The standards of corporate governance have a major role in the maintenance of Singapore's reputation as a secure and established financial and business centre. Singapore is ranked first in 'Doing Business 2016' by the World Bank Group and has been lauded for its high standards of corporate governance by the 2014 CG Watch, ranking first with Hong Kong.
A number of regulatory bodies in Singapore are empowered to investigate and prosecute corporate misconduct:
- The Monetary Authority of Singapore (MAS) acts as the central bank of Singapore. The MAS is responsible for regulating and supervising the financial services sector, administering the Securities and Futures Act (SFA) and conducting surveillance on financial stability. Pursuant to Part IX of the SFA, the MAS has powers to require the disclosure of information about securities and futures contracts, to require the production and inspection of companies' books, to enter premises to carry out investigations and to examine witnesses. Effective from March 2015, the MAS and the Commercial Affairs Department (CAD) of the Singapore police force jointly investigate potential market misconduct offences such as insider trading and market manipulation under Part XII of the SFA.2
- The Singapore Exchange Limited (SGX) acts as a front-line regulator to promote a fair, orderly and transparent marketplace and a safe and efficient clearing system through monitoring the continuing compliance of the Singapore Exchange Securities Trading Limited (SGX-ST) Listing Manual (the Listing Manual) and the review of listings applications. Enforcement of compliance with the Listing Manual by listed companies is performed through investigations by the SGX, with appropriate sanctions imposed for breaches.
- The Accounting and Corporate Regulatory Authority acts as the regulator of business entities, public accountants and corporate service providers.
- The Competition and Consumer Commission of Singapore (CCCS) is tasked with administering and enforcing the provisions of the Competition Act, which promotes competition in the markets, and the Consumer Protection (Fair Trading) Act, which protects consumers against unfair trade practices. The CCCS's key sectors of focus for 2019 are digital platforms, transport, hospitality, and administrative and support services. The CCCS will take action against anti-competitive agreements, abuse of dominant positions, and mergers and acquisitions that substantially lessen competition. As at 31 March 2017, the CCCS had completed 63 investigations relating to anti-competitive agreements and abuse of dominant positions, and reviewed 64 merger notifications. The CCCS has the power to require the production of specified documents or information, to enter premises without a warrant, and to enter and search premises with a warrant, if the CCCS has reasonable grounds for suspecting that the provisions of the Competition Act have been infringed. In respect of its consumer protection function, the Consumers Association of Singapore (CASE) and Singapore Tourism Board (STB) are the first points of contact for complaints by local consumers and tourists respectively. However, where errant retailers continue to persist in unfair practices, the CASE and the STB may refer them to the CCCS, which has the power to gather evidence, file timely injunction applications with the Singapore courts, and enforce compliance with injunction orders issued by the courts, against such errant retailers.
- The Singapore police force has wide investigative powers pursuant to Part IV of the Criminal Procedure Code (CPC). In the course of its investigations, the police may issue written orders to summon any person in Singapore to attend and assist in investigations, failing which a warrant may be issued to order the attendance of that person. The police may also order the production of or access to documents and other relevant evidence necessary or desirable to any investigation, and may search or apply for a search warrant in the event of non-compliance. The CAD is the principal department of the Singapore police force that investigates white-collar commercial and financial crimes, and has similar powers. In April 2017, the MAS and the CAD announced the launch of a government-industry partnership to strengthen Singapore's capabilities in the fight against money laundering and terrorism financing.3
- The Corrupt Practices Investigation Bureau (CPIB) operates with functional independence and is mandated to investigate corruption offences under the Prevention of Corruption Act (PCA) and other related offences. CPIB officers have wide investigative powers pursuant to the PCA and may exercise all those powers in relation to police investigations given by the CPC in the course of CPIB investigations. Additionally, CPIB officers may, with authorisation from the Public Prosecutor, investigate any financial account or safe deposit box in any bank.
- The Financial and Technology Crime Division of the Attorney-General's Chambers is responsible for the prosecution and appeals of white-collar and other commercial crimes, including corruption cases investigated by the CAD and the CPIB.
