Singapore Combats Money Laundering & Financial Crime with Best Practice Papers
To help financial institutions protect against trade-based money laundering, the Anti-Money Laundering and Countering the Financing of Terrorism Industry Partnership (ACIP) in Singapore released two best practice papers to guard against the misuse of company structures for illicit purposes.
The two best practice papers are titled Legal Persons-Misuse Typologies and Best Practices, and Best Practices for Countering Trade-based Money Laundering. The papers discuss the common red flags to trade-based money laundering. They also include recent typologies which involve the misuse of companies and other legal persons. In addition, the two papers discuss recommended measures that financial institutions can note to help identify or prevent such activities.
Two industry-led working groups produced these papers. Their team comprised of representatives from several major banks, government agencies in Singapore, and professional service providers. The recommendations suggested in the papers are also relevant to professional service providers outside the financial sector. Well, the paper can help lawyers, accountants, and company service providers.
Words from the Monetary Authority of Singapore (MAS)
Special Advisor of Monetary Authority of Singapore (MAS)’ Financial Supervision Group, Mr. Chua Kim Leng mentions that they are buoyed by the industry’s commitment to tackling money laundering, terrorist financing, and other illicit activities. This is especially since criminals employ increasingly more sophisticated means of laundering money. Financial institutions, gatekeepers, and intermediaries need to remain vigilant and take pre-emptive measures to combat such risks, mentions Mr. Chua.
During his keynote speech at the ACIP Industry Dialogue 2018, Mr. Chua said data analytics have been of major help in anti-money laundering (AML). Additionally, the statistics have been countering the financing of terrorism. Mr. Chua says several banks have started to integrate data analytics tools into their counter-terrorism financing controls. On the other hand, anti-money laundering transaction monitoring is getting stricter.
Everyone Coming Together
Mr. Chua announced that ACIP member banks have banded together to create a new workgroup. Doing this will help them share their collective experience, practical insights on understanding, acquiring, and also for building or co-creating AML/CFT analytics solutions. Besides that, the group will work to identify which areas need closer collaboration between the industry and the government. They want to lead the current situation towards substantive and transformative change. Mr. Chua said he is looking forward to the group’s findings and recommendations later that year. Mr. Chua added that MAS has been incorporating data analytics into their supervisory work.
Mr. Chua also says STR analytics is one of the promising areas. Additionally, through the use of network analysis, they have been able to identify groups of related STRs across banks and over time, among the numerous STRs that banks file every year. There could be potential illicit activities in some cases. Thus, this is one area banks could look into gaining deeper insights from the already available information.
Conduct of Inspections Has Been Helping against Money Laundering as Well
Mr. Chua mentions that another aspect is in the conduct of inspections. Here, data analytics has helped to better identify which the problem areas are, including higher-risk accounts or transactions for targeted reviews. Inspections could, therefore, be more focused and effective. They can yield findings that would be more useful to banks in enhancing their AML/CFT systems and implementation, continued Mr. Chua.
The Commercial Affairs Department (CAD) and MAS are encouraging all relevant firms to adopt the red flag indicators and recommended measures to strengthen resilience against money-laundering and terrorism-financing risks. The two papers will be available on the website of the Association of Banks in Singapore (ABS).
ACIP is a private-public partnership which was set up in Singapore in April 2017. ACIP is co-chaired by the CAD and MAS, which is supported by a steering group which comprises of eight banks and ABS. The organization works to bring together the government and stakeholders from the industry to provide a dedicated platform.
The platform discusses key transnational illicit financial risk issues in Singapore’s financial and non-financial sectors. Besides that, they identify and promote areas which help to uplift risk understanding of money laundering and terrorism financing in Singapore.
ACIP has established a data analytics working group which leverages on the collective experience of its members using the AML/CFT data analytics system. This allows for better detection of suspicious client profiles, activities or transaction patterns, and the working group will be able to identify areas where closer collaboration between both the industry and the government can be enhanced for better enforcement efforts against criminals who abuse Singapore’s financial system.