Singapore Updates Money Laundering Risk Assessment First 2014
Singapore has recently released an updated National Risk Assessment (ML NRA) on money laundering, as the risk landscape continues to change with the rise of digital banking systems and Singapore’s growing role as a global financial hub. The assessment includes an overview of money laundering risks observed by both supervisory and law enforcement agencies, as well as input from Singapore’s Financial Intelligence Unit, the Suspicious Transaction Reporting Office (STRO), and feedback from private sector entities and foreign authorities.
Compared to the last ML NRA in 2014, the updated assessment includes new risk assessments on areas such as the misuse of legal entities and virtual assets, in order to identify and address these crimes in a timely manner. In recent years, the evolving economic landscape and increasing use of digital services have contributed to a higher level of risk, resulting in faster cross-border transactions.
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According to David Chew, head of delegation to the Financial Action Task Force and Director of the Commercial Affairs Department at the Singapore Police Force, the ML NRA is a crucial document in Singapore’s anti-money laundering regime. The strategy focuses on three key areas – prevention, detection, and enforcement. Chew notes that Singapore continues to face foreign threats such as corruption, tax crimes, and trade-based money laundering.
The updated assessment also highlights two new key money laundering threats – cyber-enabled fraud (commonly known as scams) and foreign organized crime. Both of these pose significantly higher risks compared to the previous ML NRA. While the assessment is not a response to any specific case, it does mention that some of the biggest threats today come from fraud, particularly cyber-enabled fraud orchestrated by criminal syndicates based overseas. Other major ML threats include organized crime, corruption, tax crimes, and trade-based money laundering.
In August 2023, Singapore authorities seized cash, properties, luxury goods, and cars worth over $3 billion collectively in a high-profile money laundering case involving 10 Chinese nationals (known as the “Fujian Gang”) with different passports. While the updated ML NRA covers common types of money laundering, such as illicit funds passing through Singapore via bank accounts and the misuse of legal entities like shell companies, it also includes new sectors that were not addressed in the 2014 version. This includes digital payment token service providers and high-value assets such as real estate, precious stones, and metals.
According to the ML NRA, Singapore’s banking sector poses the highest money laundering risks, consistent with international typologies. This is due to Singapore’s strong international presence and efficient system for handling large volumes of financial transactions. All three local banks – DBS Group Holdings, Overseas-Chinese Banking Corporation (OCBC), and United Overseas Bank (UOB) – as well as several international banks operating in Singapore, such as Credit Suisse, Citigroup, RHB, Standard Chartered, and Maybank, were found to have accounts linked to the Fujian Gang case, with over $1.5 billion seized.
The updated ML NRA also highlights the role of corporate service providers (CSPs) as posing higher money laundering risks. In January, one CSP – Wang Junjie, a director of filing agent LW Business Consultancy – had their registration canceled by the Accounting and Corporate Regulatory Authority (ACRA) for anti-money laundering breaches in connection with the Fujian Gang case. These breaches included failure to perform additional customer due diligence measures, inadequate inquiry into beneficial ownership, and a lack of risk assessments for some customers. In September 2020, local media reported that Wang (also known as “J.J”) was listed as director, secretary, and shareholder of 185 companies in Singapore, with nine of these companies linked to individuals convicted of money laundering offenses. Wang has since been struck off as a “qualified individual” by the ACRA.
The findings of the assessment aim to help Singapore maintain a strong anti-money laundering regime and keep up with evolving risks. This includes raising awareness among financial institutions and Designated Non-Financial Businesses and Professions (DNFBPs) regarding new and emerging money laundering risks, allowing for more effective detection and enforcement of illicit activities by law enforcement.