When The Man From FCPA considers risky geographic location, Singapore is not high on the list. Indeed, on the most recent Transparency International Corruption Perceptions Index (TI-CPI), Singapore was rate No. 8 with a country index of 85. Yet even with that high score, the country was recently urged to engage more in the international fight against money-laundering. It was revelations from the Malaysian 1MDB corruption scandal which led the Financial Action Task Force to note in a recent report that “Singapore should more aggressively target the more complex cases expected of a sophisticated financial centre.”
This warning re-emphasized that one of the effects of bribery and corruption (as they are defined under such laws as the FCPA and U.K. Bribery Act) is that they enable money-laundering. The money illegally paid out to foreign officials and employees of state-owned enterprises must be hidden away and laundered through some banking system, and Singapore is certainly one of the world’s leading financial centers. It makes sense that corrupt politicians from Malaysia would use the closest major financial center in their scheme to loot the Malaysian national sovereign wealth fund. An appropriate response by Singapore officials to re-instill confidence in their banking system would be to track and identify beneficial ownership in corporations. That would be a good start to repair the city’s damaged reputation.
This type of response by the city should give pause to the anti-corruption compliance practitioner as well. Obviously the money-laundering aspect of any large bribe is something that could not only cause reputational damage but lead to significant financial penalties. The strengthening of Singapore’s anti-money laundering procedures may well lead to additional scrutiny in other areas of the bribery and corruption cycle. Businesses need to understand that not only will they be watched more closely, but their business partners, agents, and representatives, and even their customers will be, as well. The corporate response should be to understand the enhanced risk of greater scrutiny and be have a more robust compliance program in place.