Singapore’s Financial Sector Faces Higher Risk of Money Laundering
A Major Hub at Risk
Singapore, a prominent financial hub in Southeast Asia, has been identified as having a higher risk of money laundering (ML) due to its facilitation of cross-border transactions, professional intermediaries, and high-value assets.
Vulnerabilities in the Financial Sector
- Payment institutions with cross-border money transfer services
- Digital payment token services providers (DPTSPs)
- External asset managers
These entities are at higher risk of being used for ML due to their ability to facilitate complex ownership structures and fund management.
Free Trade Zones: A Potential Vulnerability
Singapore’s Free Trade Zones (FTZs) have been identified as potential vulnerabilities, despite not having special storage facilities for high-value goods. However, international typologies have noted that storage facilities in Special Economic Zones (SEZs) can be used to store high-value cultural objects, and may present ML/TF vulnerabilities.
Strategic Location: A Prime Target for Criminal Organizations
Singapore’s strategic geographical location has enabled it to develop into an international aviation and maritime transportation hub, making it a prime target for criminal organizations seeking to launder funds through the country. The report notes that Singapore’s financial centre is dominated by banks and features a highly efficient and developed system, but this also increases its vulnerability to ML.
Combating Money Laundering: A National Priority
The Monetary Authority of Singapore (MAS) has identified combating ML as a national priority, and the Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) Steering Committee (SC) leads the country’s efforts to prevent, detect, and enforce against ML. The committee sets policy objectives and directions for combating ML and ensures effective coordination between government agencies.
Raising Awareness: A Systemic Risk
Singapore’s financial sector has been ranked as one of 29 systematically important financial centres in the world by the International Monetary Fund (IMF). However, this ranking also highlights the need for increased vigilance and cooperation to combat ML threats.
Conclusion
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In conclusion, Singapore’s financial sector faces a higher risk of money laundering due to its facilitation of cross-border transactions, professional intermediaries, and high-value assets. The country’s authorities have recognized the importance of combating ML and are taking steps to strengthen their AML/CFT regime. However, continued efforts are necessary to address the growing threat of ML in Singapore’s financial sector.