It is generally advisable for all businesses, corporate entities and individuals under investigation to cooperate fully with the authorities, and provide full and frank disclosure of material information. This is in view of the legislation in place to secure cooperation with many of the above authorities. For example, it is an offence under the SFA to refuse or fail to appear before the MAS and render assistance in investigations. Further, Chapters IX and X of the Penal Code specify further offences such as (1) failing to attend before, (2) failing to produce a document and (3) furnishing false information to any public servant.
Singapore's legislative and regulatory corporate governance framework has shifted from a merit-based approach to a disclosure-based regime of supervision. Under a disclosure-based regime, market participants are provided with better information, thus allowing them greater choice and freedom to take calculated risks, which promotes a more dynamic market.
To be successful, a disclosure-based regime requires an effective and robust enforcement regime to ensure accurate disclosure of material information in order to maintain the confidence of market participants.
Companies listed on the SGX-ST are required to comply continuously with the Listing Manual. Pursuant to Rule 703 of the Manual, listed companies must announce any information known to it concerning itself, or any of its subsidiaries or associated companies, that is (1) necessary to avoid the establishment of a false market in the securities of the listed company, or (2) would be likely to materially affect the price or value of its securities. Under Section 203 of the SFA, a listed company must not intentionally, recklessly or negligently fail to notify the SGX of information that is required to be disclosed under the Listing Manual. A breach of Section 203 of the SFA is not a criminal offence unless the failure to notify, if the company withholds disclosure, is intentionally or recklessly in non-compliance with Rule 703 of the Listing Manual. Section 331 of the SFA provides that directors may be prosecuted in their personal capacity for acts of the company provided that the non-compliance was committed with the consent or connivance of, or could be attributable to any neglect on the part of, the directors.
The Listing Manual is complemented by the revised Code of Corporate Governance 2012 (the CG Code 2012), issued by the MAS. Although compliance with the CG Code 2012 is not mandatory, listed companies are required under the Listing Manual to describe in their annual reports their corporate governance practices with specific references to the principles of the CG Code 2012. If the company deviates from any guidelines of the CG Code 2012, the deviation must be disclosed, with an appropriate explanation. The CG Code 2012 is aimed at increasing accountability and transparency, and the amendments are related to matters such as director independence, board composition, multiple directorships, alternate directors and disclosure of remuneration. In February 2017, the MAS announced that it had formed a Corporate Governance Council (the Council) to review the CG Code 2012.4 The Council has been considering how the 'comply-or-explain' regime under the CG Code 2012 can be made more effective. This includes 'improving the quality of companies' disclosure of their CG practices and explanations for deviations' from the CG Code 2012.
In relation to competition law, the CCCS has implemented a leniency programme to incentivise cartel members to come forward and inform the CCCS of the cartel activities. To encourage self-reporting, a company stands to benefit from total immunity from financial penalties if the company is the 'first in the door' to provide the CCCS with evidence of the cartel activity before an investigation has commenced, and provided that the CCCS does not already have sufficient information to establish the existence of the alleged cartel activity.
The company must also satisfy the following general conditions:
- it provides the CCCS with all the information, documents and evidence available to it regarding the cartel activity;
- it grants an appropriate waiver of confidentiality to the CCCS in respect of any jurisdiction where the applicant has also applied for leniency or any other regulatory authority it has informed of the conduct;
- it unconditionally admits to the conduct for which leniency is sought and details the extent to which this had an impact in Singapore by preventing, restricting or distorting competition in Singapore;
- it maintains continuous and complete cooperation throughout the investigation and until the conclusion of any action by the CCCS arising as a result of the investigation;
- it refrains from further participation in the cartel activity from the time of disclosure of the cartel activity to the CCCS (except as may be directed by the CCCS);
- it must not have been the one to initiate the cartel; and
- it must not have taken any steps to coerce another undertaking to take part in the cartel activity.
In this regard, two companies (Koyo Singapore Bearing (Pte) Ltd and DHL Global Forwarding) have avoided financial penalties for their involvement in international cartel activities under the leniency programme. Full immunity was granted to both companies when they reported on price fixing to the CCCS.
