PART 2 | CUSTOMER DUE DILIGENCE MEASURES |
| Prescribed customer due diligence measures |
| 4. For the purposes of section 70C of the Act, a legal practitioner or law practice must perform the customer due diligence measures prescribed in this Part. |
| Client suspected of money laundering or financing of terrorism |
5.—(1) Where a legal practitioner or law practice has reasonable grounds to suspect that a client may be engaged in money laundering or the financing of terrorism, the legal practitioner or law practice —| (a) | must not establish any new business relationship with, or undertake any new matter for, the client; and | | (b) | must disclose the suspicion, or the information on which the suspicion is based, by filing a suspicious transaction report with either or both of the following (as the case may be):| (i) | a Suspicious Transaction Reporting Officer, if the client may be engaged in money laundering; | | (ii) | a police officer or Commercial Affairs Officer, if the client may be engaged in the financing of terrorism. |
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| (2) Paragraph (1)(a) does not prevent the renewal of an existing retainer of the legal practitioner or law practice. |
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| General customer due diligence measures in relation to client |
6.—(1) At the applicable time specified in rule 11, a legal practitioner or law practice must perform the following customer due diligence measures in relation to a client:| (a) | ascertain the identity of the client; | | (b) | verify the client’s identity using objectively reliable and independent source documents, data or information; | | (c) | take reasonable measures to determine whether the client is a politically-exposed individual, or a family member or close associate of any such individual. |
(2) Where the client is an entity or a legal arrangement, the customer due diligence measures that a legal practitioner or law practice must perform under paragraph (1)(a) and (b) include identifying the client and verifying the client’s identity, respectively, through the following information:| (a) | the name of the client; | | (b) | the legal form of the client; | | (c) | the documents that prove the existence of the client; | | (d) | the documents that regulate and bind the client (such as the constitution, or the memorandum and articles of association, of a company, if the client is a company, or the trust deed of an express trust, if the client is an express trust); | | (e) | the individuals in the senior management of the client; | | (f) | the address of the registered office of the client; | | (g) | the address of a principal place of business of the client, if the registered office of the client is not a principal place of business of the client. |
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(3) Despite paragraph (2), the legal practitioner or law practice need not perform the customer due diligence measures referred to in that paragraph, if the client is —| (a) | a Ministry or department of the Government, an organ of State or a statutory board; or | | (b) | a ministry or department of the government of a foreign country or territory, |
| unless the legal practitioner or law practice suspects that the client may be engaged in, or the business relationship with the client or the matter undertaken for the client may involve engagement in, money laundering or the financing of terrorism. |
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| General customer due diligence measures in relation to individual purporting to act on behalf of client |
7. At the applicable time specified in rule 11, a legal practitioner or law practice must perform the following customer due diligence measures in relation to an individual purporting to act on behalf of a client:| (a) | verify whether the individual is authorised to act on behalf of the client; | | (b) | ascertain and verify the identity of the individual. |
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| General customer due diligence measures in relation to entity or legal arrangement |
8.—(1) At the applicable time specified in rule 11, a legal practitioner or law practice must perform the following customer due diligence measures in relation to a client which is an entity or a legal arrangement:| (a) | ascertain whether the client has any beneficial owner; | | (b) | ascertain the identity of each beneficial owner (if any); | | (c) | take reasonable measures to verify the identity of each beneficial owner (if any) using objectively reliable and independent source documents, data or information; | | (d) | take reasonable measures to determine whether each beneficial owner (if any) is a politically-exposed individual, or a family member or close associate of any such individual; | | (e) | understand the nature of the client’s business; | | (f) | understand the ownership and control structure of the client. |
