Jurisdiction - Singapore
News
Singapore – Proposed Amendments To Casino Control Act.

29 November, 2013

 

Legal News & Analysis – Asia Pacific – Singapore – Regulatory & Compliance

 

Introduction


A Bill has been introduced in Parliament to amend the Casino Control Act (Cap 33A 2007 Ed.) in order to enhance the ability of the authorities to detect and prevent money laundering for criminal activity and the financing of terrorism. The proposed changes include the introduction of a new Section 139, and amendments to Sections 143 and 200 of the Act, and are summarised below.


Proposed New Section 139 – Customer Due Diligence Measures


The measures contained in the new Section 139 will be familiar to Casino operators as they are already to be found within the Casino Control (Prevention of Money Laundering and Terrorism Financing) Regulations 2009 (the “Regulations”). The new Section 139 (1) and (2) combine measures found in Sections 6 and 15 of the Regulations respectively, and provide that the casino operator must perform due diligence checks in the following circumstances:


i) when a patron account is opened;

ii) when the operator enters into a cash transaction with a patron involving $10,000 or more;

iii) when the operator receives $5,000 or more into a deposit account from a patron in a single transaction;

iv) when the operator has a reasonable suspicion that a patron is engaged in any money laundering or terrorism financing activity;

v) when the operator doubts the veracity of any information previously obtained about patron; or

vi) “under such other circumstances as may be prescribed” in future by the authorities.

 

In addition a casino operator must refuse to open an account for a patron if:


i) they are unable to complete the due diligence checks, for whatever reason;

ii) the patron is unable or unwilling to provide any information which they are asked for, or the patron withdraws the application; or

iii) “under such other circumstances as may be prescribed” in future by the authorities.


The references to “… under such other circumstances as may be prescribed” are not present in the Regulations, and allow the authorities the discretion to add other circumstances beyond those specified in the provisions, in which the Casino must perform the due diligence exercise, or refuse to open a patron account. This provides flexibility, not previously available in the Regulations, for the Government to adapt to changing circumstances.


The Regulations remain in force however, and they include detailed provisions on due diligence measures (such as verification of identity) and other obligations relating to reporting of transactions, monitoring of accounts, internal procedures and training. The proposed amendments to the Act therefore do not alter the operators’ existing obligations on due diligence, but serve to clarify the key requirements and enhance the record keeping measures relating to those due diligence checks. This is clear from the proposed addition of an entirely new measure contained in Section 139 paragraph (3), which provides that the casino operator must keep “all records obtained through customer due diligence measures” including records of ID documents, accounts and business correspondence obtained in the course of those checks. This expands the requirements imposed on operators beyond those presently contained in the Regulations, where the current obligation is limited to the retention of records made during the identity verification of patrons making a deposit of $5,000 or more into their account, and the retention of details relating to enhanced due diligence and monitoring of “politically exposed persons”.


The proposed new measure in Section 139 (3) is in addition to the existing wider obligations in relation to record keeping, for example, the obligation to implement policies relating to record-keeping (Section 16 (2)(c) of the Regulations), and a general obligation under Section 143 of the Act relating to general record keeping of the casino operations. The new requirement in Section 139(3), in conjunction with new measures in relation to record-keeping in the proposed amendments to Section 143 outlined in the following section below, indicate that the Government is seeking a more thorough approach to due diligence in order to enhance detection and prevention of money laundering and financing of terrorism. Failure to comply with any of the measures in Sections 139 (1) to (3) can lead to unspecified disciplinary measures (under section 139 (4)).

 

Amendments To Section 143 Of The Act: More Stringent Record Keeping


It is the substantive changes to Section 143 of the Act which demonstrate that the focus of these amendments is to require improvement in record keeping on the part of the casinos, rather than substantively changing the obligations of due diligence.


The current position under Section 143 is that a casino operator must retain records of transactions for a period of not less than 5 years after the transaction has taken place. The proposed amendment obliges the casino operator to retain records of due diligence measures (i.e. those specified in Section 139) for not less than 5 years after the closure of the patron‘s account. This change ensures that the Casino’s due diligence measures, undertaken when the account was opened, are now retained and are available to the authorities for a much longer period of time. It prevents a situation arising where a suspicious activity may occur more than 5 years after the account was opened, and no record is available of any of the due diligence measures the Casino took when opening the account, thereby leaving a significant evidential gap in any case which may come before the court, or in any enforcement action against the Casino.


There is a further addition to Section 143 in the form of paragraph 1A, which requires the casino operator to ensure that all records relating to the operations of the casino are kept in such a manner as to permit a reconstruction of individual transactions (including the amount and type of currency involved, if any) so as to provide, if necessary, evidence for prosecution of an offence.


The specific reference to “evidence for prosecution of an offence” should leave no doubt in the Casino operator’s mind as to the standard of record-keeping which is required. Any system of record keeping, whether it relates to due diligence measures or not, must be in such a form as to stand up to the scrutiny of the court in a criminal case which comes with the “beyond reasonable doubt” standard of proof.


Amendment To Section 200


There is one further minor alteration to the Act in Section 200. This section stipulates the matters in relation to which the Casino Regulation Authority, with the approval of the Minister, may make regulations. The amendment replaces the old paragraph (t) which simply read as follows:

 

anti-money-laundering requirements


with the following:


requirements to detect or prevent money laundering and the financing of terrorism


While on the face of it this is a minor alteration, it does broaden the scope of the measures beyond money laundering to specifically include the financing of anti-terrorism. The separation of the offences in this way corresponds to the fact that offences related to money laundering and those related to terrorist activity are covered by different legislation, namely the Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act, (Cap 65A), and the Terrorism (Suppression of Financing) Act (Cap 325) respectively, and the elements of the offences are different.


Concluding Words


While the proposed new measures contained in the amendments to the Act do not affect the due diligence measures which Casino operators are obliged to undertake, they do substantially alter the record-keeping regime. Casino Operators should be prepared to review their current record-keeping procedures and make any changes necessary to ensure that they comply with these new and more stringent requirements once the proposed amendments are passed and come into effect.


Rajah & Tann

 

Lau Kok Keng, Partner, Rajah & Tann 

kok.keng.lau@rajahtann.com


Cherrin Wong, Rajah & Tann

cherrin.wong@rajahtann.com


Darren King, Rajah & Tann

darren.king@rajahtann.com

 

Comments are closed.