Singapore’s Vigilant Anti-Money Laundering Measures and the Upcoming Cosmic Platform

The recent anti-money laundering bust involving approximately S$1.8 billion in cash and assets in Singapore has raised questions about how potentially suspicious transactions could have gone undetected. Here’s an overview of the rules and regulations that financial institutions in Singapore must comply with to combat money laundering:

1. Identity Verification: Banks in Singapore use Singpass accounts to verify the legitimacy of customers. When individuals apply for a new bank account or a loan, the bank can access their Singpass account to view personal details such as salary information, address, and occupation. This helps the bank assess the customer’s background. Those without a Singpass account must fill in an application form manually.
2. Country or Jurisdiction: Financial institutions pay special attention to individuals from countries listed on the Financial Action Task Force (FATF) list of high-risk countries.
3. Sources of Wealth: Banks assess the sources of wealth of their customers. They may flag individuals who are not employed in Singapore or have businesses registered outside the country. Customers with significant wealth must provide documents to verify the origin of their wealth, including shareholder equity, returns from property or asset investments, and inheritance.
4. Plausibility of Wealth Accumulation: Banks evaluate whether it is plausible for an individual to accumulate a certain level of wealth based on the documents submitted. This scrutiny is particularly applied to wealthier individuals with substantial assets.
5. Transaction Behavior: Suspicion may arise if customers exhibit evasive behavior, try to expedite transactions, or avoid in-person contact, such as communicating only through intermediaries.

When a bank flags a suspicious transaction, the following steps typically occur:

• Suspicious Transaction Report (STR): The bank files an STR when it detects a suspicious transaction or fund flow. This can happen when the source of wealth cannot be verified or when there are doubts about the transaction.
• Information Gathering: Instead of turning away the client, financial institutions accept the transaction to avoid alerting the suspicious party. They use this time to gather information.
• Reporting: The bank files an STR with the Suspicious Transaction Reporting Office (STRO) under the Commercial Affairs Department.

Singapore has seen an increase in the number of STRs filed in recent years, reflecting growing vigilance against money laundering.

To further enhance anti-money laundering measures, the Monetary Authority of Singapore (MAS) is developing a digital platform called Cosmic (Collaborative Sharing of Money Laundering/Terrorism Financing Information & Cases). This platform will allow financial institutions to securely share information on potentially suspicious customers with each other. It aims to help banks detect and prevent financial crime more effectively.

Cosmic is expected to be rolled out in phases starting in the second half of 2024, enabling financial institutions to share information on customers with multiple red flags and receive protection from civil suits arising from sharing such information.