Singapore’s Financial Sector Faces Higher Risk of Money Laundering
A Major Concern for the Global Economy
Singapore, a major financial hub in Southeast Asia, is at risk of being misused as a conduit for money laundering (ML) and terrorist financing (TF), according to a recent assessment. The country’s strategic geographical location, strong global connectivity, and dynamic international business, financial, and trading centre make it vulnerable to ML/TF threats.
Sectors at Higher Risk
The Financial Action Task Force (FATF) has identified several sectors that are assessed to be of higher risk and susceptible to ML, including those that:
- Facilitate cross-border transactions
- Act as professional intermediaries for fund management
- Integrate funds into high-value assets
Singapore’s financial sector is dominated by banks and features a highly efficient system, but the country also faces risks from misuse of legal persons and legal arrangements.
Concerns over Storage Facilities in Free Trade Zones (FTZs)
The report highlights concerns over storage facilities in FTZs, which could increase Singapore’s vulnerability to trade-based money laundering (TBML) and related risks. However, Singapore’s FTZ regime is designed to ensure strong governance and combat criminal misuse.
A Whole-of-System Approach
To combat ML, Singapore adopts a whole-of-system approach, involving close coordination and collaboration amongst:
- Government agencies
- Public-private partnership
- International cooperation
The Anti-Money Laundering and Countering Financing of Terrorism Steering Committee (AML/CFT SC) sets policy objectives and directions for combating ML and ensures that government agencies have effective mechanisms in place to cooperate and coordinate with each other.
Strong Commitment to Combating Money Laundering
The AML/CFT SC is led by senior-level officials from the Ministry of Home Affairs, Ministry of Finance, and Monetary Authority of Singapore. The committee’s efforts demonstrate Singapore’s strong commitment towards combating ML and maintaining its reputation as a trusted financial centre.
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