"Building Resilience for the CSP Sector" - Keynote Address by Mr Ong Khiaw Hong, ACRA Chief Executive at the CSIS 6th Corporate Service Providers Conference 2021

Mr Nathaniel C V, Chairman, Chartered Secretaries Institute of Singapore (CSIS)  

Mr Gregory Vijayendran S.C., President, Law Society   

Mr Henry Tan, Council Member, Institute of Singapore Chartered Accountants (ISCA)

Distinguished guests

Ladies and gentlemen

I am happy to join you this morning at the 6th annual conference for Corporate Service Providers (CSPs).

2 This is the second year that the CSP conference is held virtually. I would like to thank CSIS for organising this conference to provide a platform for us to come together to discuss how the industry could navigate the COVID-19 landscape and prepare for the new normal. 

Building Business Resilience through Digitalisation  

3 I would like to highlight two key areas of focus that are essential for the CSP sector to build resilience – firstly, on digitalisation and secondly, on compliance with the Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) requirements.     

4 Digitalisation is no longer an option, but a necessity for survival and continuity for any business. To cope with COVID-19 dining-in restriction, many F&B outlets and hawker stalls have moved on to online delivery platforms and adopted contactless or e-payment options. To stay in business, some retail outlets have also transitioned from a purely brick-and-mortar shop to offering online shopping experience. We applaud these businesses for making the digital leap to take their business into the future.

5 In fact, businesses now recognise that converting manual processes to digital is just the basic step; what is more important is to look at how they can leverage digitalisation to create new business propositions and stay competitive. Indeed, as more and more businesses adopt digital platforms in their interactions with their counterparts or customers, it is important that CSPs consider how they can value-add in their digital ecosystem to stay relevant.  

6 The government has made digitalisation a key pillar of the public service transformation efforts. Government digital services will be designed and built around the needs of citizens and businesses – they will be intuitive, easy to use and accessible anytime, anywhere, on any device.  

7 All our registration, filing and information services have been online since 2003. In the coming years, we will go digital-to-the-core, adopt an anticipatory and predictive mode of operation and make compliance so simple that there is “no need for service” – which is the best service. We recently introduced two e-Advisers for “Starting a Business” and for “Business Structure” on the GoBusiness portal - to provide simple information to new and aspiring business owners about their business options and statutory obligations - to help them start on the right footing. We have also piloted ACRA Digital Assistant (Ada) to manage customers’ enquiries on Unique Entity Number. This is a virtual intelligent chat assistant that engages users in personalised conversations to address their enquiries.  More enquiries will be handled by Ada in the new future.

8 Last year, I mentioned that the ACRA-IRAS seamless filing initiative enables smaller companies to prepare and file statutory returns from their accounting systems via APIs (Application Programming Interfaces) to ACRA and IRAS. CSPs and companies used to take 9 hours to manually prepare and file the statutory returns but now takes just about half an hour to do so, without the need to log in to BizFile+ and myTax portal. To-date, over 50 companies have filed their statutory returns to ACRA and IRAS through this mode.

9 More recently, we collaborated with 1X, Singapore’s first private securities exchange to enable updating of share ownership information with ACRA directly from source. This occurs in real-time as shares are traded on the 1X platform. In the next few years, ACRA will extend the seamless filing solution to more statutory filings. We envision seamless filing to become the preferred way of filing in the near future. We will partner more software providers to widen the range of seamless filing solutions.

10 At the CSIS-ISCA-ACRA outreach sessions in February this year, we polled about 850 CSPs to find out the digital adoption rate among the CSPs. About half of the respondents indicated their intent to procure corporate service digital solutions. Many were keen to digitalise their work processes though some were unsure which solution to adopt, and were concerned about the limited resources to implement digital solutions.   

11 The government is providing subsidies for digital solutions such as the IMDA Start Digital Programme and Productivity Solutions Grants. CSIS has also launched a new series of technology sessions where they invite tech firms to talk about digital solutions. I encourage you to attend these sessions and find out how to upskill yourselves and digitalise your business operations. Later today, there will be a sharing by a CSP on their experience using a company secretarial software which is integrated seamlessly with ACRA’s BizFile+.  