(2) Where the client is an entity, the customer due diligence measures that a legal practitioner or law practice must perform under paragraph (1)(b) and (c) include identifying, and taking reasonable measures to verify the identity of, each beneficial owner of the client, through the following information:| (a) | the identity of each individual (if any) who has a controlling ownership interest in the client; | | (b) | if there is any doubt as to whether an individual who has a controlling ownership interest in the client is a beneficial owner of the client, or if there is no individual who has a controlling ownership interest in the client, the identity of each individual (if any) who has control of the client through other means; | | (c) | if there is no individual who has a controlling ownership interest in the client or who has control of the client through other means, the identity of each individual in the senior management of the client. |
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(3) Where the client is a legal arrangement, the customer due diligence measures that a legal practitioner or law practice must perform under paragraph (1)(b) and (c) include identifying, and taking reasonable measures to verify the identity of, each beneficial owner of the client, through the following information:| (a) | if the client is an express trust, the identities of the settlor, each trustee, the protector (if any) and each beneficiary or class of beneficiaries of the trust, and any other individual exercising effective control over the client (including through a chain of control or ownership); | | (b) | if the client is any other legal arrangement, the identity of each person in an equivalent or a similar position to a settlor, trustee, protector or beneficiary of a trust, or to an individual referred to in sub-paragraph (a). |
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(4) Despite paragraphs (1), (2) and (3), the legal practitioner or law practice need not perform the customer due diligence measures referred to in those paragraphs, if the client is —| (a) | a Ministry or department of the Government, an organ of State or a statutory board; | | (b) | a ministry or department of the government of a foreign country or territory; | | (c) | an entity listed on a securities exchange as defined in section 2(1) of the Securities and Futures Act 2001, or a subsidiary of such an entity more than 50% of the shares or other equity interests of which are owned by the entity; [S 636/2024 wef 31/12/2021] | | (d) | an entity listed on a stock exchange outside Singapore that is subject to regulatory disclosure requirements; | | (e) | a relevant Singapore financial institution; | | (f) | a financial institution incorporated or established outside Singapore that is subject to and supervised for compliance with requirements for the prevention of money laundering and the financing of terrorism consistent with the standards set by the FATF; | | (g) | an investment vehicle every manager of which is a financial institution referred to in sub-paragraph (e) or (f); | | (h) | any of the following universities in Singapore:| (i) | Nanyang Technological University; | | (ii) | National University of Singapore; | | (iii) | Singapore Institute of Technology; | | (iv) | Singapore Management University; | | (v) | Singapore University of Technology and Design; | | (vi) | Singapore University of Social Sciences; [S 514/2017 wef 15/09/2017] |
| | (i) | a Government school as defined in section 2 of the Education Act 1957; [S 636/2024 wef 31/12/2021] | | (j) | the Society; or | | (k) | an entity that is made up of regulated professionals who are subject to and supervised for compliance with requirements for the prevention of money laundering and the financing of terrorism consistent with the standards set by the FATF, |
| unless the legal practitioner or law practice suspects that the client may be engaged in, or the business relationship with the client or the matter undertaken for the client may involve engagement in, money laundering or the financing of terrorism. |
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(5) The legal practitioner or law practice must, when determining any of the following, document the basis for making that determination:| (a) | that the client is a financial institution referred to in paragraph (4)(f); | | (b) | where the client is an investment vehicle referred to in paragraph (4)(g), that a manager of the client is a financial institution referred to in paragraph (4)(f); | | (c) | that the client is an entity referred to in paragraph (4)(k). |
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| General customer due diligence measures in relation to business relationships |
9.—(1) A legal practitioner or law practice must perform the customer due diligence measures referred to in paragraphs (2) and (3) in relation to a business relationship with a client.| (2) The legal practitioner or law practice must, at the applicable time specified in rule 11, identify and, if appropriate, obtain information on the purpose and intended nature of the business relationship with the client. |
