Compliance
MAS Flags Money Laundering Threats Via Banks, Others In Major Report
Singapore's main financial regulator has issued a report delving into the different types of money laundering, the institutions most likely to be involved, and the fast-changing nature of the problem.
Banks and wealth managers in Singapore pose the highest money
laundering threat to the Asian city-state, according to a report
by the jurisdiction’s regulator. The report has been
issued as Singapore is seeking to learn lessons from
the largest case in its history.
The Monetary
Authority of Singapore yesterday issued at 126-page report,
Money Laundering Risk Assessment Report Singapore 2024,
which identified major risks of money laundering, and concluded
by saying it must remain vigilant against the problem.
“Considering the ML [money laundering] threats and
vulnerabilities, the banking sector has been assessed to pose the
highest ML risk to Singapore. The role of banks in facilitating
transactions in the financial system, and their wide networks
through which cross-border transactions can be conducted, make
banks a common channel which criminals exploit,” MAS said. “In
addition, banks are exposed to a larger proportion of customers
with higher ML risks (including those from higher ML risk
jurisdictions), a high volume of cross-border transactions, and a
range of complex products and structures.”
Singapore’s key money laundering threats are fraud (particularly,
cyber-enabled fraud), organised crime, corruption, tax crimes,
and trade-based money laundering, MAS said.
“The banking [including the wealth management sector] is
assessed to pose the highest ML risks to Singapore,” it said.
Citigroup, DBS and other banks caught up in a major money
laundering case are said to be tightening scrutiny of their
wealthy customers and potential clients. Firms are trying to
ensure that the kind of conduct that saw a group of criminals
from China launder more than S$3 billion ($2.23 billion) does not
recur. The criminals laundered proceeds from online gambling
through at least 16 financial institutions in Singapore. A report
said the case
covers 27 people, and not only the 10 persons brought to
court on various charges.
This isn’t the first time Singapore – along with other hubs such
as Switzerland and the US – have been hit by scandals. Just under
a decade ago, the wealth sector witnessed the multi-billion saga
of funds that were
siphoned off from the 1MDB fund created by the
Malaysian government. Banks in Singapore were among those
affected.
Thorough
“The MAS’ recent Money Laundering National Risk Assessment
underscores Singapore's commitment to staying ahead of financial
crime in a rapidly changing risk environment. Its thorough
approach not only strengthens Singapore's anti-money laundering
framework but also supports global efforts against illicit
financial activities,” Rory Doyle, head of financial crime policy
at Fenergo said in
comments emailed to this publication. “The report's focus on
high-risk sectors like banking and corporate services highlights
the need for these industries to stay agile in response to
evolving regulations.” Dublin-based Fenergo is a regtech
business which provides digital know your customer and client
lifecycle management solutions.
“As MAS ramps up efforts to address reporting failures over the
coming months, with a focus on combatting financial crime and
protecting investors, banks need to be proactive. This could mean
rolling out new training programmes, tightening perimeter
controls to bolster due diligence efforts, and embracing
cutting-edge technologies such as artificial intelligence and
machine learning to streamline operations and ensure compliance,”
Doyle said.
Fraud
MAS said Singapore law enforcement agencies (LEAs) see a “high
number of ML cases arising from foreign fraud, particularly
cyber-enabled fraud.”
“Fraud is also the most frequently cited offence in foreign
authorities’ requests to Singapore for assistance, through both
the Suspicious Transaction Reporting Office (STRO) and LEAs. It
is also increasingly a key crime of concern globally,” it
continued. “Authorities have observed that fraudulent proceeds
are often professionally laundered and facilitated through third
parties, such as multiple layers of corporate and individual
mules and nominees, as well as through the financial and DNFBP
sectors. In addition, Singapore’s engagements with other
jurisdictions have identified fraud to be the top predicate crime
of concern posing an ML threat to Singapore.”
The regulator said the jurisdiction has also spotted a rise in
the money laundering threat posed by “cyber-enabled” fraud
committed domestically, orchestrated by syndicates typically
located overseas. Foreign organised crime gangs, and illegal
online gambling, are also threats.
“In the recent money laundering case, which involved over S$3
billion's ($2.214 billion's) worth of seized and prohibited
assets, several of the accused persons were convicted of
laundering proceeds which were suspected of being the benefits of
illegal online gambling from foreign organised criminal groups.
Some of these monies were held in bank accounts in Singapore.
Others were converted into assets such as real estate, cars,
handbags and collectables,” MAS said. “Aside from banks, other
sectors were involved in the offenders’ management of their
assets (for instance, they had engaged CSPs [corporate service
providers] to incorporate companies in Singapore through which
they held their assets, purchased properties through real estate
salespersons, and placed their funds in other high value goods
through precious stones and precious metals dealers).
MAS said the most commonly observed types of money laundering are
rapid pass-through of funds through bank accounts, misuse of
legal persons such as shell companies, and placement in high
value assets.