FAFT AML Deficient
Higher Risk Areas
US Dept of State Money Laundering assessment
Offshore Finance Centre
Not on EU White list equivalent jurisdictions
Medium Risk Areas
Failed States Index (Political Issues)(Average Score)
Singapore is not on the FATF List of Countries that have been identified as having strategic AML deficiencies
Compliance with FATF Recommendations
The last Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in Singapore was undertaken by the Financial Action Task Force (FATF) in 2016. According to that Evaluation, Singapore was deemed Compliant for 18 and Largely Compliant for 16 of the FATF 40 Recommendations.
Singapore’s AML/CFT coordination is highly sophisticated and inclusive of all relevant competent authorities. Driven by the AML/CFT Steering Committee and the Inter-Agency Committee, the coordination mechanism in Singapore is a very valuable tool in AML/CFT policy development. This proved to be true in the development of the National Risk Assessment (NRA) and the cooperation and organisation associated with this mutual evaluation exercise. Singapore has a strong focus on law and order and enforcement, which often result in dissuasive penalties.
Singapore has a reasonable understanding of its ML risks and has taken steps to mitigate them. Nevertheless, moderate gaps remain. In particular the nexus between transnational threats, the inherent risks faced by Singapore as one of the world’s largest financial centres, and vulnerabilities within the system is not sufficiently reflected in Singapore’s NRA.
Singapore’s ability to proactively identify and address serious foreign predicate ML, and transnational ML networks will be strengthened with moderate improvements in Singapore’s understanding of its foreign predicate ML risks. Singapore provided information that it was pursuing some complex cases involving transnational fraud and corruption. However, Singapore has prosecuted few foreign predicate ML cases outside of wire transfer frauds involving money mules/shell companies, and has confiscated low amounts of proceeds of crime. Singapore has demonstrated that it has a general understanding of its TF risks. But the weighting placed in the risk methodology on indicators derived from reported incidences in Singapore has somewhat hindered Singapore’s ability to appreciate the inherent TF risks associated to its geographical location and its status as a global financial centre.
Singapore’s FIU, the Suspicious Transactions Reporting Office (STRO), uses well-functioning systems and coordination mechanisms to integrate FIU information into LEA processes. Singapore’s primary investigative agencies routinely make significant use of STRs at early stages of ML and predicate investigations. While financial intelligence information is provided to other agencies, they are yet to make significant use of such information to support investigation. STRs relating to TF, while routinely disclosed to the Internal Security Department (ISD), have not resulted in any criminal investigations.
Singapore’s FIs generally demonstrated a reasonably good understanding of ML risks impacting Singapore domestic clients, but a less developed understanding of the risk of illicit flows into and out of Singapore. FIs and especially DNFBPs had a less mature understanding of TF risks, and often failed to distinguish between terrorism and TF risks. Overall, there is a significant difference in the level of understanding of the ML/TF risks between the financial sector and DNFBP sector, therefore limiting DNFBPs’ ability to develop a comprehensive risk understanding.
For most FIs, AML/CFT supervision appears robust, with a variety of off-site factors examined and comprehensive on-site examinations/follow-up being conducted. Singapore has recently extended AML/CFT supervision to most types of DNFBPs, but there are significant differences in effective supervision of AML/CFT requirements between relevant supervisory bodies. While Singapore has a range of remedial measures that it can impose on FIs, the financial penalty structure across the DNFBP sector is quite diverse and concerns exist about the differences in approach in terms of dissuasiveness and proportionality. Apart from the casino and TSP sectors, sanctions for non-compliance by DNFBPs have not been tested.
Singapore has not undertaken an adequate ML/TF risk assessment of all forms of legal persons and legal arrangements. Authorities however acknowledge that legal persons and arrangements created in Singapore, and those registered or operating in Singapore from foreign jurisdictions, can be used to facilitate predicate crimes and ML/TF offences. Singapore has implemented some preventive measures designed to prevent the misuse of legal persons and arrangements for ML and TF, including the collection of beneficial ownership information by FIs and DNFBPs. However, in practice, some DNFPBs do face challenges in obtaining beneficial ownership information.
On international cooperation, Singapore provides constructive and high quality information and assistance when requested, but faced occasional challenges executing some MLA requests in a timely manner. Although few outgoing MLA requests were made prior to 2015, Singapore has taken steps to increase outgoing MLA requests in 2015, more than doubling the entire number of MLA requests in the previous 3 years. Singapore also uses informal channels and the LEAs, FIU and financial supervisors are generally well engaged in making and receiving requests where permitted. Singapore shares domestically available beneficial ownership information for legal persons and legal arrangements, however there is limited information available under the domestic framework.
Risks and General Situation
Singapore maintains one of the lowest domestic crime rates in the world,1 and therefore, the bulk of Singapore’s exposure to ML risks arises from offences committed overseas. In particular, Singapore’s status as both a major global financial centre and an international trade/transportation hub makes it vulnerable to becoming a transit point for illicit funds from abroad. According to Singaporean authorities, foreign predicate offences constituted 66% of all ML investigations and 27% of all ML convictions in Singapore between 2008 and 2014. Singapore’s NRA published in January 2014 identifies common predicate offences committed in Singapore (e.g. cheating (the term which Singapore uses for fraud), unlicensed money lending (UML) and criminal breach of trust (CBT), as well as foreign predicate cheating offences and proceeds of overseas corruption as posing relatively higher ML threats to Singapore.