If the company is not the first-in-the-door leniency applicant but provides evidence before the CCCS issues a proposed infringement decision, the company may still be granted a reduction of up to 50 per cent of the financial penalty, if the general conditions in points a to e above are satisfied. In particular, the CCCS, in its revised Guidelines on Lenient Treatment for Undertakings coming forward with information on Cartel Activity 2016, had clarified that coercers and initiators of cartels may also apply for leniency and may qualify for up to 50 per cent discount of the financial penalty.
The CCCS has reportedly seen an increase in the number of leniency applications and has recently stated that antitrust enforcement remains a priority for the CCCS, with bid-rigging cases in the pipeline. As at 31 March 2017, the CCCS had received leniency applications in 22 cases.
Notwithstanding that there is no obligation on retailers for self-reporting, retailers are nevertheless encouraged to work with the CASE, the STB and the CCCS to address complaints by local consumers and tourists.
ii Internal investigations
Generally, internal investigations are those that a company decides to carry out in relation to itself and into its own affairs. They may be prompted by regulatory concerns, or complaints from third parties, or concerns raised as a result of inquiries by independent directors and shareholders.
Internal investigations usually involve conducting interviews with employees, managers and directors, and the collection and review of hard-copy documents and electronic files stored on various forms of media (e.g., emails, telephone records or other electronic transmissions). The involvement of external parties, such as lawyers, forensic accountants, private investigators or computer experts, may occasionally be required. During the course of its investigations, the company may be obliged to comply with its legal disclosure obligations (e.g., under the Listing Manual) and legal professional advice should be sought in this regard.
Depending on the seriousness and nature of the matter, the individuals being investigated may retain their own lawyers. If there are reasonable grounds to suspect that the investigations may lead to prosecutions, it is advisable to consider retaining lawyers at an early stage so that any statements given during the internal investigations that may be subsequently turned over to the police are given with the benefit of legal advice.
On the issue of maintaining legal professional privilege during an internal investigation, the Court of Appeal considered the doctrine of legal professional privilege in light of significant developments at common law in the case of Skandinaviska Enskilda Banken AB (Publ), Singapore Branch v. Asia Pacific Breweries (Singapore) Pte Ltd. The issue before the Court of Appeal was whether draft reports prepared and produced by an external accounting firm (and law firm) in respect of an internal investigation of Asia Pacific Breweries (Singapore) Pte Ltd's (APBS) internal control systems and procedures attracted both legal advice and litigation privilege. The internal investigation by APBS was prompted by a fraud perpetuated by an APBS finance manager, who had obtained credit and loan facilities from banks. The action was brought against APBS to recover the monies after the fraud was uncovered. In the action, the banks sought specific discovery of the draft report.
On the issue of legal advice privilege, the Court of Appeal endorsed the decision of the Australian Federal Court in Pratt Holdings Pty Ltd v. Commissioner of Taxation, which held that whether privilege is accorded to documentary communications of a third party is dependent on the nature of the function the third party performed for the party that engaged it. Privilege will be accorded if the function was to enable the engaging party to obtain legal advice if required. This is as opposed to the nature of the relationship of the third party's legal relationship with the party that engaged it. The Court of Appeal stated that 'the approach taken in Pratt Holdings is principled, logically coherent and yet practical and is also consistent with the reality of legal practice' and held that third-party communications could be covered by legal advice privilege, but it had to be demonstrated that the communications were made for the dominant purpose of obtaining legal advice.
On litigation privilege, the Court of Appeal set out the basic principles or requirements of litigation privilege as set out in Section 131 of the Evidence Act (i.e., if the dominant purpose for which the legal advice had been sought and obtained was for the anticipation or contemplation of litigation, the advice concerned would be protected by litigation privilege). The Court of Appeal held that as litigation was 'foremost in the mind' of APBS and the dominant purpose of the draft reports was in aid of litigation at the time, litigation privilege applied to the draft reports.
The Evidence Act was amended in 2012 to extend legal advice privilege to communications with in-house legal counsel for the dominant purpose of seeking legal advice.
Note that there are statutory exceptions to situations in which legal advice privilege may be asserted over communications or documents. In particular, Section 128(2) of the Evidence Act expressly states that 'any communications made in furtherance of any illegal purpose' or where 'any fact observed by any legal counsel in an entity in the course of his [or her] employment as such showing that any crime or fraud has been committed since the commencement of his [or her] employment' are examples of such exceptions.
