New Legislative Changes for Corporate Service Providers in Singapore

The Corporate Service Providers Bill (CSP Bill) and the Companies and Limited Liability Partnerships (Miscellaneous Amendments) Bill (CLLPMA Bill) were passed by the Parliament of Singapore in July 2024. These Bills aim to combat financial crime by strengthening the country’s anti-money laundering regime.

Specifically, the CSP Bill aims to enhance the regulatory regime for corporate service providers in Singapore while the CLLPMA Bill will enhance the transparency of beneficial ownership of companies and limited liability partnerships.

The proposed amendments are not yet in effect, so businesses should stay informed by regularly checking for updates in the official Government Gazette.

What are the key changes introduced in the CSP Bill?

The CSP Bill implements the following changes.

Businesses providing corporate services must register with ACRA

Businesses providing corporate services in and from Singapore must register with the Accounting and Corporate Regulatory Authority (ACRA) as a corporate service provider (CSP). This is now obligatory even if the company does not file transactions on behalf of their customers with ACRA.

Further, companies that carry out activities in relation to the provision of accounting services must be registered with ACRA.

Entities that breach the requirement to be registered as a corporate service provider is liable for a fine of up to S$50,000 (US$37,905) and imprisonment of up to two years.

Comply with anti-money laundering obligations

Registered CSPs must comply with anti-money laundering obligations. Any breach of such obligations can result in criminal liability for the CSP and their senior management, with fines of up to S$100,000 (US$75,818) for each offense.

Fit and proper tests for nominee directors

Individuals can only be appointed as nominee directors for a business if a registered CSP arranges the appointments. Further, the CSP must have assessed the individual as fit and proper. Non-compliant individuals can be liable for a fine of up to S$10,000 (US$7,582) while non-compliant CSPs can be liable for a fine of up to S$100,000 (US$75,818).

The changes aim to prevent the misuse of nominee directorships in creating shell companies for money laundering, particularly when CSPs appoint unqualified individuals as nominee directors for clients.

What are the key changes introduced in the CLLPMA Bill?

The CLLPMA Bill introduces the following changes.

Disclosure of nominee status

Companies must now disclose the nominee status of their nominee directors to ACRA. Upon disclosure, the nominee status of the directors and shareholders will be made publicly available, but their nominators’ identities will not be disclosed.

Increase in fines for the register of registrable controllers

Companies and LLPs will face increasing fines if they fail to maintain accurate and up-to-date registers of registerable controllers, nominee shareholders, and nominee directors with ACRA. The fines range from S$5,000 (US$3,791) to S$25,000 (US$18,956)

Conclusion

In conclusion, the recent legislative changes in Singapore, including the CSP Bill and CLLPMA Bill, significantly strengthen the regulatory framework for corporate service providers and enhance transparency in company ownership. These amendments aim to curb financial crimes, particularly money laundering, by imposing stricter requirements on CSPs and nominee directors. As these changes are not yet in effect, businesses should remain vigilant and regularly consult the official Government Gazette for updates to ensure compliance with the new regulations.

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