Photographer: Munshi Ahmed/Bloomberg

Singapore Has Gaps to Fill in Money-Laundering Fight, FATF Says

  • ‘Moderate gaps’ in money laundering measures, FATF says
  • FATF sets standards on measures to fight illicit fund flows

Singapore can do more to address the money-laundering risks posed by the country’s status as a global financial center, the Financial Action Task Force said.

While acknowledging that the Southeast Asian nation has a “reasonable understanding” of its money-laundering risks and has taken steps to mitigate them, “moderate gaps” remain, the Paris-based organization said in a report published Tuesday. The report detailed various recommendations on how Singapore could beef up its measures to combat money laundering and terrorism financing.

“The nexus between transnational threats, the inherent risks faced by Singapore as one of the world’s largest financial centers, and vulnerabilities within the system” are not sufficiently reflected in Singapore’s risk assessment program, the FATF said. Its evaluation was based on measures in place to combat money laundering and financing of terrorism during a visit by FATF examiners on Nov. 17-Dec. 3.

As a hub for financial services and international trade, Singapore attracts money flows from abroad that make the city vulnerable to becoming a “transit point” for illicit funds, the FATF said. Before its report was published, the Monetary Authority of Singapore had stepped up action to address the reputational damage caused by anti-money laundering lapses at banks in the nation linked to 1Malaysia Development Bhd.

Strong Framework

Singapore’s regime for anti-money laundering and for countering the financing of terrorism has undergone “significant reform” since a previous assessment in 2008, and the city has a “particularly strong” framework for law enforcement and the supervision of financial institutions, the FATF said.

However, the organization said it appeared that no investigations had ever been undertaken in relation to terrorism financing even though Singapore’s Internal Security Department had received 780 potential case leads.

Singapore’s regime to combat terrorism financing was not accorded sufficient credit by the FATF, according to a joint statement by the MAS, and the city’s finance and home-affairs ministries. The statement pointed to the recent convictions of six individuals for such crimes, which happened after the FATF assessment period.

Bank Rebuke

The evaluation was also conducted before a series of disciplinary actions the MAS took in cases related to 1MDB. In May, it ordered BSI SA’s unit in the city state to shut down for breaches of money laundering rules and imposed almost $10 million in financial penalties. In July, the central bank rebuked four banks including UBS Group AG and Standard Chartered Plc for lapses in compliance controls.

The FATF recommended improvements including:

  • the comprehensive risk assessment of all types of legal persons to identify money laundering, terrorism financing risks; develop policy to address those risks
  • ensuring the effective supervision of non-financial companies
  • pursue more offenders involved in the laundering of foreign proceeds of crime, on top of the current focus of pursuing money mules and shell companies

Singapore pledged “further steps” to strengthen its regime to fight illicit flows, including pursuing more complex transnational money-laundering cases and more proactive confiscations of criminal proceeds, according to the government’s statement.

The government will enhance the accessibility and transparency of information on beneficial ownership of legal persons, limited liability partnerships and trusts, it said. It will also improve the risk assessment for all legal persons and the non-profit sector, while bolstering supervision of the non-financial sector.

“The FATF assessment was a useful and important exercise which not only validated Singapore’s areas of strength in combating ML/TF, but also identified areas where there is scope to strengthen the regime further,” according to the statement. “Singapore has invested substantial efforts over the years to enhance its AML/CFT regime, and remains fully committed to continue doing so.”

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