In respect of litigation privilege, the High Court held in Gelatissimo Ventures (S) Pte Ltd & Ors v. Singapore Flyer Pte Ltd that litigation privilege under Section 131 of the Evidence Act is subject to the same fraud exception as found in Section 128(2)(b) of the Evidence Act. This is despite the literal wording of Section 131 of the Evidence Act, which suggests that litigation privilege is an absolute privilege.
Although there is currently no general overarching legislation in Singapore specifically addressing whistle-blowing, certain programmes and specific legislation have been created or enacted that address this issue. An example is the implementation of the CCCS's leniency programme. The CCCS encourages businesses that are part of a cartel agreement or concerted practice, or a member of the general public who is aware of a cartel activity, to blow the whistle and provide information on cartel activity, and the CCCS will keep the identity of whistle-blowers confidential. In appropriate circumstances, the CCCS may also pay a monetary reward to informants for information that leads to infringement decisions against cartel members.
According to a press release by the CPIB, it received 808 complaints in 2016 (an 8 per cent decrease from the 877 complaints received in 2015), of which 118 were registered for investigation, as compared with 132 cases registered in 2015.5 In January 2017, as part of the CPIB's anti-corruption efforts, the new Corruption Reporting and Heritage Centre (CRHC) began operations. The CRHC was set up to enable people to make complaints discreetly and in a more accessible manner. The identity of informants is protected under Section 36 of the PCA, which includes provisions that a complaint about an offence under the PCA shall not be admitted in any civil or criminal proceedings and no witness is obliged or permitted to disclose the name or address of any informer. The court is further obliged to redact or expunge any references to the name or identity of the informer that may be found in any document in evidence in order to protect the informer from discovery. Citing Section 36 of the PCA, the court has observed, in Dorsey James Michael v. World Sport Group Pte Ltd, that there is a compelling public interest consideration ever present in Singapore to encourage whistle-blowing against corruption.
The MAS has stated that supervision can only go so far in preventing corporate misconduct in the financial industry, and that the creation of a safe environment for whistle-blowing is necessary to build a culture of trust and strong values in the financial industry. In this regard, Guideline 12.7 of the CG Code 2012 provides that a company's audit committee 'should review the policy and arrangements by which staff of the company and any other persons may, in confidence, raise concerns about possible improprieties in matters of financial reporting or other matters', and the 'existence of a whistle-blowing policy should be disclosed in the company's Annual Report, and procedures for raising such concerns should be publicly disclosed as appropriate'. Further, the Guidebook for Audit Committees (revised on 19 August 2014) lays out guidelines on the implementation, conduct and review of whistle-blowing policies within companies. The guidelines for whistle-blowing policies recommend the protection of the identity of the whistle-blower, and provide for independence, objectivity and fairness of the investigation and resolution process.
Courts take a dim view of whistle-blowers who knowingly provide false information. In PP v. Mohd Ghalib s/o Sadruddin, the court imposed a deterrent sentence of six months' imprisonment against the accused for providing false information in a complaint to the CPIB. The court stated that the sentence was meted out as the correct signal must be sent so that like-minded individuals will think twice about blatantly lying about alleged conduct. Note that the court took pains to emphasise that the decision should not apply to whistle-blowing 'done in good faith, which is a helpful check and balance, and there should not be a chilling effect on such conduct'.
i Corporate liability
In Singapore, corporate conduct is capable of attracting both criminal and civil liability. 'Persons' is defined in law as including bodies corporate unless a contrary intention arises. Hence, whenever a statute purports to impose liability on any person, a company can be held directly liable unless otherwise specified, or unless such a construction is inconsistent with the subject or context.
Concurrent liability of officers and employees
Since a company is a legal construct, it has to act through its officers and employees; therefore, situations giving rise to a finding of corporate wrongdoing are likely to also involve wrongful conduct on the part of particular individuals.
In such situations, the potential criminal and civil liability of the company and these individuals are distinct and independent. That said, there is no bar against criminal or civil liability being imposed on both the company and these individuals concurrently, save for the prohibition against double recovery in the civil context.
