Singapore Publishes Updated Money Laundering National Risk Assessment Report

Singapore released a new Money Laundering National Risk Assessment report [ML NRA] on Thursday, given that it developed a more dynamic risk profile that is due to the increasing adoption of the digital banking system as well as Singapore becoming a greater international financial center.

The assessment consolidates money laundering risks identified by the supervisory and law enforcement agencies who also consulted the Singapore Financial Intelligence Unit, the Suspicious Transaction Reporting Office (STRO), and feedback from private businesses and other overseas authorities.

Since the previous ML NRA in 2014, risk assessments like abuse of legal persons or virtual assets have been carried out to identify such crimes early to prevent their occurrence in financially related sectors. Notably, the escalation of these risks led by the unfolding economic context and the growing digitization of services in recent years, resulting in rapid transactions across international borders.

Identification Of Key Risk Areas

The report, released on Thursday- 20 Jun 2024 also revealed that Singapore’s primary risks in the field arise from scams originating locally and internationally, which involve deepfakes and utilization of artificial intelligence where the scams are often conducted by criminal groups located in foreign countries.

“The money laundering national risk assessment is a core document of Singapore’s anti-money laundering and combating terrorism financing framework, which outlines the major over-arching risk setting for Singapore’s anti-money laundering strategy,” said on the assessment’s launch David Chew, the head of the delegation to the FATF and director of the commercial affairs department of the Singapore Police Force.

“This strategy focuses on three aspects; detection, prevention, and enforcement. Because the country continues to face key foreign money laundering risks specifically in corruption, tax as well as trade-based money laundering,” he added.

From August 2023, over $3 billion worth of cash, luxury bags, properties, and cars among others linked to 10 Chinese nationals recognized as the “Fujian Gang” holding different passports were confiscated by Singapore law enforcement related to money-laundering crimes that made headlines in Singapore and across the globe.

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Criticisms have arisen that criminals might wish to utilize its highly developed financial system and an existing commercial structure to filter or transfer unlawful resources and extraordinary items, in addition to isolating Singapore as a place they could transform their embezzled assets into different properties, for example, property or gems and valuable metals.

According to Mr. Chew ‘Singapore’, thus, continues to be vulnerable to some of the most significant foreign money laundering threats ‘particularly in the areas of tax, corruption, and trade-based money laundering’.

The risks are also high due to the enhancement of technology that has encouraged speedy, and large cross-border transactions.

Key Points of the Report

• A new challenge of money laundering concern has been identified such as cyber-enabled frauds popular known as scams and foreign organized crimes, which comparatively pose a higher risk than what we observed earlier in our last NRA.
• Precious stones and metals plus digital payments are two new sectors highlighted as being at a higher risk of money laundering activity as shown by the latest national risk assessment of Singapore.
• Singapore continues to be exposed to greater risks because of new economic and geopolitical circumstances as an ideal place for international financial and business activities and a transit point for freights, according to the agencies.
• However, as the agencies explained, the banking sector remains the most vulnerable to money laundering because it has a unique capacity to manipulate the banks because of their function of processing large transactions.
• Banks also deal with clients who are more likely to engage in money laundering activities, and from those jurisdictions that are associated with higher risks.
• In the financial sectors, entities providing services involving digital payment tokens (DPT) are also included in the higher risk category as cross-border money transfer service providers including remittance agents, and external asset managers.
• The agencies said that there have been enhancements in the number of reported matters concerning DPTs and the possibility of manipulating them.
• Among the non-financial sectors, corporate service providers hold higher risks since they can be employed to conduct such crimes, such as the incorporation of shell companies with a complex ownership structure to conceal the identity of the criminals.
• Real estate, licensed trust companies, as well as casinos, and precious stones and metals also have higher risks of money laundering according to the agencies.

Commitment To Mitigation

Singapore continues to stand firm that via the implementation of more rigorous measures these identified risks will be effectively handled. These include raising awareness about new risks to FIs and DNFBPs and enhanced promptness in identification, interception, and action by police and supervising entities.

Speaking to the House, Mr Chew said, “We will take a zero-tolerance approach to money laundering and other related issues. We will also ensure that criminals do not use the financial system to perpetrate their deeds. We shall use all the techniques at our disposal to track them down and handed to the law body.

He noted that while Singapore has committed to its clean business landscape and kept vowing to retain confidence and trust in its financial hub.

The insights generated from the outcomes of the updated ML NRA, therefore, act as a reference framework for the FIs and DNFBPs to strengthen the risk-based measures in the system. The stakeholders should ensure to keep on revisiting their controls and make sure they meet new emerging risk challenges of money laundering.

For additional specifics of the findings, please consult the full text of the ML NRA report.