Saturday, 15 June 2024

MAS launches digital platform to fight money laundering and terrorism financing

5 min read

By Czeriza Vigilia

Singapore’s central bank has launched a platform that allows financial institutions to exchange customer information and flag suspicious activities leading to potential financial crimes

The Monetary Authority of Singapore (MAS) has launched a centralised digital platform called COSMIC to curb illicit financing by facilitating the sharing of customer information among financial institutions (FIs).

COSMIC (Collaborative Sharing of Money Laundering/Terrorism Financing Information and Cases) was co-developed by MAS and six major commercial banks in Singapore–DBS, OCBC, UOB, Citibank, HSBC, and Standard Chartered Bank. These banks take part in the platform’s initial implementation phase.

Information sharing is currently voluntary and centred on three key financial crime risks in commercial banking: misuse of legal persons, misuse of trade finance for illicit purposes, and proliferation financing or the moving of funds and assets to fund the production and transport of weapons of mass destruction.

Setting out the legal basis and safeguards for information sharing through COSMIC is the amended Financial Services and Markets Act of 2023 (FSMA) and accompanying subsidiary legislation which took effect on 1 April. 

Through COSMIC, a participant institution may share customer information with another FI only if the customer’s profile indicates potential criminal behaviour. At the same time, law requires FIs to put in place safeguards to protect the confidentiality of information shared. Customers are also encouraged to respond immediately if FIs seek clarifications on their risk profiles or transactions.

Loo Siew Yee, MAS’ assistant managing director for policy, payments and financial crime said: “COSMIC will enable FIs to warn each other of suspicious activities and make more informed risk assessments on a timely basis. It complements the industry’s existing close collaboration with MAS and law enforcement authorities to combat financial crime. This will strengthen Singapore’s capabilities to uphold our reputation as a well-regulated and trusted financial centre.”

Banks in Singapore have been stepping up scrutiny of customers and their sources of funds after the 2023 money laundering scandal involving more than $2 billion in assets. Arrested in August 2023 were 10 foreigners concealing proceeds from organised crime in cash, properties, cars, luxury goods, and gold bars.

Authorities also found that the perpetrators held funds in large banks in the city state. In the aftermath of what is considered to be the biggest money laundering scandal in Singapore’s history, banks are now taking longer than usual to open private bank accounts for wealthy clients and are requiring more documents as part of their due diligence.

In a related development, MAS signed a memorandum of understanding with Mastercard on 9 April to strengthen cyber security in the financial services sector in Singapore. Singapore’s central bank and the global payments firm will share intelligence in cyber threats and conduct joint analysis of threats impacting the financial services sector to come up with recommendations on countermeasures. Competency-building activities would also be conducted for staff through joint cyber security exercises and study visits.

Vincent Loy, MAS assistant managing director for technology said: “With a constantly evolving cyber threat landscape and rapid digitalisation of financial services globally, close public-private partnership between key financial sector players is essential to engendering cyber resilience of the financial ecosystem.”

Ari Sarker, Mastercard president for Asia Pacific said: “Amid escalating cyber threats in today’s connected economy, the need for cyber security has never been more acute. It’s not about securing a device or a network anymore; it’s about securing the entire ecosystem, for today and tomorrow. This collaboration is a significant step in that direction, and we are delighted to be the chosen partner for MAS.”

Keywords: Digital Platforms, Money Laundering, Suspicious Activities, Legal Persons, Trade Finance, Proliferation Financing, Financial Crime Risks, Safeguards, Risk Profiles, Terrorism Financing, Customer Due Diligence, Cyber Security, Cyber Threats, Customer Information, Technology
Institution: Monetary Authority Of Singapore, Mastercard
Country: Singapore
Region: Asia Pacific
People: Loo Siew Yee, Vincent Loy, Ari Sarker
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