(3) The legal practitioner or law practice, must conduct the following ongoing customer due diligence measures on the business relationship with the client during the course of the business relationship:| (a) | the legal practitioner or law practice must scrutinise transactions undertaken throughout the course of the business relationship, to ensure that those transactions are consistent with the legal practitioner’s or law practice’s knowledge of the client, the client’s business, the client’s risk profile and, where appropriate, the source of funds for those transactions; | | (b) | the legal practitioner or law practice must ensure that the customer due diligence data, documents and information obtained in respect of the client, each individual appointed to act on behalf of the client, and each beneficial owner of the client, are relevant and kept up-to-date, by undertaking reviews of existing customer due diligence data, documents and information, particularly if the client is a higher risk client; | | (c) | where the legal practitioner or law practice has reasonable grounds for suspecting that the business relationship with the client involves engagement in money laundering or the financing of terrorism, but the legal practitioner or law practice considers it appropriate to retain the client —| (i) | the legal practitioner or law practice must substantiate the reasons for retaining the client, and document those reasons; and | | (ii) | the business relationship must be subjected to commensurate risk mitigation measures, including enhanced ongoing monitoring; |
| | (d) | where the legal practitioner or law practice assesses the client to be a higher risk client, or the business relationship with the client to be a higher risk business relationship, the legal practitioner or law practice must —| (i) | perform enhanced customer due diligence measures in accordance with rule 13; and | | (ii) | obtain the approval of the legal practitioner’s or law practice’s senior management to retain the client. |
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| Specific customer due diligence measures for legal practitioners who act as trustees |
10.—(1) A legal practitioner who acts as a trustee must perform the customer due diligence measures referred to in paragraphs (2) to (6).| (2) A legal practitioner who is a trustee of an express trust governed by Singapore law must, at the applicable time specified in rule 11, obtain and must maintain adequate, accurate and current information on the identities of the settlor, each trustee, the protector (if any) and each beneficiary or class of beneficiaries of the trust, and of any other individual exercising effective control over the trust. |
| (3) A legal practitioner who is a trustee of any trust governed by Singapore law must, at the applicable time specified in rule 11, obtain and must maintain basic information on every other regulated agent of, or service provider to, the trust, including any investment adviser or manager, accountant or tax adviser. |
| (4) The legal practitioner referred to in paragraph (2) or (3) must maintain the information referred to in the applicable paragraph for at least 5 years after the legal practitioner’s involvement with the trust ceases. |
| (5) The legal practitioner referred to in paragraph (2) or (3) must ensure that any information maintained pursuant to the applicable paragraph is kept accurate and as up-to-date as possible, and is updated on a timely basis. |
(6) Subject to any rule of law relating to a trustee’s duty of confidentiality, a legal practitioner must, when forming a business relationship with any person referred to in the following sub‑paragraphs in the legal practitioner’s capacity as a trustee, disclose to that person the legal practitioner’s status as such trustee:| (a) | a financial institution as defined in section 2 of the Financial Services and Markets Act 2022; [S 251/2023 wef 28/04/2023] | | (b) | a casino operator as defined in section 2(1) of the Casino Control Act 2006; [S 636/2024 wef 31/12/2021] | | (c) | a licensed estate agent as defined in section 3(1) of the Estate Agents Act 2010; [S 636/2024 wef 31/12/2021] | | (d) | a regulated dealer as defined in section 2 of the Precious Stones and Precious Metals (Prevention of Money Laundering, Terrorism Financing and Proliferation Financing) Act 2019; [S 378/2024 wef 01/05/2024] | | (da) | a pawnbroker as defined in section 3(1) of the Pawnbrokers Act 2015; [S 992/2020 wef 14/12/2020] [S 636/2024 wef 31/12/2021] | | (e) | a legal practitioner; | | (f) | a foreign lawyer registered under section 36P of the Act; | | (g) | a notary public as defined in section 2 of the Notaries Public Act 1959; [S 636/2024 wef 31/12/2021] | | (h) | a public accountant as defined in section 2(1) of the Accountants Act 2004; [S 636/2024 wef 31/12/2021] | | (i) | a person (not being a legal practitioner or a public accountant) who provides one or more of the following services:| (i) | acting as an agent for the formation of entities; | | (ii) | acting as (or arranging for another person to act as) a director or secretary of a company, a partner of a partnership, or a person holding a similar position in any other entity; | | (iii) | providing a registered office, any business address or any accommodation, correspondence or administrative address for a company, a partnership or any other entity or legal arrangement; | | (iv) | acting as (or arranging for another person to act as) a trustee of an express trust, or performing (or arranging for another person to perform) a function equivalent to the function of a trustee in any other legal arrangement; | | (v) | acting as (or arranging for another person to act as) a nominee shareholder for another person. |
