CSP Due Diligence Requirements

CSP Due Diligence Requirements | Bestar

CSP Due Diligence Requirements Explained

In Singapore, registered Corporate Service Providers (CSPs) are required to perform comprehensive Customer Due Diligence (CDD) measures to combat money laundering (ML), terrorism financing (TF), and proliferation financing (PF). These obligations are crucial and are being further strengthened with the Corporate Service Providers Act 2024 and Corporate Service Providers Regulations 2025, which come into effect on June 9, 2025.

Here's a breakdown of the key CDD measures a registered CSP "must perform":

1. Identification and Verification of Customer Identity:

• Full Name and Aliases: Obtain the complete legal name and any known aliases.

• Identification Numbers: Collect NRIC, passport, or incorporation numbers.

• Residential or Business Address, Contact Number: Record accurate contact details.

• Date of Birth or Incorporation: Obtain date of birth for individuals or incorporation date for entities.

• Nationality or Place of Incorporation: Ascertain the nationality of individuals or place of incorporation for companies.

• Verification: Verify identities using reliable and independent sources, such as valid government-issued identification (e.g., NRIC, passport, or incorporation documents like ACRA business profiles or certificates of incorporation). Copies of these documents must be retained.

2. Identification and Verification of Beneficial Owners:

• Identify Every Beneficial Owner: CSPs must identify all beneficial owners of their customers. A beneficial owner is typically an individual who ultimately owns or controls a customer, directly or indirectly. This includes directors, sole proprietors, partners, managers, or executive authorities for companies.

• Verify Identities: Verify the identities of these beneficial owners using reliable and independent sources.

• Understand Ownership and Control Structure: Especially for entities, CSPs must understand the company's ownership and control structure to ensure they identify the true beneficial owners behind the company.

3. Obtaining Information on Purpose and Intended Nature of Business Relationship:

• CSPs must gather information about the purpose and intended nature of the business relationship with the customer. This helps in understanding the legitimate reasons for engaging corporate services and identifying any potential red flags.

4. Risk Assessment and Risk-Based Approach:

• Customer Risk Assessment: Perform a thorough risk assessment for each customer to determine their overall risk level (low, medium, or high) for ML/TF/PF. This involves considering various risk factors:

  • Customer factors: Non-resident customers, overly complex ownership structures, cash-intensive businesses, Politically Exposed Persons (PEPs) or those connected to them.

  • Country or territory risk factors: Whether the customer's country is subject to sanctions or embargoes.

  • Service risk factors: Non-face-to-face transactions.

• Risk-Sensitive Basis: CDD measures must be performed on a risk-sensitive basis, meaning the intensity of CDD should be proportionate to the assessed risk. Higher-risk customers require Enhanced Customer Due Diligence (EDD).

• Documentation: All risk assessments and determinations must be properly documented and kept up-to-date.

5. Customer Screening:

• CSPs must screen customers, their agents, connected parties, and beneficial owners against any lists and information provided by ACRA, other directed sources, and relevant sanctions lists (e.g., UN, US Sanction lists) to identify designated persons or terrorists as defined under relevant acts. All screening results and determinations must be documented.

6. Ongoing Monitoring:

• CSPs must conduct ongoing monitoring of every business relationship to detect and prevent ML/TF/PF. This includes:

  • Regularly reviewing customer activities and transactions to ensure they are consistent with the CSP's knowledge of the customer and their risk profile.

  • Keeping customer documentation and information up-to-date.

  • Applying enhanced ongoing monitoring for higher-risk customers, which involves increased scrutiny.

7. Specific Measures for Non-Face-to-Face Transactions:

• For customers not physically present for identification, CSPs must implement additional measures to mitigate higher risks. This can include:

  • Obtaining additional documents, data, or information.

  • Conducting and maintaining records of live video calls with at least one proposed director (who is not a nominee), a member with at least 50% voting rights, or an authorized representative (for legal persons).

8. Inability to Perform/Complete CDD:

• If a registered CSP is unable to perform or complete CDD, they must:

  • Decline to provide any corporate service to the customer.

  • Not establish a business relationship with the customer.

  • Terminate any ongoing provision of corporate services to the customer.

  • Document the reasons why the measures were not completed.

  • Consider whether a Suspicious Transaction Report (STR) must be filed.

9. Record-Keeping:

• CSPs must document and keep a record of their CDD documentation for at least five years.

These measures are critical for CSPs to comply with their anti-money laundering and counter-financing of terrorism obligations, strengthening Singapore's position against financial crime. Failure to comply can result in substantial fines and criminal liability for both the CSP and its senior management.

How Bestar can Help

Bestar plays a vital role in Singapore's business ecosystem, acting as essential partners for companies, especially startups and foreign entities, to navigate the country's robust regulatory landscape. With the Corporate Service Providers Act 2024 and Corporate Service Providers Regulations 2025 coming into effect on June 9, 2025, our role in ensuring compliance and combating financial crime is even more pronounced.

