Singapore can do more to address the money-laundering risks posed by the nation’s status as a global financial center, the Financial Action Task Force (FATF) said.
While acknowledging that the Southeast Asian city-state has a “reasonable understanding” of its money-laundering risks and has taken steps to mitigate them, “moderate gaps” remain, the Paris-based organization said in a report published yesterday.
The report detailed various recommendations on how Singapore could beef up its measures to combat money laundering and terrorism financing.
“The nexus between transnational threats, the inherent risks faced by Singapore as one of the world’s largest financial centers and vulnerabilities within the system” are not sufficiently reflected in Singapore’s risk assessment program, the FATF said.
The evaluation was based on measures in place to combat money laundering and terrorism financing during a visit by the FATF from Nov. 17 to Dec. 3 last year.
As a hub for financial services and international trade, Singapore attracts money flows from abroad that make the city-state vulnerable to becoming a “transit point” for illicit funds, the FATF said.
Before its report was published, the Monetary Authority of Singapore had stepped up action to address the reputational damage caused by anti-money laundering lapses at banks in the nation linked to 1Malaysia Development Bhd (1MDB).
Singapore’s regime for anti-money laundering and for countering the financing of terrorism has undergone “significant reform” since a previous assessment in 2008 and the city-state has a “particularly strong” framework for law enforcement and the supervision of financial institutions, the FATF said.
However, the organization said it appeared that no investigations had ever been undertaken in relation to terrorism financing, even though the Singaporean Internal Security Department had received 780 potential case leads.
Singapore’s regime to combat terrorism financing was not accorded sufficient credit by the FATF, according to a joint statement by the Monetary Authority of Singapore, and the finance and home affairs ministries. The statement pointed to the convictions of six individuals for such crimes, which happened after the FATF assessment period.
The evaluation was also conducted before a series of disciplinary actions in cases related to 1MDB. In May, it ordered BSI SA’s unit in the city-state to shut down for breaches of money laundering rules and imposed almost US$10 million in financial penalties. In July, the central bank rebuked four banks, including UBS Group AG and Standard Chartered PLC, for lapses in compliance controls.
Singapore pledged “further steps” to strengthen its regime to fight illicit flows, including pursuing more complex transnational money-laundering cases and more proactive confiscations of criminal proceeds, the government said.
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