Singapore's Updated Risk Assessment Reveals Heightened Money Laundering Vulnerabilities in Financial Sector
Summary:
Singapore's updated National Risk Assessment on Money Laundering reveals significant risks in the financial sector, especially with digital payment token service providers. Although global activities of these providers in Singapore are relatively small, the risks are closely monitored. The key threats outlined in the assessment stem from cyber-enabled fraud, organized crime, corruption, tax crimes, and trade-based money laundering.
The most recent National Risk Assessment (NRA) on Money Laundering (ML) in Singapore has revealed considerable vulnerabilities in the Anti-Money Laundering (AML) landscape, chiefly within the financial sector. These issues are notably heightened by digital payment token (DPT) service providers. The in-depth 126-page study has pinpointed previously uncovered high-risk zones, such as virtual asset (DPT) service providers and traders of precious stones and metals, which weren't featured in the previous report of 2014.
Wealth management and the banking sector are identified as high-risk areas for ML, due to both the large scales at which transactions occur and the type of customers they serve. The risk factor associated with the finance sector significantly escalates with the inclusion of DPT service providers or virtual asset service providers. The study underlines an escalated number of cases related to DPTs and diversification in misuse methods.
Despite the proportion of worldwide DPT activities occurring in Singapore being relatively small, the potential risk factors are kept under strict surveillance. Other vulnerable sectors within the financial industry include cross-border money transfer services provided by payment institutions and external asset managers.
Chief threats to Singapore regarding money laundering are cyber-based fraud, organized crime, corruption, tax crimes, and laundering money through trade, as disclosed in the risk assessment study. Common laundering techniques involve secreting illegal funds in Singaporean bank accounts, setting up false businesses, or investing in high value assets like property or precious metals.
Compiled using insights from domestic supervisory and law enforcement agencies, the Financial Intelligence Unit, private sector feedback, and foreign authorities, the NRA report offers a comprehensive overview.
As an international finance hub with an open economy, Singapore is particularly vulnerable to ML threats. Law offenders regularly misuse the country's economic and business infrastructure to move or launder illicit funds. Additionally, the conversion of unlawful money into assets, like digital payment tokens, real estate, or precious metals, poses a notable risk.
In April, Singapore's Monetary Authority (MAS) announced an amendment to the Payment Services Act (PS Act) to broaden the scope of regulated services related to DPT service providers.
Published At
6/20/2024 2:13:14 PM
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