On 20 June 2024, the Monetary Authority of Singapore (“MAS“), Ministry of Finance (“MOF“), and Ministry of Home Affairs (“MHA“) published the updated Money Laundering (“ML“) National Risk Assessment (“ML NRA 2024“). Among other things, the ML NRA 2024 provides an overview of Singapore’s key ML risks and highlights the key sectors which pose high ML risks (see the press release dated 20 June 2024 by MAS, MOF and MHA titled “Singapore Publishes Updated Money Laundering National Risk Assessment”).
The main sources of ML threats are fraud (particularly cyber-enabled fraud), organised crime, corruption, tax crimes and trade-based ML.
The most common ML typologies include: (i) illicit funds flowing into or through Singapore via bank accounts; (ii) misuse of legal persons such as shell companies to channel illicit funds; and (iii) placement of illicit funds in high value assets such as real estate and precious stones and metals.
High Risk Sectors and Entities
(a) The banking sector (including wealth management) poses the highest ML risks to Singapore. Banks have higher exposure to ML threats and are more easily exploited by criminals due to their role in facilitating large volumes of transactions in the financial system and servicing customers with higher ML risks, including those from jurisdictions with higher ML risks.
(b) In financial sectors, entities that pose higher ML risks include: (i) digital payment token (“DPT“) service providers or virtual assets service providers, and the Singapore authorities are closely monitoring the risks involving the DPT sector; (ii) payment institutions providing cross-border money transfer services, including remittance agents; and (iii) external asset managers.
(c) In Designated Non-Financial Businesses and Professions (“DNFBP“) sectors, entities that pose higher ML risks include corporate service providers (“CSPs“). CSPs provide upstream services such as incorporation of companies, and they are linked to the misuse of legal persons in some instances. Other DNFBP sectors which pose higher risks include the real estate, licensed trust companies, casinos and precious stones and metals sectors.
Action for Financial Institutions (“FIs“) and DNFBPs
The findings from the ML NRA 2024, together with other risk assessments conducted by the authorities, serve as a guide for all stakeholders, including FIs and DNFBPs, to: (i) detect and keep pace with the priority and emerging risks; (ii) take appropriate preventive measures; (iii) continue strengthening the implementation of risk-based measures; and (iv) allow more timely detection, disruption and enforcement on illicit activities. FIs and DNFBPs should take reference from the ML NRA 2024 in assessing their risks and enhance their controls accordingly.
FIs (including banks) and DNFBPs must comply with AML/CFT requirements set out in the applicable MAS Notices on Prevention of Money Laundering and Countering the Financing of Terrorism issued to each type of entity in the banking, financing and DNFBP sectors, as supplemented by the applicable Guidelines to each Notice. These MAS Guidelines provide that FIs (including banks) and DNFBPs should, where applicable: (i) incorporate the results of Singapore’s National ML/TF Risk Assessment Report (“NRA“) into their enterprise-wide ML/TF risk assessment processes; and (ii) consider the NRA results and its enterprise-wide ML/TF risk assessment results when assessing the ML/TF risks presented by customers from specific sectors.
