MAS Flags Money Laundering Threats Via Banks, Others In Major Report

Tom Burroughes Group Editor 21 June 2024

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.

“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.

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.

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