Here's a detailed look at how Bestar can help businesses in Singapore:

1. Company Incorporation and Setup:

• Streamlined Registration: Bestar guides clients through the entire company incorporation process, ensuring all requirements are met and documents are accurately prepared for submission to the Accounting and Corporate Regulatory Authority (ACRA). This includes reserving the company name, preparing the constitution, and filing the necessary forms.

• Choosing the Right Structure: We provide advice on the most suitable business structure (e.g., private limited company, sole proprietorship, partnership, limited liability partnership) based on the client's business goals, ownership, and tax implications.

• Foreigner Assistance: For foreign entrepreneurs, Bestar is crucial in facilitating the setup process, including providing a local nominee director if needed (a mandatory requirement for Singapore companies) and assisting with bank account opening.

2. Corporate Secretarial Services (Ongoing Compliance):

• Statutory Compliance: This is a core service. Bestar ensures the company adheres to the ongoing requirements of the Companies Act, including:

  • Appointing a Company Secretary: Every Singapore company must appoint a qualified company secretary. Bestar provides this service.

  • Maintaining Statutory Registers: We meticulously maintain critical company records such as the Register of Members, Directors, Secretaries, Charges, and the increasingly important Register of Registrable Controllers and Nominee Director/Shareholder Registers.

  • Annual General Meetings (AGM) and Annual Return (AR) Filings: Bestar manages the preparation of notices, agendas, and minutes for AGMs (or documentation for dispensing with AGMs) and ensures the timely filing of the Annual Return with ACRA.

  • Updating Company Particulars: We notify ACRA of any changes in company details (e.g., changes in directors, shareholders, registered office address, company name) within the stipulated deadlines.

• Resolutions and Minutes: Preparing and circulating board and shareholder resolutions and minutes for various corporate actions.

3. Accounting and Taxation Services:

• Bookkeeping: Bestar offers professional bookkeeping services to maintain accurate and up-to-date financial records, essential for compliance and decision-making. This includes managing accounts payable and receivable, bank reconciliations, and cash flow management.

• Financial Statement Preparation: We prepare financial statements in compliance with Singapore Financial Reporting Standards (SFRS) and, if required, convert them to XBRL format for ACRA filing.

• Tax Compliance:

  • Corporate Income Tax (CIT): Calculation and timely filing of Estimated Chargeable Income (ECI) and the annual Corporate Income Tax Return (Form C/CS).

  • Goods and Services Tax (GST): Assistance with GST registration, preparation, and timely filing of regular GST returns.

  • Tax Planning & Advisory: Providing advice on tax efficiency and available tax incentives.

4. Payroll Management:

• Payroll Processing: Managing employee salaries, allowances, and deductions.

• CPF Contributions: Ensuring accurate and timely Central Provident Fund (CPF) contributions.

• IR8A Forms: Preparation and submission of annual Form IR8A for employees.

• MOM Compliance: Ensuring compliance with the Ministry of Manpower (MOM) regulations related to employment.

5. Nominee Director Services:

• Local Resident Director: For foreign individuals or entities setting up a company in Singapore, Bestar can provide a nominee resident director to fulfill the statutory requirement, especially now with increased scrutiny under the CSP Act 2024.

• Compliance and Due Diligence: As per the new regulations, Bestar offering nominee director services must rigorously assess and verify the nominee director's fitness and propriety, and disclose nominee status and nominator identity to ACRA, enhancing transparency.

6. Registered Office Address:

• Every Singapore company must have a local registered office address. Bestar provides this service, often including mail handling and forwarding.

7. Business Advisory and Consulting:

• Strategic Guidance: Bestar offers broader business advisory services, including advice on corporate structuring, financial management, and business expansion strategies.

• Compliance Reviews: We can conduct reviews of a company's internal processes to ensure alignment with new regulatory obligations, especially regarding AML/CFT/PF.

8. Immigration Services:

• Bestar also assists with applications and renewals for various work passes (e.g., Employment Pass, S Pass) for foreign staff.

Key Benefits of Engaging Bestar:

• Expertise and Compliance: Bestar possesses in-depth knowledge of Singapore's dynamic regulatory framework (ACRA, IRAS, MOM, etc.), ensuring businesses remain compliant and avoid costly penalties. This is especially crucial with the heightened AML/CFT/PF obligations under the new CSP Act.

• Time and Cost Efficiency: Outsourcing administrative and compliance tasks to Bestar is more cost-effective than hiring and training an in-house team. It frees up valuable management time, allowing business owners to focus on core operations and strategic growth.

• Risk Mitigation: By managing deadlines, ensuring accurate filings, and conducting thorough due diligence, Bestar helps businesses mitigate legal, financial, and reputational risks associated with non-compliance.

• Scalability: Bestar services are scalable, allowing businesses to adjust the level of support as they grow and their needs evolve.

• Accessibility for Foreigners: Bestar simplifies the entry into the Singapore market for foreign investors by providing essential local presence and compliance support.

In essence, Bestar acts as a vital backbone for businesses in Singapore, ensuring they operate legally, efficiently, and with full transparency, especially under the new, stricter regulatory regime.

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