Overview
The Law Society of Singapore issued an updated Practice Direction 3.2.1 – Prevention of Money Laundering, Financing of Terrorism and Proliferation Financing (“PD”) on 6 October 2025, replacing the July 2022 version.
The revision reflects the Legal Profession (Prevention of Money Laundering and Financing of Terrorism) (Amendment) Rules 2025, which came into effect on 1 July 2025, and aligns with Singapore National Strategy 2024 for Anti-Money Laundering, Countering the Financing of Terrorism and Proliferation Financing (AML/CFT/PF) and the latest FATF Recommendations. The revision also strengthened compliance governance within law practices and emphasises risk management, proliferation financing controls, and the handling of emerging technologies.
What’s New
1. Expanded Scope
The revised PD now includes Proliferation Financing (PF), extending the compliance framework beyond money laundering and terrorism financing. Law practices must incorporate PF considerations into client and matter risk assessments.
2. Links to Multiple Resources
The updated PD consolidates reference materials and guidance to support compliance, including links to FATF papers, national risk assessments, and MinLaw advisories, enabling firms to implement risk-based CDD effectively.
3. New Rule 18A – Group-Wide Compliance Programmes
Law practices with branches or subsidiaries must establish group-wide AML/CFT/PF programmes. These programmes should ensure consistency of controls, support intra-group information sharing, and safeguard confidentiality.
4. Strengthened Internal Controls
The following are revised as mandatory work processes:
- Independent confirmation and periodic review of internal controls;
- Employee screening processes; and
- Formal compliance management arrangements, especially training.
5. Persons whom clients may be acting on behalf of
Law practices should verify the identities of individuals that the clients are acting on behalf of. This is to prevent potential abuse by the ultimate beneficial owner hiding behind these clients.
6. Simplified Customer Due Diligence (SCDD)
The introduction of Rule 13A formalises the use of Simplified Customer Due Diligence (SCDD) for clients assessed as low risk for ML/FT/PF. Previously a matter of discretion, the PD now provides clearer parameters for when reduced CDD measures may be applied.
7. Ongoing Customer Due Diligence
Law practices are required to refresh client due diligence at defined intervals, especially for high-risk clients or when significant changes occur in the client profile or engagement.
8. Performance of CDD measures by third parties
Law practices may rely on third parties (e.g., other regulated institutions or lawyers) to perform certain CDD measures with strict limitations.
9. Virtual Assets and New Technologies
A new section provides guidance on engagements involving virtual assets and technology-based services. Firms must assess and manage risks associated with digital tokens, decentralised platforms, and other technology-enabled transactions.
10. Suspicious Transactions Report
Law practices are obligated under Section 70D LPA and the Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act (CDSA) to file STRs as soon as suspicion arises.
Failure to file or follow-up on STRs can lead to disciplinary action and potential criminal liability
11. Training and Competency
Law practices must maintain structured and ongoing AML/CFT/PF training for all partners, directors, and employees. Acceptable formats include seminars, webinars, and in-house sessions, with proper records of attendance.
12. Updated Annexes and Templates
The PD now includes additional annexes to support implementation:
- Annex B1: Firm-Wide Risk Assessment Template
- Annex D: Ongoing CDD Checklist
- Annex F: Ministry of Law’s June 2025 Guidance on Client Risk and STR timelines
These materials promote greater consistency and transparency in documentation.
What’s Next for Law Practices
- Update internal AML/CFT/PF frameworks – Incorporate PF and group-wide compliance requirements by Q1 2026.
- Conduct an independent review of existing IPPCs to meet new Rule 18 obligations.
- Reassess client risk matrices to identify PF exposure and digital-asset-related risks.
- Implement documented SCDD procedures with justification records for low-risk clients.
- Review and formalise AML training programmes, maintaining attendance and content logs. Adopt LSS templates for risk assessments and CDD documentation to ensure audit readiness.
How We Can Help
Our Compliance and Governance team can assist by:
- Gap-Analysis Review: Assessing your firm’s 2022 policies against the 2025 PD requirements to identify implementation priorities.
- Framework Redesign: Updating AML/CFT/PF manuals, risk matrices, and internal control documentation.
- Independent Review Facilitation: Providing external confirmation or independent testing to satisfy Rule 18 review expectations.
- Ongoing Support: Assisting in periodic client file reviews, risk monitoring, and preparation for regulatory inspections.
Contact Us
If you would like to discuss how these updates may affect your firm’s AML/CFT/PF compliance framework. Find out more here.