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| Timing of certain customer due diligence measures |
11.—(1) Subject to paragraph (2), the applicable time for performing, in relation to a client, the customer due diligence measures referred to in rules 6(1) and (2), 7, 8(1), (2) and (3), 9(2) and 10(2) and (3) is before the start, or during the course, of establishing a business relationship with the client.(2) A legal practitioner or law practice need not complete the performance, in relation to a client, of a customer due diligence measure referred to in rule 6(1)(b) or (c), 7, 8(1)(b), (c), (d), (e) or (f), (2) or (3), 9(2) or 10(2) or (3), or in rule 6(2) (only insofar as it relates to the customer due diligence measure that a legal practitioner or law practice must perform under rule 6(1)(b)), before the start, or during the course, of establishing a business relationship with the client if —| (a) | a deferral of the completion of that measure is necessary in order not to interrupt the normal conduct of business operations; and | | (b) | the risks of money laundering and the financing of terrorism can be effectively managed. |
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(3) Where paragraph (2) applies to a legal practitioner —| (a) | the law practice in which the legal practitioner practises must adopt internal risk management policies and procedures concerning the conditions under which a legal practitioner who practises in the law practice, or the law practice, may establish a business relationship with a client before the completion of the relevant customer due diligence measure; and | | (b) | the legal practitioner must complete the relevant customer due diligence measure as soon as is reasonably practicable. |
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(4) Where paragraph (2) applies to a law practice, the law practice must —| (a) | adopt internal risk management policies and procedures concerning the conditions under which a legal practitioner who practises in the law practice, or the law practice, may establish a business relationship with a client before the completion of the relevant customer due diligence measure; and | | (b) | complete the relevant customer due diligence measure as soon as is reasonably practicable. |
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12.—(1) A legal practitioner or law practice is to perform, in relation to a client, the customer due diligence measures prescribed in this Part to an extent that is commensurate with the level of risk of money laundering and the financing of terrorism.(2) A legal practitioner or law practice must —| (a) | perform, in relation to each client, an adequate analysis of the risks of money laundering and the financing of terrorism; | | (b) | document the analysis and the conclusions reached; and | | (c) | keep the analysis up to date. |
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(3) The risks of money laundering and the financing of terrorism are lowered if the client is any of the following:| (a) | a Ministry or department of the Government, an organ of State or a statutory board; | | (b) | a ministry or department of the government of a foreign country or territory; | | (c) | an entity listed on a securities exchange as defined in section 2(1) of the Securities and Futures Act 2001, or a subsidiary of such an entity more than 50% of the shares or other equity interests of which are owned by the entity; [S 636/2024 wef 31/12/2021] | | (d) | an entity listed on a stock exchange outside Singapore that is subject to regulatory disclosure requirements; | | (e) | a relevant Singapore financial institution; | | (f) | a financial institution incorporated or established outside Singapore that is subject to and supervised for compliance with requirements for the prevention of money laundering and the financing of terrorism consistent with the standards set by the FATF; | | (g) | an investment vehicle every manager of which is a financial institution referred to in sub-paragraph (e) or (f); | | (h) | any of the following universities in Singapore:| (i) | Nanyang Technological University; | | (ii) | National University of Singapore; | | (iii) | Singapore Institute of Technology; | | (iv) | Singapore Management University; | | (v) | Singapore University of Technology and Design; | | (vi) | Singapore University of Social Sciences; [S 514/2017 wef 15/09/2017] |
