Amendments to Corporate Service Provider Regulatory Regime to Come into Force from 9 June 2025

Introduction

Pursuant to the Corporate Service Providers (“CSP“) Act 2024 (Commencement) Notification 2025, the Corporate Service Providers Act 2024 (“CSP Act“) will come into force on 9 June 2025. To provide further details on the requirements under the CSP Act, the Corporate Service Providers Regulations 2025 (“CSP Regulations“) have been published on 8 May 2025, and will also come into force on 9 June 2025.

The CSP Act seeks to enhance the regulatory regime for the CSP sector. It was passed in Parliament on 2 July 2024 as part of a series of legislative amendments to the corporate compliance regime aimed at strengthening Singapore’s anti-money laundering framework. For more information on these legislative amendments, please see our earlier Legal Update here.

The CSP Act sets out important obligations for CSPs, including the following:

1. Registration of CSPs;
2. Extension of obligations to detect and prevent financial crime and the misuse of companies;
3. Criminal liability and penalties for breach of obligations by CSPs and senior management; and
4. Requirements for nominee directors to be appointed by a CSP and to be fit and proper.

This Update highlights the key obligations and corresponding penalties under the CSP Act and the CSP Regulations. CSPs should take of these obligations and review their operations and practices to ensure compliance with the new regulatory regime.

Registration of CSPs

Under the CSP Act, all business entities that carry on a business in Singapore of providing any corporate service must be registered with the Accounting and Corporate Regulatory Authority (“ACRA“) as a registered CSP even if they do not file transactions with ACRA on behalf of their customers. A “corporate service” includes: (i) forming a corporation or other legal entity; (ii) acting as a director or secretary; (iii) providing a registered office, business address, correspondence or administrative address; (iv) acting as a nominee shareholder; (v) carrying out designated activities in relation to the provision of accounting services; and (vi) carrying out transactions using ACRA’s electronic transaction system. 

Failure to observe the registration obligation may result in a fine of up to S$50,000 and/or imprisonment for a term not exceeding two years. In the case of a continuing offence, a further fine of up to S$2,500 may be imposed for every day or part of a day during which the offence continues.

CSPs should note that an application for renewal of registration must be made not earlier than 60 days before the date of expiry of the registration.

Extension of Obligations to Combat Financial Crime

All registered CSPs must now comply with the obligations relating to the financing of proliferation of weapons of mass destruction (“proliferation financing“), in addition to existing requirements for detecting and preventing money laundering and terrorism financing (collectively, “AML / CFT / PF requirements“). In particular, the CSP Act requires each CSP to perform customer due diligence measures before providing any corporate service to a customer and where the registered CSP has reason to suspect money laundering, proliferation financing or terrorism financing. 

The CSP Act clarifies that “customer due diligence measures” refers to the prescribed measures for:

1. identifying a customer of the registered CSP and the customer’s agent (if any), and verifying their identities;
2. identifying every beneficial owner of the registered CSP’s customer and verifying the identity of the beneficial owner(s);
3. obtaining information on the purpose and intended nature of the business relationship between the registered CSP and the customer; and
4. any other measures for detecting or preventing money laundering, proliferation financing or terrorism financing.

In this regard, the CSP Regulations provide further details on the required policies, procedures and controls:

1. Registered CSPs are required to develop, implement and maintain adequate internal policies, procedures and controls to prevent money laundering, proliferation financing and terrorism financing.
2. Registered CSPs must regularly assess the effectiveness of the internal policies, procedures and controls and impement an independent audit function.
3. Registered CSPs must ensure that their employees are duly trained on the AML / CFT / PF requirements and on their internal policies, procedures and controls.

Criminal Liability

Registered CSPs will be subject to criminal liability for breaches of their AML / CFT / PF requirements, as will their senior management.

1. CSPs that fail to comply with the AML / CFT / PF requirements may be liable to a fine of up to S$100,000 for each breach.
2. The senior management of a registered CSP who fail to ensure that the CSP complies with its AML / CFT / PF requirements may also be liable to a fine of up to S$100,000 for each breach.

Requirements for Nominee Directors

A person will only be able to act as a nominee director by way of a business if the appointment is arranged by a registered CSP. Any person who breaches this requirement may be liable to a fine of up to S$10,000. For the avoidance of doubt, this restriction does not apply to a person who acts as a nominee director of his or her affiliated company.

A registered CSP must not arrange for a person to act as a nominee director of a company unless they are satisfied that the person is fit and proper. The CSP Regulations further provide that a registered CSP must consider the following factors in determining whether a person arranged to act as a nominee director is fit and proper:

1. whether the person has been convicted of any offence involving fraud or dishonesty, or of any relevant offence;
2. whether the person is an undischarged bankrupt;
3. whether the person’s previous conduct and compliance history of the companies of which the person was a director 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 the person’s existing directorships.

Registered CSPs that fail to comply with the above requirement may be liable to a fine of up to S$100,000.

Concluding Words

The regulation of CSPs has received greater focus due to the prevalent threat of money laundering, which has come under the spotlight in recent cases. ACRA can thus be seen to be pursuing heightened vigilance and corporate compliance to more effectively support anti-money laundering efforts.

CSPs should ensure that they do not fall foul of the obligations under the CSP Act and the CSP Regulations. As these requirements are set to come into effect on 9 June 2025, CSPs have a window to review their operations, procedures and policies to assess whether they are in compliance and, if not, to implement the necessary changes.

Companies should ensure that their CSP is registered with ACRA and assess whether their existing nominee director arrangements comply with the CSP Act. They should also be aware of the enhanced AML / CFT / PF requirements applicable to CSPs and should anticipate information requests from the CSPs to comply with these requirements.

For further queries, please reach out to our Team members set out on this page.

For more information, please see the following:

• Press release on “Corporate Service Providers (CSP) Act to come into effect from 9 June 2025”
• Corporate Service Providers Act 2024
• Corporate Service Providers Regulations 2025