Anti-Money Laundering (AML) and Politically-Exposed Person (PEP)
The recent buzz words you would hear on the Singapore news are “AML”, “PEP” & “Sanction List” when we come into contact with people, especially foreigners, with cash to set up a new company or to invest or to exchange into another currency or to deal with pawn shops…in Singapore.
I have received at least 3 enquiries since last week on what & how to do AML & PEP screenings.
Let me try to explain AML & PEP here for our general understanding.
What is ‘Anti Money Laundering – AML’ ?
* Anti-money laundering (AML) refers to a set of procedures, laws or regulations designed to stop the practice of generating income through illegal actions.
* In most cases, money launderers hide their actions through a series of steps that make it look like money that came from illegal or unethical sources was earned legitimately.
Adverse Effects of Money Laundering
* Money Laundering activities typically aim to generate income with no regulation to maximize income for as little cash outflow as possible, with no regard for the probable negative economic, political and social implications.
* These activities also include income-generating actions that aim to raise funds for separate illegal activities.
AML regulations require :
* financial institutions, funds companies, company secretarial firms, money changers, etc, issuing credit to complete due-diligence procedures to ensure that these institutions and services firms are not aiding in money-laundering activities.
* The onus to perform these procedures is on the institutions and services firm, not on the criminals or the government.
Politically exposed person ( PEP )
ACRA Act (Cap 2A) and ACRA ( filing agents & qualified individuals ) regulations 2015 First Schedule specifically required PEP screenings to be performed in the financial services industry in Singapore.
PEP is a term describing someone who has been entrusted with a prominent public function.
* A PEP generally presents a higher risk for potential involvement in bribery & corruption by virtue of their position & the influence that they may hold.
* The terms politically exposed person & senior foreign political figure are often used interchangeably.
* Foreign official is a term for individuals deemed as government persons under the Foreign Corrupt Practices Act or FCPA, & although definitions are similar to PEP, there are quite a few differences & should not be used interchangeably.
* The term PEP is typically used referring to customers in the financial services industry, while ‘foreign official’ refers to the risks of third party relationships in all industries.
So, if you are setting up a company in Singapore or intend to do investment in Singapore, don’t be surprised that your Service Agent or Consultant would screen you for “AML” & “PEP”, they are just doing their job.
Feel free to call if you need to tap onto our robust AML software or a check on PEP, we have the capability to assist you, or just call if you are unsure of how to proceed.
If you need help, feel free to contact us at :
(M) +65 90880669
