On 1 May 2024, the Prevention of Proliferation Financing and Other Matters Act 2024 (“Act“) came into operation. The Act was enacted to meet the updated standards set out by the Financial Action Task Force (FATF), of which Singapore is a member, for the prevention of financial crimes. The updated standards relate to the new requirements pertaining to the identification, assessment and mitigation of risks associated with the financing of proliferation of weapons of mass destruction (“proliferation financing“).
The Act amends the laws that cover the following non-financial sectors: (i) precious stones and precious metals (“PSPMs“) dealers (“PSMDs“); (ii) moneylending; (iii) pawnbroking; and (iv) legal services. These laws are as follows (collectively, “four Acts“):
(a) Precious Stones and Precious Metals (Prevention of Money Laundering and Terrorism Financing) Act (“PSPM Act“);
(b) Moneylenders Act;
(c) Pawnbrokers Act; and
(d) Legal Profession Act.
The Act updates the four Acts to clearly align the regulatory regime for the PSMDs, moneylending, pawnbroking, and legal services sectors with the updated FATF standards. Pursuant to the Act, businesses or persons covered by the four Acts are required to put in place adequate measures to combat proliferation financing.
The Act also enhances the regulatory regime for PSMDs. The changes include:
(a) Updating the definition of “precious product”. Previously, “precious product” under the PSPM Act meant any jewellery, watch, apparel, accessory, ornament, or other finished product (i) made up of, containing, or having attached to it, any PSPM; and (ii) where at least 50% of the value of the product is attributable to the PSPM. This definition has been amended to cover any “precious product” priced above the prescribed value, i.e. S$S20,000, to capture products with majority of value that is attributable to other factors (e.g. branding or workmanship) as these products can also pose financial crime risks.
(b) Amending the definition of “asset-backed token” to exclude digital payment tokens (“DPTs”) as DPT service providers are already regulated by the Monetary Authority of Singapore under the Payment Services Act.
For a more detailed discussion on the key changes introduced by the Act, please refer to our December 2023-January 2024 NewsBytes write-up titled “Prevention of Proliferation Financing and Other Matters Bill Passed” (page 37) (link here).
Click on the following link for more information (available on the Singapore Statutes Online website at www.sso.agc.gov.sg):
