A. Introduction

1. Singapore’s existing fraudulent and insolvent trading provisions were significantly overhauled and a new liability for wrongful trading was introduced in 2020 via the Insolvency, Restructuring and Dissolution Act 2018 (IRDA¹. The introduction of the new provisions in the IRDA reflected a recognition that it was difficult to hold officers to account under the existing regime and a new approach was needed. Previously, criminal liability must first be found as a prerequisite before the making of an application to impose civil liability against the officer of the company.
2. Section 45(1) of the Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act 1992 (CDSA) mandates a person to make a suspicious transaction report if, in the course of his profession or employment, he “knows or has reasonable grounds to suspect” that any property represents the proceeds of or is connected with drug dealing or criminal conduct. “Criminal conduct” is defined as doing or being concerned in, whether in Singapore or elsewhere, any act constituting a serious offence or a foreign serious offence (s 2(1) of the CDSA). In turn, “serious offence” is defined as any offence specified in the Second Schedule of the CDSA (s 2(1) of the CDSA).
3. The Second Schedule of the CDSA was most recently amended by the Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act 1992 (Amendment of Second Schedule) Order 2023. Under the amendment, 14 offences in the IRDA were added to the Second Schedule, meaning that these IRDA offences are now reportable under section 45(1) of the CDSA. The amendment took effect from 10 February 2023.
4. This update looks at the implications for insolvency practitioners and whether they have a reporting duty under section 45(1) of the CDSA in respect of these IRDA offences which have now been added as predicate offences under the CDSA. We also examine the interplay between the confiscation of benefits under the CDSA and the availability of these funds for distribution to the creditors of an insolvent company.

B. Insolvency practitioners do have a duty to report under the CDSA

5. The CDSA does not exempt insolvency practitioners from the duty to report IRDA offences. Under the CDSA, only lawyers, legal counsel and arbitrators in prescribed circumstances are exempted from the duty to report (s 45(5) of the CDSA). The subsidiary legislation under the CDSA does not provide for such an exemption.
6. Neither does the IRDA exempt insolvency practitioners from the duty to report. Under the IRDA, there is no provision providing for such an exemption. Similarly, there is no such exemption in the subsidiary legislation under the IRDA.
7. In Public Prosecutor v Rahmad Bin Ibrahim [2007] SGDC 349, the District Court held that the test of having “reasonable grounds to suspect” under section 39(1) CDSA is a partly subjective and partly objective test, and a matter is “determined from the perspective of the accused person (ie, a person with his knowledge and experience) and on the standards and belief of a reasonable man in his shoes”.
8. Insolvency practitioners and their employees can download the Suspicious Transaction Report (STR) Form from and e-file the completed STR on SONAR. STRO’s guidance on the completion of the STR Form is also available on SONAR.
9. The failure to report does have serious implications. Any person who contravenes Section 45(1) of the CDSA shall be guilty of an offence and shall be liable on conviction if the person is an individual, to a fine not exceeding $250,000 or to imprisonment for a term not exceeding 3 years or to both.

C. Commentary

10. It is likely that a person, including an insolvency practitioner, is not obliged to report a newly-added IRDA offence if the offence was committed before 10 February 2023. In other words, the duty to report IRDA offences should not apply retrospectively, because it would create liability where there previously was none².
11. In AAY and others v AAZ [2011] 1 SLR 1093, the High Court held that the defendant’s disclosure was not compulsory under the CDSA as the alleged crimes did not fall within the scope of the CDSA when they were committed.
12. However, this does not rule out the need to report if a reportable offence was committed after 10 February 2023 even if the liquidation took place before 10 February 2023. Due to the serious implications of the failure to report, it is recommended that insolvency practitioners seek legal advice when faced with such situations.
13. Separately, we now turn to the interplay between the confiscation of benefits under the CDSA and the availability of these funds for distribution to the creditors of an insolvent company.
14. Section 7 of the CDSA provides that benefits of “criminal conduct” of a defendant are liable to be confiscated by the state, where the defendant is convicted of one or more “serious offences”. Such confiscation proceedings are premised on an application by the Public Prosecutor.
15. The funds or assets concerned in the 14 offences in the IRDA, which have been added to the Second Schedule, are likely to constitute benefits of “criminal conduct”. It remains to be seen whether the state would exercise its discretion to apply for confiscation in such cases where the funds or assets, would in the ordinary course, be distributed to the creditors of the insolvent company. The state will have to consider if the public interest justifies such an application.
16. In the event that the Public Prosecutor makes such an application, it also remains to be seen whether the courts will find that the confiscation proceedings under the CDSA would take precedence over the distribution of assets to the creditors of an insolvent company.
17. It is recommended that insolvency practitioners seek legal advice when faced with such a situation as there may be avenues to discuss the matter with the state, in finding a just and fair resolution that would protect the interests of creditors.

Dentons Rodyk thanks and acknowledges Practice Trainee Chieng Hui Jie for her contributions to this article.

1. https://www.mlaw.gov.sg/news/parliamentary-speeches/second-reading-speech-sms-edwin-tong-insolvency-omnibus-bill↩
2. This would otherwise contravene Section 11 of the Constitution of the Republic of Singapore which provides that no person shall be punished for an act or omission which was not punishable by law when it was done or made, and no person shall suffer greater punishment for an offence than was prescribed by law at the time it was committed.↩