Move to curb money laundering, terror financing activities
The Monetary Authority of Singapore may step up regulations to curb
money laundering and terrorism financing risks posed by remittance
agents, money changers and some Internet-based payment systems.
Controls
on pawnbrokers and corporate service providers such as lawyers and
accountants can also be improved, according to a government risk study
released today. Singapore authorities are closely monitoring virtual
currencies such as Bitcoins that may be used for illegal activities and
will consider regulation if needed, according to the report.
“Singapore’s openness as an international transport hub and financial
center exposes it to inherent cross-border” money laundering or
terrorism financing risks, according to the study. MAS “has put in place
a robust preventive regime. Nonetheless, there are areas for further
enhancement.”
The risk assessment study comes seven weeks after Singapore police
and the bank association urged residents to be wary of fraudsters
seeking to use their bank accounts to funnel illegal funds after an
increase of reported cases last year.
Remittance agents, who accept funds for transfer to individuals
outside Singapore, and money changers operate in “cash-intensive”
industries and offer greater risks of money laundering or terrorism
financing, according to report.
Total outward remittance from Singapore amounted to S$24.1 billion
($19 billion) in 2012, while inward remittances were S$995 million, the
government said in the study. Volumes in the money-changing business
that year were S$36.8 billion. The implementation of controls in these
industries isn’t as robust as in banks and MAS will ensure “enforcement
efforts are further stepped up,” according to the report.
More Powers
The pawnbroking industry had total loans outstanding at over S$1
billion in 2012, the study showed. The number of pawn shops in the city
increased to 191 that year from 114 in 2008.
MAS is also considering additional supervisory powers and
requirements to bolster “nascent” money laundering and terrorism
financing controls for Internet payment companies such as PayPal Inc. or
Alibaba Group Holding Ltd.’s Alipay.
Agencies involved in the study included MAS, the customs bureau, the
casino regulator, the finance, home affairs and law ministries, and the
Accounting and Corporate Regulatory Authority.
Accountants and other corporate service providers can be exposed to
money laundering and terrorist financing activities if higher-risk
customers hire them to set up complex structures that conceal ownership
and reduce the transparency of transactions, according to the study.
Tax Evasion
Singapore’s central bank is stepping up its anti-money laundering
rules in line with global regulations following U.S. authorities’
investigation of several Swiss banks for their dealings on behalf of
American clients. MAS made it a crime last July for clients to use
financial institutions to evade tax.
UBS (UBSN) AG and Credit Suisse Group AG, Switzerland’s largest
banks, are among firms implicated in a U.S. crackdown since 2008 on
offshore tax evasion that led to charges against about 70 American
taxpayers and 30 bankers, lawyers and advisers.
The U.S. charged UBS in 2009 with aiding tax evasion by thousands of
American clients. The Zurich-based bank avoided prosecution by paying a
$780 million penalty, admitting it fostered tax evasion and agreeing to
hand over data on client accounts to U.S. tax officials.
Private Banking
Risks for private banks operating in Singapore are lower than those
for full banks because they have fewer clients, less physical cash
transactions and more checks when customers open accounts, according to
today’s report. Singapore is Asia’s largest private banking center with
offshore assets of about $800 billion, Boston Consulting Group data show
as of September.
In Singapore, the number of reported cases of illegitimate cash being
given to so-called money mules to hand over to a third party increased
to 133 in the first nine months of last year, up from 93 for all of
2012, local police, the bank association and the National Crime
Prevention Council said in November. The amount of illegal monies in
those cases fell to S$15.5 million from 2012’s S$24.6 million.
- Contributed by Darren Boey in Hong Kong at
dboey@bloomberg.net; Sanat Vallikappen in Singapore at
vallikappen@bloomberg.net
Singapore monitoring new forms of illicit financing
Asian financial hub Singapore on Friday said it was scrutinising
trade in virtual currencies such as Bitcoin as well as precious stones
and metals to forestall new forms of illicit financing by criminals and
terrorists.
In an inaugural report on money laundering and
terrorist financing risks, the city-state said these sectors were
identified for further study "as technology evolves and criminals become
more sophisticated".
"Authorities will seek to better understand
how money laundering and terrorist financing can be carried out through
these channels," said the joint report by the finance and home affairs
ministries as well as the Monetary Authority of Singapore (MAS).
It
said the government would "review international best practices, to
determine whether any safeguards and mitigating measures are needed".
The
report said virtual money and precious metal-backed currencies carry
the risk of being abused due to their anonymity, cross-border nature and
low transaction costs.
The MAS, which serves as the city-state's
central bank, "is closely monitoring developments in this area and will
consider the need for regulation if necessary", the report said.
Bitcoin,
the world's most popular form of electronic money, made headlines last
year when US authorities closed the Silk Road website when it was found
the currency was being used to buy illegal drugs, forged documents,
hacker tools and even the services of hitmen.
The report also said Singapore was monitoring the trade in precious stones and metals.
"There
are international typologies on the use of precious stones and metals
as a tool to launder money, particularly as a store-of-value to move
illicit proceeds easily," it added.
The bank said of 22 sectors
that were assessed, the city's vast financial sector remained among the
most vulnerable to abuse owing to the large number of transactions that
take place and its wide international reach.
Singapore houses the
regional offices of some of the world's top financial institutions and
its total assets under management are now around Sg$1.4 trillion ($1.02
trillion), according to the MAS.
The report said "relevant
controls are in place" for financial institutions, including supervision
by MAS, record keeping, transaction monitoring and rigorous customer
due diligence measures.
It identified remittance agents,
money-changers, Internet-based stored value facility holders,
pawnbrokers as well as corporate service providers as sectors where
"controls are relatively less robust".
"Relevant government
agencies will be strengthening the legislative and supervisory framework
through the year to address the risks in these sectors more
effectively," it said.
"The
possibility that terrorist elements may seek to direct funds from abroad
to support terrorism activities in Singapore or use Singapore as a
conduit for foreign (terrorist financing) cannot be discounted," the
report said.
Singapore in 2001 said it crippled a cell of the
Southeast Asia-based militant network Jemaah Islamiyah with the arrest
of suspects linked to an alleged plot to bomb local and foreign targets
including Changi Airport.
Officials say the island republic is a
prime target for extremist groups because of its close ties with the
United States and major role in global finance and business.- AFP