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 entitled Legal Persons-Misuse Typologies and Best Practices, and Best Practices for Countering Trade based Money Laundering. The papers discuss the common red flags which are linked to trade-based money laundering and recent typologies which involve the misuse of companies and other legal persons. In addition, the two papers also discuss recommended measures that financial institutions can note to help identify or prevent such activities.
These two papers were produced by two industry-led working groups which comprise of representatives from several major banks, government agencies in Singapore and professional service providers. The recommendations suggested in the papers are relevant to professional service providers who also happen to be outside the financial sector, and this includes lawyers, accountants and company service providers.
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, terrorism financing and other illicit activities, 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 was used in anti-money laundering (AML) and countering the financing of terrorism. Mr Chua says several banks have started to integrate data analytics tools into their counter terrorism financing controls and anti-money laundering transaction monitoring.
Mr Chua announced that ACIP member banks have band together to create a new workgroup which shares their collective experience, practical insights on understanding, acquiring and building or co-creating AML/CFT analytics solutions. The group will work to identify which areas need closer collaboration between the industry and the government, which could then lead to 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 says STR analytics is one of the promising areas, and 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 and this is one area banks could look into gaining deeper insights from the information already provided.
Mr Chua mentions that another aspect is in the conduct of inspections, where data analytics has helped to better identify which the problem areas were, including higher-risk accounts or transactions for targeted reviews. Inspections could therefore be more focused and effective, and yielded 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 setup in Singapore in April, 2017. ACIP is co-chaired by the CAD and MAS, which being supported by a steering group which comprises of eight banks and ABS, which works to bring together the government and stakeholders from industry to provide a dedicated platform.
The platform discusses key transnational illicit financial risk issues which confront Singapore’s financial and non-financial sectors, while also identifying and promoting 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 patters, 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.