Sole Proprietor Convicted of PIC Fraud

A sole proprietor of a business was recently charged and convicted for submitting false information in order to obtain a Productivity and Innovation Credit (PIC) cash payout of $9,000 for her business.

She had submitted an application for a PIC cash payout in 2013, with a false declaration that her business had met the condition of having three local employees during the period of her claims. However, IRAS’ investigations revealed that she had worked on her own with no employees. She had falsely used the names of her acquaintances, to fulfill the three local employees’ conditions, even though they were not working for her.

She was charged and convicted for wilfully with intent to obtain a PIC cash payout by providing false information in the PIC cash payout application form. Upon conviction, she was ordered by the court to pay a penalty of $27,000, three times the amount of the cash payout that had been wrongfully obtained, and a fine of $10,000.

This case highlights the importance for business owners to ensure that their business fulfills the “three-local employee” condition if they wish to apply for PIC cash payout.  This condition requires the business to have at least three local employees (Singapore Citizens or Singapore Permanent Residents with Central Provident Fund (CPF) contributions) excluding sole proprietors, partners under contract for service, and shareholders who are directors of the company.

Besides meeting this “three-local-employee” condition, businesses have to also make sure that they incurred the PIC qualified expenditure, have active business operations and the PIC equipment is actually in use for the business.


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ACRA Cancels Registration of Filing Agent and Qualified Individual for AML/CFT Breaches

The Accounting and Corporate Regulatory Authority (ACRA) had cancelled the registrations of filing agent (RFA) and qualified individual (RQI) on 18 January 2024. The registrations were cancelled in view of breaches of anti-money laundering and countering the financing of terrorism (AML/CFT) controls under the ACRA (Filing Agents and Qualified Individuals) Regulations 2015 (the “ACRA Regulations”).

Some of the basic AMT/CFT controls that a RFA and RQI are required to exercise are as follows:

(a) perform additional customer due diligence measures when a customer is not physically present during onboarding;

(b) inquiring if there exists any beneficial owner in relation to some of its customers; and

(c) perform risk assessments i

RQIs and RFAs provide corporate secretarial services for business entities, such as helping customers to incorporate companies, file annual returns and fulfil other filing requirements under the Companies Act 1967 or other Acts under ACRA’s purview. RQIs and RFAs are required to perform customer due diligence measures in accordance with the ACRA Regulations, and conduct their business in such a manner as to guard against the facilitation of money laundering and the financing of terrorism. RQIs and RFAs must also satisfy statutory requirements such as being fit and proper persons, to be registered or continue to be registered.

RQIs and RFAs who breach their statutory obligations may be subject to enforcement actions, such as financial penalties of up to $10,000 or $25,000 per breach respectively or have their registrations with ACRA suspended or cancelled.

Therefore, RQIs and RFAs play an important role in helping to detect and combat illicit activities.

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