Criminal liability for conduct of officers and employees
A company can be subject to criminal liability for the conduct of its officers and employees in one of several ways.
First, a company may be guilty of a strict liability offence, namely an offence that does not require proof of a culpable mental state, such as intention, recklessness or knowledge. If a company's employees have caused the commission of a strict liability offence, the company may be held liable.
Second, a company may be guilty of being an accessory to the criminal conduct of its officers and employees. Accessory liability offences take the form of abetment or criminal conspiracy, and typically require some proof that the company was complicit in the conduct of its officers and employees.
Third, a company may be guilty of an offence if the criminal statute in question expressly makes a company liable for the acts of its officers and employees.
Fourth, and as a general catch-all, a company may be guilty of any other offence insofar as it is committed by the company's organs (board of directors, or shareholders in general meeting) or agents. Under Singapore law, the acts of such organs and agents are regarded as the acts of the company.
A particular difficulty arises whenever an offence requires proof of a mental state. A company, by its very nature, has no 'mind' to speak of. If the statute specifies how such a mental state is to be determined, then this would not be an issue. However, where the statute does not, Singapore law recognises two methods of attributing the mental state of officers and employees to that of the company. First, the mental state of agents may be attributed subject to certain conditions. Second, the mental state of an officer or employee who is considered the 'directing mind and will' of the company may be attributed to that of the company as well. Typically, the latter category includes directors or senior officers of the company.
Civil liability for conduct of officers and employees
A company can be subject to civil liability for the conduct of its officers and employees, and is not exempt from any category of civil wrongs (e.g., contract, tort or equity). A company may be personally liable for the conduct of its agents and organs, and may be vicariously liable for the tortious conduct of its employees insofar as the conduct was committed during the course of employment.
Legal representation of a company and its officers and employees
There is generally no objection to a company and its employees being represented by the same counsel in the same matter where their interests are aligned. However, if a conflict or a risk of conflict between the interests of the company and the interests of the employee exist, it is preferable that separate representation be sought, as this would avoid the need for counsel to discharge him or herself from acting for both the company and the employees.
Save for custodial sentences, companies may generally be subject to the same penalties as natural persons (e.g., fines). That said, the corporate penal regime has several unique additional features.
First, companies may be subject to additional criminal sanctions. Although the typical criminal sanction is the imposition of a fine, some statutes impose additional (or higher) sanctions for companies.
Second, companies may be subject to regulatory sanctions on top of criminal sanctions. For instance, companies who hold regulatory licences may have their licences revoked under the terms of the licence or the authorising statutes under which the licences are issued. Also, if the company in question is listed on the Singapore Exchange, the Exchange is empowered under the Listing Manual to impose sanctions such as a private warning, public reprimand, suspension of the trading of its securities, or even a delisting of the company.
Third, companies may avail themselves of deferred prosecution agreements (DPA) in certain situations. A DPA is essentially a type of plea bargain. Under these agreements, prosecutors agree not to bring charges against a company in exchange for the company's fulfilment of certain conditions within a fixed duration. Such conditions are not limited and may include cooperation in investigations, implementation of compliance programmes, and payment of certain financial penalties. The DPA option is only applicable to certain scheduled offences, including certain offences under the Prevention of Corruption Act and the SFA. All DPAs need to be approved by the High Court. After approval, the corporation will be deemed to be granted a discharge not amounting to an acquittal. Upon expiration of the DPA and subject to the company's compliance with the terms of the DPA, the High Court may grant a discharge amounting to an acquittal.
iii Compliance programmes
Unless specifically provided for under a particular statute, the existence of a compliance programme does not generally function as a legal defence. That said, it is prudent for companies to institute reasonable compliance programmes depending on the risks in question and the costs involved. The existence of compliance programmes may lower the risk of wrongdoing or the duration of any wrongdoing (which may affect any penalties imposed on the company subsequently).
Compliance programmes may also be relevant at one of three stages insofar as criminal proceedings are concerned. First, prosecutors may take into account the existence of a compliance programme when exercising their discretion to prosecute. Second, DPAs may be conditioned on the institution of compliance programmes. Third, the existence of a compliance programme may be relevant after the conviction of a company, as a mitigating factor during sentencing.