| | (i) | a Government school as defined in section 2 of the Education Act 1957; [S 636/2024 wef 31/12/2021] | | (j) | the Society; | | (k) | an entity that is made up of regulated professionals who are subject to and supervised for compliance with requirements for the prevention of money laundering and the financing of terrorism consistent with the standards set by the FATF. |
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(4) The risks of money laundering and the financing of terrorism are raised, if —| (a) | the client is from or in, or the transaction relates to, any country or jurisdiction in relation to which the FATF has called for countermeasures or enhanced customer due diligence measures, as notified to the legal practitioner or law practice generally by the Society; | | (b) | the client is from or in any country or jurisdiction known to have inadequate measures to prevent money laundering and the financing of terrorism, as determined by the legal practitioner or law practice, or as notified to the legal practitioner or law practice generally by the Society; or | | (c) | the legal practitioner or law practice suspects that the client is engaged in, or the transaction involves, money laundering or the financing of terrorism. |
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| Enhanced customer due diligence measures |
13.—(1) A legal practitioner or law practice must, in addition to performing the other customer due diligence measures prescribed in this Part, perform the enhanced customer due diligence measures mentioned in paragraph (2), if —| (a) | the risks of money laundering and the financing of terrorism are raised under rule 12(4); | | (b) | the client, or the beneficial owner of the client (being an entity or a legal arrangement), is a foreign politically-exposed individual, or a family member or close associate of any such individual; or | | (c) | both of the following apply:| (i) | the legal practitioner or law practice assesses the business relationship with the client to be a higher risk business relationship; | | (ii) | the client, or the beneficial owner of the client (being an entity or a legal arrangement), is —| (A) | a domestic politically-exposed individual; | | (B) | an individual who has been entrusted with a prominent function in an international organisation; or | | (C) | a family member or close associate of any individual mentioned in sub-paragraph (A) or (B). |
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(2) The enhanced customer due diligence measures to be performed by the legal practitioner or law practice are as follows:| (a) | obtain the approval of the legal practitioner’s or law practice’s senior management before —| (i) | in the case of a new client, establishing a business relationship with the client; or | | (ii) | in the case of an existing client, continuing a business relationship with the client; |
| | (b) | take reasonable measures to establish the source of wealth, and the source of funds, of the client and, if the client is an entity or a legal arrangement, of the beneficial owner of the client; | | (c) | conduct enhanced ongoing monitoring of the business relationship with the client. |
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14.—(1) A legal practitioner or law practice must perform, in relation to an existing client, the customer due diligence measures prescribed in this Part that are applicable to the client, based on the legal practitioner’s or law practice’s assessment of the materiality and risks of money laundering and the financing of terrorism, taking into account —| (a) | any previous customer due diligence measures performed in relation to the client; | | (b) | the time when any customer due diligence measures were last performed in relation to the client; and | | (c) | the adequacy of the data, documents or information obtained from any previous customer due diligence measures performed in relation to the client. |
(2) In paragraph (1)(a), (b) and (c), “customer due diligence measures” includes any customer due diligence measures performed under —| (a) | the Legal Profession (Professional Conduct) Rules (R 1) as in force before 23 May 2015; or | | (b) | any practice directions, guidance notes and rulings issued by the Council or the Society, whether before, on or after 23 May 2015. |
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| Inability to complete customer due diligence measures |
15.—(1) Where a legal practitioner or law practice is unable to complete any customer due diligence measures prescribed in this Part in relation to a client, the legal practitioner or law practice —| (a) | must not commence any new business relationship, and must terminate any existing business relationship, with the client; | | (b) | must not undertake any transaction for the client; and | | (c) | must consider whether to file a suspicious transaction report in relation to the client. |
(2) For the purposes of paragraph (1), the legal practitioner or law practice is unable to complete those customer due diligence measures, if —| (a) | the legal practitioner or law practice is unable to obtain, or to verify, any information required as part of those customer due diligence measures; or | | (b) | the legal practitioner or law practice does not receive a satisfactory response to any inquiry in relation to any information required as part of those customer due diligence measures. |