 12 The second area of focus is the need for CSPs to build resilience against money laundering, terrorism financing and other illicit activities. As a leading financial centre, Singapore has an important part to play in addressing global money laundering and terrorism financial risks. In July last year, we enhanced the transparency of ownership and control of corporate entities by introducing the requirement for companies and LLPs to file the information in their Register of Registrable Controllers (RORC) with the ACRA central register. To-date, more than 270,000 or over 70% entities have lodged their RORC information with ACRA. I strongly urge you to reach out to your clients if they have yet to comply with the requirement – before we start enforcement action on those who are the non-compliant.

13 To further enhance Singapore’s regime on transparency and beneficial ownership of legal persons, ACRA and MOF have launched a public consultation early this month, on proposed legislative amendments to reduce opportunities for the misuse of corporate entities for illicit purposes. My colleague will be sharing more about the proposed changes later at the conference.

14 CSPs too, must stay up to date with AML/CFT measures and implement them correctly, as you play a key role in facilitating the setting up of business in Singapore, with some of you acting as locally resident directors or nominees. To help CSPs understand the AML/CFT risks and obligations, we partnered CSIS and ISCA to introduce the mandatory training programme in 2018. I am pleased to let you know that to-date, the passing rate of the AML/CFT proficiency test has been high, at 96%. The proficiency test is a pre-requisite to be registered or renewed as Registered Filing Agents (RFAs).

15 However, I urge you not to let your guards down, and to remain mindful of the growing complexity of such risks. The Financial Action Task Force has reported recently new money laundering and terrorist financing threats and vulnerabilities arising from COVID-19 crisis. It is important that you stay vigilant to new and emerging risks, and to continue to ensure the robustness of your AML/CFT controls.

16 In our compliance review on RFAs conducted between 2020 to 2021, we have observed a fall in compliance rate mainly due to the COVID-19 situation, which had posed challenges to CSPs’ ability to conduct due diligence checks. Some CSPs have not been able to conduct the required checks due to difficulties in holding in-person meetings. We also observed that some CSPs were unable to continue their daily operations on virtual platforms as they have yet to adopt digital tools and processes. This observation highlights the importance for CSPs to go digital so as not to hamper your effectiveness and competitiveness. I urge CSPs to leverage technology to transform your business processes and operations to improve productivity and reduce costs. Besides improving work efficiency, this will also create better customer experience and bring greater value to your clients.

17 We have also found that some CSPs continued to fall short of their AML/CFT responsibilities. ACRA takes a serious view of any breaches in AML/CFT obligations, and we will not hesitate to take strong enforcement actions against those who refuse to comply or intentionally flout the laws. Between November 2020 and June 2021, we conducted 14 inspections on RFAs arising from Compliance Review findings, and imposed financial penalties ranging from $4,000 to $14,000 on 6 CSPs, for failing to conduct proper due diligence checks on their clients. Depending on the severity of the non-compliance, an RFA may face restricted access to BizFile+, financial penalty or have their registration cancelled.

Strengthening Accountancy Sector  

18 I would like to take a moment to update you on a recent development at ACRA. Some of you may be aware of the recent Ministry of Finance (MOF) announcement on the merger of the accountancy-related units in ACRA, the Singapore Accountancy Commission (SAC) and the Accounting Standards Council (ASC) Secretariat. The merger serves to strengthen effectiveness of regulation, standards-setting, and sector development by harnessing synergies across complementary functions related to accountancy. The merger would happen in the second half of next year. The details of the implementation are being worked on and further updates will be shared in due course.

Conclusion

19 I would like to conclude by thanking CSIS for your partnership and support over the years. Your regular feedback has helped ACRA to ensure that our regulatory regime remains robust and relevant for CSPs and businesses. I am happy that CSIS has developed the new competency framework to raise the professional standards for CSPs. I encourage CSPs to use the framework to identify existing gaps, reskill and upskill, so that you can remain relevant and continue to thrive in the changing business environment.

20 On this note, I wish you all an enjoyable and fruitful conference.

Thank you.