Beyond the company, compliance programmes may also assist the officers and employees of a company insofar as their personal liabilities are concerned. Such programmes may allow the officers and employees to show that the offence in question was not committed as a result of their consent, connivance or neglect.
iv Prosecution of individuals
Where there has been corporate wrongdoing, there is no bar prohibiting the authorities from holding a particular individual liable under criminal law as well, whether in addition to liability on the part of the company or otherwise. If an officer of a company, especially a senior officer, is accused of corporate wrongdoing, this will inescapably have reputational effects on the company, regardless of whether the company itself is also charged. How the company manages the continued relations with the individual in question should, therefore, take such considerations into account.
There is no obligation on the part of the company to dismiss or discipline an individual who has been the subject of a criminal investigation or charged with a criminal offence. That said, this is dependent on the company's internal policies and the view that the company takes with respect to the individual's conduct. In practice, most companies would have in place their own disciplinary or investigation procedures, which may apply where there have been allegations of wrongdoing against a particular employee. This is likely to be governed by the relevant employment agreement between the company and the employee. Where, for example, the evidence that is known to the company suggests there are grounds for taking disciplinary action or for terminating an employee's employment, the company may do so regardless of the outcome of the criminal investigation or prosecution against the employee.
Needless to say, companies should cooperate with investigators insofar as they are legally obliged to do so. For example, authorities may require that a company produces documents or information relevant to their investigations or require that witnesses (such as other employees of the company) attend to be examined. There is no bar against the company coordinating with the individual's counsel. This may be a course that the company may wish to take where the interests of the company and the individual are aligned.
There is also no legal bar against the company paying for the legal fees of the employee. It is also common for a company to purchase directors' and officers' insurance, which may indemnify the legal costs to be incurred by an individual director or officer who is subject to criminal allegations. How such policies may operate, including the scope and extent of coverage, would depend on their precise terms.
i Extraterritorial jurisdiction
There is generally a presumption against the extraterritorial application of Singapore criminal statutes. That said, specific laws have been enacted by Parliament to extend the reach of particular statutes beyond Singapore's borders. Some key examples are discussed below.
The PCA, which is the principal anti-bribery statute in Singapore, expressly provides that it would apply extraterritorially to Singapore citizens outside Singapore. Section 37(1) of the PCA states:
The provisions of this Act have effect, in relation to citizens of Singapore, outside as well as within Singapore; and where an offence under this Act is committed by a citizen of Singapore in any place outside Singapore, he may be dealt with in respect of that offence as if it had been committed within Singapore.
Therefore, if a Singapore citizen commits an offence within the meaning of the PCA outside Singapore, he or she would be held liable as though it was committed within the Singapore territory.
Terrorism (Suppression of Financing) Act
The Terrorism (Suppression of Financing) Act, which is one of the key pieces of anti-terrorism legislation, also contemplates extraterritorial application, providing at Section 34 that certain offences thereunder if committed outside Singapore would be deemed to be committed in Singapore and that the person in question may be charged, tried and punished accordingly, and, further, that if a Singapore citizen commits certain other offences outside Singapore, they may be dealt with as though they were committed in Singapore.
Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act
The Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act (CDSA), which is the principal statute criminalising money laundering, also contemplates extraterritorial application. This is clear from Section 3(3) and (5) of the CDSA, which respectively state that the Act 'shall apply to any serious offence or foreign serious offence' and 'shall apply to any property, whether it is situated in Singapore or elsewhere', as well as from Section 2(1), which defines 'criminal conduct' and 'drug dealing' as the doing of such acts 'whether in Singapore or elsewhere'.
Organised Crime Act
Finally, the Organised Crime Act (OCA) targets local and transnational criminal organisations. The definition of 'organised criminal group' under Section 2 includes groups 'based within or outside Singapore' whose purposes include obtaining material benefit from the facilitation of 'any act outside Singapore that, if it occurred in Singapore, would constitute any serious offence' under selected Singapore laws. Aside from criminal prosecution, the OCA recognises the difficulty of meeting the criminal standard of proof against organised crime syndicates (required under other statutes such as the CDSA), and hence allows for courts to order confiscations on a civil basis, as well as wide-ranging prevention orders against individuals and groups on a non-conviction basis.
ii International cooperation
Mutual Assistance in Criminal Matters Act
The Mutual Assistance in Criminal Matters Act (MACMA) sets out the framework for mutual legal assistance between Singapore and other states in criminal matters. It allows the Singapore authorities to provide assistance in relation to criminal investigations or proceedings to other states in respect of certain prescribed offences, without the need for a mutual legal assistance treaty between the requesting state and Singapore, on the basis of reciprocity.
