STRENGTHENING CORPORATE COMPLIANCE

Following the Corporate Service Providers Act 2024 (“CSP Act”) passed by Parliament on 2 July 2024, the CSP Act will come into effect on 9 June 2025. Significant regulatory reforms have been introduced to enhance governance, transparency and compliance within Singapore’s corporate service sector.

We set out a summary of the key legislative amendments and how the regulatory reforms will impact businesses in Singapore.

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MANDATORY REGISTRATION FOR CORPORATE SERVICES PROVIDERS

All entities carrying on a business by providing corporate services in or from Singapore are required to be registered as a CSP if they perform any of the following activities:

• Forming of local business entities on behalf of another person
• Forming of foreign business entities on behalf of another person (NEW)
• Acting/Arranging for persons to act as directors/nominee shareholders (NEW)
• Transacting with ACRA on behalf of other persons
• Acting as a secretary of a company by way of business (NEW)
• Providing registered office/business address for business entities (NEW)
• Carrying out transactions involving designated activities relating to provision of accounting services (NEW)

Exemption: Landlords providing physical spaces to companies using their address as the registered office, business address, or correspondence address of the businesses is not a CSP.

However, CSP registration is required in cases such as:

• Offering a business or correspondence address without providing a dedicated physical space (e.g. virtual office providers)
• Where the company is not physically present at the address but uses it for contact or registration purposes

Important Note: Companies engaging CSPs must ensure they are registered and operating in accordance with the updated regulatory framework.  In this regard, we are pleased to share that our Group Entities and Affiliates who are carrying out the above activities are already registered as a CSP under the Act.

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COMPANY’S DUTY: ENSURING THE FIT AND PROPER CONSIDERATIONS FOR NOMINEE DIRECTORS

Individuals serving as Nominee Directors by way of business must be appointed through registered CSPs and must undergo “Fit and Proper Assessment” by the CSPs at the time of their appointment as directors to ensure regulatory compliance.  After an individual has been appointed as a nominee director, companies must ensure that their nominee director remain “Fit and Proper”.

The “FIT AND PROPER” assessments included the following:

1. Whether the person has been convicted (whether in Singapore or elsewhere) of any offence involving fraud or dishonesty, or of any relevant offence;
2. Whether the person is an undischarged bankrupt, whether in Singapore or elsewhere;
3. Whether the person’s previous conduct and compliance history of the companies of which the person was a director (if applicable) has been satisfactory; and
4. Whether the person has the competency, capacity and capability to properly fulfil the obligations of a nominee director, taking into account the person’s experience and existing commitments, including the number of his/her existing directorships.

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ACRA Filing Requirement for Register of Registrable Controllers (RORC):

All companies (including foreign companies) and limited liability partnerships (LLPs) are required to file with ACRA and maintain their RORC from the date of Company’s incorporation or LLP’s registration.

Companies and LLPs are required to ensure that their register of controllers are kept up-to-date and reflect the correct information of the registrable controllers.

Important Note:

Companies and LLPs are reminded to send notices to their registrable controllers annually to confirm the accuracy of their particulars, and provide any updates, if necessary. 

Declaration of Nominee Status of Directors and Shareholders:

Companies and foreign companies are required to maintain and update their registers of nominee directors and nominee shareholders in preparation for the filing of the information of the nominee directors and nominee shareholders in the central registers maintained by ACRA.

Important Note:

All the information kept in the registers of nominee directors and nominee shareholders will have to be filed with ACRA where only public agencies may access the full information maintained by ACRA for the administration or enforcement of any written law.

The ACRA records available to the public will only state the nominee status of the directors and shareholders.

This means that:

Only the nominee status of the directors and shareholders will be made publicly available, including adding the nominee status to business profile extractions.

The maximum fines have increased from $5,000 to $25,000, for offences pertaining to non-compliance with the filing and maintenance of registers of registrable controllers, the register of nominee directors and the register of nominee shareholders for companies and the register of registrable controllers for LLPs.

Should you require assistance with the filing and maintenance of your registers, please contact us for our fees quote.

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ENHANCED ANTI-MONEY LAUNDERING (“AML”), COUNTER-TERRORISM FINANCING (“CTF”) AND COUNTERING PROLIFERATION FINANCING (“CPF”) OBLIGATIONS

CSPs are required to identify and assess ML/TF/PF risks on an enterprise-wide level, which should incorporate the findings of Singapore’s ML/TF/PF Risk Assessments, and take a risk-based approach in implementation of AML/CFT/CPF controls.

Senior Management of CSPs will bear increased responsibility for regulatory breaches, thereby reinforcing corporate accountability.

PF & TF Legal Liabilities

Under Singapore’s regulatory regime, companies and businesses by:

• providing services, property, or resources to designated individuals/entities for terrorisms acts is prohibited under UN Sanctions and TF laws.
• failure to report or screen against terrorist designations can result in:
  • up to S$1 million fine for companies, or twice the value of the property/service involved; and
  • up to S$500,000 fine or 10 years’ jail, or both, for individuals.

The CSPs must perform AML/CFT/CPF screenings as part of their internal governance and vendor onboarding processes.

Important Note:

Companies and businesses must stay alert to these risks and conduct their own due diligence checks.

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COMPANIES LIMITED BY GUARANTEE WHICH ARE NON-PROFIT ORGANISATIONS

Companies limited by guarantee, which are non-profit organisations (CLG-NPOs) are reminded of the importance of filing annual returns and audited financial statements for transparency.

ACRA has (i) updated the CLG-NPO guidelines to apprise the sector to evolving ML/TF risks impacting the NPO sector and (ii) listed red flag indicators for the NPO sector on ACRA’s website at acra.gov.sg.

CLG-NPOs are reminded to file STRs if any findings or evidence give rise to suspicion.

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PERFORMING CUSTOMER DUE DILIGENCE (CDD) MEASURES

CSPs must perform CDD measures including customer screening and identification of beneficial owners before providing any corporate service to a customer.

SCREENING OBLIGATIONS: For customers who are “not physically present” for identification purposes, CSPs must take specific and adequate measures to compensate for the higher risk, including ensuring that the Customer’s identity is established by additional documents, data and information.

RELIANCE ON THIRD PARTIES FOR CDD: CSPs must immediately obtain the necessary CDD information from any third party performing CDD on their behalf. Responsibility remains with the CSP, even when CDD is performed by a third party.

REMOTE TRANSACTIONS – Legal Persons Risk Assessment (LPRA)

Where a customer is “not physically present” for identification purposes (for non-face-to-face transactions) involving company incorporation, transfer of management/ownership, or sale of shelf companies, CSPs must conduct a live video call with one of the following individuals to verify their identities and their authority to receive corporate services or represent the company:

• At least one proposed director (excluding nominee directors); or
• At least one proposed member who holds ≥50% voting rights of the proposed company; or
• An authorised representative of the proposed member (if the member is a legal entity), provided the representative is an individual.

Important Note: The live video call requirement cannot be substituted by the use of a third-party verification platform or notarised documents.

RECORD-KEEPING REQUIREMENT: CSPs must capture and retain a screenshot of the live video call.
This screenshot serves as evidence that the video call occurred with the relevant party; and the necessary identity verifications were conducted via live interaction.

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What Should Companies Do?

• Ensure nominee directors meet the “Fit and Proper” requirements at all times
• Maintain and keep accurate records of Registers of Registrable Controllers, Nominee Directors and Nominee Shareholders;
• Ensure prompt provision of accurate information and documents for all CDD measures and screening processes, especially for remote transactions and for the conduct risk assessments

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If you have any questions, please email to:-