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16. Where a legal practitioner or law practice suspects that a client may be engaged in money laundering or the financing of terrorism, and has reasonable grounds to believe that the performance of any customer due diligence measures prescribed in this Part will tip-off the client, the legal practitioner or law practice —| (a) | need not perform those customer due diligence measures; but | | (b) | must instead file a suspicious transaction report with either or both of the following (as the case may be):| (i) | a Suspicious Transaction Reporting Officer, if the client may be engaged in money laundering; | | (ii) | a police officer or Commercial Affairs Officer, if the client may be engaged in the financing of terrorism. |
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| Performance of customer due diligence measures by third parties |
17.—(1) A legal practitioner or law practice cannot rely on a third party to perform any customer due diligence measures prescribed in rule 9(3).| (2) Even if a legal practitioner or law practice relies on a third party to perform any customer due diligence measures prescribed in this Part (other than rule 9(3)), the legal practitioner or law practice remains responsible for the performance of those measures. |
| (3) Where a legal practitioner or law practice relies on a third party to perform any customer due diligence measures prescribed in this Part (other than rule 9(3)), the legal practitioner or law practice must obtain from the third party all information required as part of those customer due diligence measures. |
(4) Before a legal practitioner or law practice relies on a third party to perform any customer due diligence measures prescribed in this Part (other than rule 9(3)), the legal practitioner or law practice must be satisfied that —| (a) | where necessary, the legal practitioner or law practice will be able to obtain from the third party, upon request and without delay, all source documents, data or information required to verify the information referred to in paragraph (3); and | | (b) | the third party —| (i) | is subject to and supervised for compliance with requirements for the prevention of money laundering and the financing of terrorism consistent with the standards set by the FATF; and | | (ii) | has measures in place for compliance with those requirements. |
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| Internal controls and foreign branches and subsidiaries |
18.—(1) A law practice must implement programmes for the prevention of money laundering and the financing of terrorism which have regard to —| (a) | the risks of money laundering and the financing of terrorism; and | | (b) | the size of the law practice. |
(2) Where a Singapore law practice has any branch or subsidiary (whether in Singapore or elsewhere), the Singapore law practice must implement group-wide programmes for the prevention of money laundering and the financing of terrorism that apply to, and are appropriate for —| (a) | every such branch; and | | (b) | every such subsidiary more than 50% of the shares or other equity interests of which are owned by the Singapore law practice. |
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(3) The programmes for the prevention of money laundering and the financing of terrorism referred to in paragraphs (1) and (2) must include the following:| (a) | the development and implementation of internal policies, procedures and controls for the prevention of money laundering and the financing of terrorism, including —| (i) | appropriate compliance management arrangements; and | | (ii) | adequate screening procedures when hiring employees; |
| | (b) | the confirmation of the implementation, and the review, by an independent party of the internal policies, procedures and controls referred to in sub-paragraph (a). |
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(4) Where a Singapore law practice has any foreign branch or foreign subsidiary, the Singapore law practice must, as far as possible, ensure that the following entities apply measures for the prevention of money laundering and the financing of terrorism that are consistent with the measures for the prevention of money laundering and the financing of terrorism that are applicable in Singapore:| (a) | every such foreign branch; | | (b) | every such foreign subsidiary more than 50% of the shares or other equity interests of which are owned by the Singapore law practice. |
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(5) A law practice must ensure that its partners, directors and employees are regularly and appropriately trained on —| (a) | the laws and regulations relating to the prevention of money laundering and the financing of terrorism; and | | (b) | the law practice’s internal policies, procedures and controls for the prevention of money laundering and the financing of terrorism. |
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