Singapore Adopts Risk-Based Approach to Combat Money Laundering and Terrorism Financing
Singapore has taken a decisive step in combating money laundering (ML) and terrorism financing (TF), adopting a whole-of-government approach led by the Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) Steering Committee.
A Comprehensive Framework
The country’s AML/CFT policy objectives are to protect the integrity of its financial system from illegal activities and illicit fund flows. To achieve this, Singapore has implemented a comprehensive legal, institutional, policy, and supervisory framework, as well as effective monitoring and law enforcement actions against ML/TF threats.
National Risk Assessments
Singapore’s government has conducted national risk assessments on environmental crime money laundering (ML) and terrorism financing (TF). The Environmental Crime ML National Risk Assessment identified key threats and vulnerabilities, including:
- Illegal wildlife trafficking
- Illegal logging
- Waste trafficking
Meanwhile, the TF National Risk Assessment 2020 found that Singapore is exposed to TF threats posed by terrorist groups regionally and internationally.
Risk-Based Approach
To combat these threats, Singapore has adopted a risk-based approach, allocating law enforcement, financial intelligence, and supervisory resources on a risk-sensitive basis. The government has also taken a preventive approach, combining:
- Tough licensing requirements
- Comprehensive reporting requirements
- Strict regulations
- Risk-based supervision of relevant sectors
Enhancing Compliance Culture
Financial institutions and designated non-financial businesses and professionals are encouraged to take reference from the national risk assessments in assessing their ML/TF risks and enhancing their controls as appropriate. Private sector stakeholders’ understanding of ML/TF risks has been enhanced, promoting a culture of compliance.
National Strategy for Countering the Financing of Terrorism
Singapore’s National Strategy for Countering the Financing of Terrorism (CFT) outlines the country’s five-point approach to address TF risks:
- Coordinated risk identification
- Strong legal and sanctions frameworks
- Robust regulatory regimes
- Decisive law enforcement actions
- International partnerships
The strategy serves as a roadmap for future action plans and enhances coordination across law enforcement agencies, policymakers, regulators, and supervisors.
International Recognition
Singapore’s efforts have been recognized internationally, with the country being commended by the Financial Action Task Force (FATF) for its robust AML/CFT regime. The government will continue to stay vigilant of ML/TF risks and work closely with the private sector to prevent and detect these threats.