Key Considerations for Financial Institutions as Singapore Implements the COSMIC Platform and Regulatory Framework for AML Information Sharing

The passing of the Financial Services and Markets (Amended) Bill (FSM(A)B in Singapore and the upcoming launch of the Collaborative Sharing of Money Laundering/Terrorist Financing Information and Cases (COSMIC) platform have significant implications for financial institutions (FIs) and their anti-money laundering (AML) efforts. Here are some key takeaways and considerations:

1. Regulatory Framework for Information Sharing: COSMIC is set to create a regulatory framework that requires FIs to share information about customers and transactions when “material risk thresholds” are breached. The framework aims to strike a balance between protecting customer privacy and preventing financial crime.
2. Types of Information Sharing: FIs will have three ways to share information on the COSMIC platform: requesting information from another FI, proactively providing information to another FI, and placing a customer on a watchlist to alert other FIs.
3. Voluntary Phase: In the initial phase, information-sharing between the Monetary Authority of Singapore (MAS) and the six major commercial banks (DBS, OCBC, UOB, Standard Chartered Bank, Citibank, and HSBC) will be voluntary. This phase will last for two years.
4. Mandatory Sharing: After the voluntary phase, MAS intends to make data-sharing practices mandatory. FIs that do not comply with mandatory information-sharing may face penalties.
5. Priority Risk Areas: COSMIC will initially focus on three high-priority risk areas: misuse of legal persons, trade-based money laundering (TBML), and proliferation financing, including the evasion of international sanctions. Subsequent phases will expand coverage to other areas.
6. Regional Collaboration: There is evidence of increased regional coordination in the fight against financial crime. The launch of the APAC Regional Chapter by the Global Coalition to Fight Financial Crime (GCFFC) indicates greater collaboration among industry partners and experts in the Asia-Pacific region.
7. Education and Awareness: Firms should consider educating their staff about COSMIC and building awareness around the platform. This may involve training on information-sharing processes and procedures.
8. Process and Procedure Updates: Some existing processes and procedures may need to be updated to align with the new information-sharing techniques and regulatory requirements.
9. Compliance with Singapore’s AML Regime: Compliance teams should review and ensure compliance with Singapore’s AML regime, considering the implications of COSMIC on their AML efforts.
10. Monitoring Regulatory Developments: Stay informed about regulatory developments and updates related to COSMIC, as further details and requirements may be introduced as the platform’s launch approaches.

Financial institutions operating in Singapore should closely monitor the implementation of COSMIC and take the necessary steps to ensure compliance with the new regulatory framework for information sharing in the fight against money laundering and terrorist financing.