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Singapore must improve monitoring for international money laundering, says watchdog

Singapore has a strong legal and institutional anti-money laundering (AML) and counter-terrorist financing (CTF) framework in place but there are still gaps in its effectiveness, particularly in larger transnational cases, the international Financial Action Task Force (FATF) has said. 29 Sep 2016

Singapore has prosecuted relatively few foreign AML cases except for lower-level wire transfer fraud using mules and shell companies, and has confiscated only low amounts of the proceeds of this crime, the FATF said.

The country's regulatory bodies need a better understanding of the risks of transnational crime and of the vulnerabilities in Singapore's own system, the FATF said.

Singapore has one of the lowest domestic crime rates in the world, and the bulk of its exposure to AML risks is from offences committed overseas, the report said.

"In particular, Singapore’s status as both a major global financial centre and an international trade/transportation hub makes it vulnerable to becoming a transit point for illicit funds from abroad," it said.

The Monetary Authority of Singapore (MAS) acknowledged that further work is needed.

MAS will consider steps to enhance the transparency of information on beneficial ownership of companies, limited liability partnerships and trusts, to ensure that this information is more readily accessible to law enforcement agencies and supervisors, it said.

It will also improve risk assessment and supervision of all companies and organisations, and improve financial institutions' understanding of risks and best practices, it said.

Singapore will also pursue more cases in complex, transnational AML cases, and proactively target and pursue confiscations of criminal proceeds, MAS said.

Moneyval, the Council of Europe’s committee for money laundering published its own annual report this week, saying that European law enforcement agencies and prosecutors need to increase the number of convictions to clamp down on money laundering.

Reflecting the FATF report, the European committee identified two priorities: prosecutorial authorities should do more to achieve money laundering convictions, and there is a need for deterrent confiscation orders which take the profit out of crime. 

The MAS set up a dedicated AML department in August, along with a separate department to strengthen the enforcement of its regulations.

MAS already had a "robust regime" in place to counter the risk of Singapore's financial sector being used for money laundering and terrorist financing, but international finance is increasingly complex  and there is a need for greater supervision, MAS said in June. 

The dedicated AML department will look after all policies on money laundering and other illicit financing risks, MAS said. It will monitor risks and carry out on-site supervision of how financial institutions manage these risks.