Singapore Regulator Grows More Teeth In Fight Against Dirty Money

Tom Burroughes Group Editor 14 June 2016

Singapore Regulator Grows More Teeth In Fight Against Dirty Money

The MAS is creating a new unit dedicated to stamping out money laundering, coming shortly after it took harsh action against a bank on its turf for AML lapses.

Singapore’s financial regulator is creating a standalone unit to fight money laundering, just a few weeks after the watchdog moved to revoke the merchant banking licence of BSI Bank in the Asian jurisdiction, the first time it has taken such action since 1984.

The Monetary Authority of Singapore is setting up dedicated departments to combat money laundering and strengthen enforcement respectively, it said yesterday. The changes will take effect on 1 August 2016.

“Like all major international financial and business centres, Singapore’s financial sector faces the risk of being used as a conduit for money laundering and terrorist financing activities. While MAS has in place a robust regime to protect the integrity of Singapore’s financial system, the increasing complexities of transnational flows necessitates heightened supervisory focus on combatting money laundering and other illicit financing activities,” the organisation said.

Recent events have highlighted AML risks in Singapore. The MAS moved in May to rescind the merchant banking licence of a local subsidiary of Lugano-headquartered BSI, the bank which is being acquired by Switzerland’s EFG International. The MAS spoke of the “gross misconduct” of BSI Bank and numerous failings on AML controls.

The affair was linked to transactions around 1MDB, the Malaysian state-run fund accused of allowing politicians and other figures to siphon off money (1MDB denies wrongdoing). Investigations have been launched in Singapore and Switzerland over money transfers. The MAS action was the first time MAS has withdrawn such a licence since 1984, when Jardine Fleming (Singapore) was shut down for serious lapses in its advisory work. (For more on the matter, see here.)

Offshore jurisdictions such as Singapore, home to an estimated global total of around $10 trillion (source: Boston Consulting Group), remain under pressure to show they do not provide hiding places for dirty money. The financial and political world is still digesting the “leak” of account details from a Panama-based law firm earlier this year, while jurisdictions are also readying for global standards of disclosure and data transfer, such as under the Common Reporting Standard.

Supervisory team
In its statement yesterday, MAS said that as well as forming a dedicated AML unit, a supervisory team will be set up to monitor these risks and carry out onsite supervision of how financial institutions manage those risks. 

Justifying its action, MAS said that with a sector that comprises more than 1,500 financial institutions of varying sizes and systemic importance, it cannot stop all rule-breakers with even the toughest supervision, so it was necessary to strengthen enforcement of the laws. 


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