The assistance Singapore may provide to other states in respect of criminal matters under the MACMA includes:
- taking of evidence;
- production of things (including documents);
- requesting the attendance of a person;
- requesting the custody of a person in transit;
- the enforcement of a foreign confiscation order;
- search and seizure;
- locating or identifying persons; and
- service of process.
The Attorney-General's Chambers handled 957 mutual legal assistance and extradition matters in 2017,6 compared with 1,126 in 2016.
Extradition is possible and not uncommon in Singapore. The Extradition Act (EA) is the primary statute that governs the extradition of fugitives to and from foreign countries, and applies in respect of any of the 40 'declared Commonwealth countries' or a 'foreign State . . . between which and Singapore an extradition treaty is in force'.
Extradition is allowed only where the fugitive has committed an 'extradition crime' within the defined meaning of the EA. In the case of a declared Commonwealth country, this refers to an offence that is punishable with a maximum penalty of death or imprisonment for not less than 12 months and that is an offence described in the First Schedule to the EA. In the case of a foreign state, this refers to 'an offence against the law of [the] foreign State [where] the act or omission constituting the offence or the equivalent act or omission would, if [it had taken] place in or within the jurisdiction of Singapore, constitute an offence against the law in force in Singapore' and that is an offence described in the First Schedule to the EA.
Embodied in the definition of an 'extradition crime' in the case of a foreign state is the requirement of double criminality. In considering whether the requirement of double criminality is satisfied, the Singapore courts will apply what is known as the 'conduct test' (i.e., the court will look at the conduct alleged against the fugitive and determine whether the conduct would have been criminal had it been committed within the jurisdiction of the requested state). In this regard, the Singapore courts will not apply the 'ingredients test', which requires strict correspondence or identity of the elements of the foreign offence and the elements of the local offence.
In addition to the above, various Singapore agencies are also parties to informal channels of cooperation with agencies of other countries.
The MAS is a signatory to a number of bilateral7 and multilateral memoranda of understanding (MOUs).8 Separately, the Singapore police force (SPF) is a member of Interpol. Additionally, under the CDSA, the SPF's Suspicious Transaction Reporting Office (STRO) is authorised to share information with foreign financial intelligence units (FIUs) under an MOU, letter of understanding or international arrangement. One such international arrangement is the Egmont Group of FIUs, which the STRO is a member of. 9 Various other Singapore agencies, such as the CPIB, the Casino Regulatory Authority and the Central Narcotics Bureau, have their own informal bilateral relationships with their counterparts in other jurisdictions.
Singapore is also a member of the Financial Action Task Force (FATF), a 37-member intergovernmental standards-setting body that develops and issues guidelines on combating international money laundering and terrorist financing. The Ministry of Home Affairs, the Ministry of Finance and the MAS jointly lead Singapore's inter-agency effort to implement and maintain legislative and regulatory compliance with periodic FATF recommendations.10
iii Local law considerations
Singapore has certain laws that may impose limitations on the sharing of information across jurisdictions.
For example, banking secrecy laws prohibit licensed banks from disclosing customer information that would include, but is not limited to, any information relating to an account of a customer of a bank or any information relating to any deposits of a customer of a bank.11
Similarly, data privacy laws provide that any data that is collected by any organisation that can be used to identify an individual cannot be disclosed unless the individual gives or is deemed to have given his or her consent.12
Additionally, before the STRO shares information with a foreign FIU under the CDSA, the foreign FIU needs to provide an undertaking to protect the confidentiality of information shared and control its use, including an undertaking that such information will not be used as evidence in any proceedings.
