspecting" is also the test in many countries. Hence it is necessary to lower it.

Fourthly, clause 25 inserts a new section 43B to make it an offence for a person who has reasonable grounds to suspect that a money laundering investigation is being or about to be conducted to tip-off another person with information which is likely to prejudice the investigation. Since the new offence of tipping off is merely an extension of the offence of prejudicing investigation, the penalty for this will be the same as that for prejudicing investigations under section 44, ie, a maximum of three years imprisonment and/or a $30,000 fine.

Fifthly, as drug money laundering offences are already extraditable, clause 31(3) similarly amends the Extradition Act to make serious crimes money-laundering offences extraditable.

Finally, the Bill also provides for repealing the Corruption (Confiscation of Benefits) Act in clause 31(2). This is because the amended DTA would apply to corruption offences and would have a scope wider than the Corruption (Confiscation of Benefits) Act as it also includes provisions relating to foreign corruption offences and criminalises the money laundering of corruption proceeds. In addition, the Bill provides for the amended Act to be renamed the "Corruption, Drug Trafficking and other Serious Crimes (Confiscation of Benefits) Act" to reflect its wider scope. The word "Corruption" is placed in the title as we want to send the signal that corruption will continue to be tackled even more seriously in Singapore after the repeal of the Corruption (Confiscation of Benefits) Act.

Sir, to conclude, the new laws, by confiscating the illegal proceeds of serious crimes and preventing criminals from enjoying the fruits of their crimes, would render many crimes unprofitable ventures. These will be additional weapons to fight against crime in Singapore. In addition, the proposed amendments would also allow my Ministry to keep ahead of the ever-changing transnational crime and global money laundering situation. In particular, although Singapore is one of the key financial centres in the world - it is open, efficient and sophisticated - we also want to ensure that she is not susceptible to money laundering. These proposed amendments would in fact enhance Singapore's growth and reputation as a modern international financial centre.

Sir, I beg to move.

Question proposed.