If a court order is obtained under the MACMA (see above), then the MACMA provides for civil and criminal immunity to any person who complies with the court order to produce any thing, and such production will not be treated as a breach of any restriction on disclosure (whether imposed by law, contract or rules of professional conduct).13
V YEAR IN REVIEW
The past year has seen an increased focus on investigation and enforcement in relation to corporate misconduct in Singapore's financial markets.
In March 2019, the MAS published its inaugural Enforcement Report. The report outlined the MAS's enforcement priorities, and sought to provide greater accountability and transparency regarding its actions and investigations.14 The MAS will continue to publish its Enforcement Report once every 18 months.
With regard to 2019, the MAS has indicated that it will focus its enforcement efforts in the following areas:
- timely and adequate disclosure of corporate information by listed companies;
- business conduct of financial advisers and their representatives;
- financial institutions' compliance with anti-money laundering and counter-terrorist financing requirements;
- brokerage houses' internal controls to detect and deter market abuse; and
- surveillance and investigations into suspected insider trading.
In addition to market abuse and financial services misconduct, the MAS has indicated that an additional key area of enforcement focus will be on money laundering-related control breaches, both by corporate entities and individuals.
The MAS has leveraged on data analytics to enhance its anti-money laundering supervisory effectiveness. One of its key initiatives is an augmented intelligence tool that is used during investigations, alongside other analytical frameworks, to conduct trade analysis and predict the likelihood that market manipulation has occurred.
Singapore's zero-tolerance approach towards corruption has seen its ranking improve in the Transparency International Corruption Perceptions Index for 2018. Singapore was ranked the third-least corrupt country out of 180 countries and territories, and was the only Asian country in the top-10 rankings.15
In 2018, cases involving private sector individuals form the majority of all the new cases registered for investigation into potential corruption offences by the CPIB, and private sector individuals constituted the majority of individuals prosecuted in the Singapore Court. The CPIB has indicated that there are two main areas of concern: construction activities and building maintenance work. The CPIB has a specialised financial investigations unit, and has developed the capabilities of its Computer Forensics Branch to support investigations, especially for cases where it is crucial to extract digital evidence.
In addition to adopting advanced technologies to combat financial crime, the CAD has indicated that it will strengthen its collaboration with its foreign counterparts and enforcement agencies. The CAD has emphasised that it will crack down on offenders who abuse Singapore's financial system to launder criminal proceeds.
The CAD has also stated that it is closely watching incidences of business email compromise fraud, where scammers use seemingly official email communications, or hack into email accounts, to send fraudulent payment or transfer instructions to victims. This type of fraud is one of the CAD's key concerns, and it has stated that it intends to participate in regional and international projects to combat this globalised crime.16
vI CONCLUSIONS AND OUTLOOK
Singapore's enforcement agencies have increasingly adopted technology and artificial intelligence tools to enhance their investigation capabilities. Cross-border investigation and enforcement efforts are increasingly common. The enforcement agencies are likely to focus on safeguarding Singapore's status as an international financial hub, and the country's reputation as a corruption-free business environment.
1 Jason Chan, Vincent Leow and Daren Shiau are partners at Allen & Gledhill LLP.
4 www.mas.gov.sg/News-and-Publications/Media-Releases/2017/MAS-Announces-Establishment-of- Corporate-Governance-Council.aspx. In January 2018, the Corporate Governance Council released a consultation paper on its recommendations to revise the Code of Corporate Governance 2012.
6 'Attorney-General's Chambers' Annual Summaries: 2017 Highlights' – International Affairs Divisions: Key Figures for Calendar Year 2017.
7 These include banking, securities and commodities regulators in Australia, Brunei, China, Malaysia, Myanmar, the United Arab Emirates, the United Kingdom and the United States.
8 These include the International Association of Insurance Supervisors and the International Organization of Securities Commissions.
9 This grouping consists of 159 FIUs, which include both national-level and local-level FIUs.
10 The most recent, the FATF Recommendations 2012, comprises some 40 recommendations. The FATF also periodically issues guidance and statements on specific issues and jurisdictions.
11 See Section 40A of the Banking Act.
12 See Section 13 of the Personal Data Protection Act 2012.
13 See Section 24(2) of the MACMA.
16 CAD Annual Report 2017.