The main conduits of ML identified in the NRA are banks, remittance agents, shell companies and individual money mules. Around 77% of the funds managed in Singapore are foreign sourced, with the majority of assets under management coming from the Asia-Pacific region. The size and foreign exposure of Singapore’s private banking and asset management industry increases Singapore’s ML/TF vulnerabilities. In addition, Singapore’s position as an international trade/transportation hub also increases its ML/TF vulnerabilities. Given the complexity and large volume of trade financing services offered in Singapore, this banking sub-sector is also exposed to a higher level of ML/TF risk. Moreover, legal persons and arrangements also remain vulnerable to misuse given the broad range of financial services available.
Singapore is situated in a region where several terrorist groups operate actively and have carried out attacks in the last 10 years. Singapore’s NRA report highlights that “there has been no evidence of TF being committed in Singapore or terrorist funds flowing into or through Singapore.” An assessment of the TF threat posed by ISIL was subsequently conducted, and the findings were communicated to all FI, DNFBP and NPO supervisors.
APG Yearly Typologies Report - 2015
Emerging Trends; Declining Trends; Continuing Trends (INCSR)
In 2012, a new trend emerged whereby money mules recruited from social networking websites with promises of love and friendship were used to launder money.
In many of these cases, the victims claimed that their email accounts were compromised. The individuals who compromised the email accounts would then use the email accounts to send fraudulent instructions to the victims’ banks to transfer funds to bank accounts in Singapore. The victims would only realise that the fraudulent transfers were made a few days later, and would then attempt to get their banks to recall the funds.
The bank accounts in Singapore are held by “money mules”, who were earlier recruited by the criminal syndicate via online social networking websites to receive and thereafter withdraw or transfer funds. These money mules may have wittingly or unwittingly assisted the criminal syndicate to launder the proceeds of crime.
Our findings suggest that there is a high possibility that the syndicate is well organised:
- The same perpetrator had made contact with different mules;
- Different mules have received funds from the same victim account;
- The same mule has received funds from different victims;
- Different mules have made transfers to the same beneficiary; and
- The same mule has made transfers to different beneficiaries.
The data also suggests that it is likely that a transnational criminal syndicate is behind these crimes, as:
- The victim accounts were based in a foreign country,
- The perpetrators appear to be based in a foreign country,
- The fraudulent funds were subsequently transferred to bank accounts in Singapore, and
- Most of the fraudulent funds have been transferred out of Singapore to other jurisdictions.
It is interesting to note that the crime is orchestrated in a way such that the funds flow across several jurisdictions, and this heightens the challenges faced by law enforcement authorities from each jurisdiction in their investigation processes.
The FIU and law enforcement unit has worked closely with STR-filers and foreign counterparts to address this issue. We have shared our preliminary findings with the Association of Banks in Singapore compliance task forces to disseminate the indicators to members. We have also disseminated information via the FIU and law enforcement networks to encourage foreign victims to identify themselves and provide evidence. We are currently working on a joint project with a foreign country project to address this trend collectively.
US Department of State Money Laundering assessment (INCSR)
Singapore was deemed a Jurisdiction of Primary Concern by the US Department of State 2016 International Narcotics Control Strategy Report (INCSR).
Key Findings from the report are as follows: -
Singapore’s openness as an international financial, investment, and transport hub exposes it to money laundering and terrorist financing risks. The country’s position as the most stable and prominent financial center in South East Asia, coupled with a regional history of transnational organized crime, large-scale corruption in neighboring states, and a range of other predicate offenses in those states increase the risk that Singapore will be viewed as an attractive destination for criminals to launder their criminal proceeds. Limited large currency reporting requirements and the size and growth of Singapore’s private banking and asset management sectors also pose inherent risks. Among the types of illicit activity noted in the region are fund flows associated with illegal activity in Australia that transit Singapore financial service providers for other parts of Asia.
As of November 17, 2015, there were 37 offshore banks in operation, all foreign-owned. Singapore is a major center for offshore private banking and asset management. Assets under management in Singapore total approximately SGD 2.4 trillion (approximately $1.89 trillion) in 2014. As of the end of 2014, Singapore had at least SGD 1.94 trillion (approximately $1.53 trillion) in foreign funds under management. Singapore does not permit shell banks or anonymous accounts.
There are two casinos in Singapore with estimated combined annual revenue of $4.83 billion in 2014. Online gaming is illegal. Casinos are regulated by the Casino Regulatory Authority. Given the scale of the financial flows associated with the casinos, there are concerns that casinos could be targeted for money laundering purposes.
Singapore exempted the processing of gold and other precious metals from its Goods and Services Tax to attract a larger share of the trade in precious metals. Regionally, gold is often used as a commodity of choice in trade-based money laundering (TBML) schemes and is also used frequently in the settling of accounts in underground financial systems. Singapore is located on a key global trade route and is a major transshipment port. Singapore hosts ten free trade zones which may be used for storage, repackaging of import and export cargo, assembly, and other manufacturing activities approved by the Director General of Customs, in conjunction with the Ministry of Finance. Singaporean authorities recognize the vulnerability of these areas to trade fraud and TBML.
There are no international sanctions currently in force against this country.
Rating (100-Good / 0-Bad)
Transparency International Corruption Index
World Governance Indicator – Control of Corruption
INVESTMENT CLIMATE - Executive Summary (US State Department)
Foreign investments, combined with investments through government-linked corporations (GLCs), underpin Singapore's open, heavily trade-dependent economy. With the exception of restrictions in the financial services, professional services, and media sectors, Singapore maintains a predominantly open investment regime. The World Bank's "Doing Business 2014" report ranked Singapore as the easiest country in which to do business. "The Global Competitiveness Report 2013-2014" by the World Economic Forum ranked Singapore as the second-most competitive economy globally. The U.S.-Singapore Free Trade Agreement (FTA), which came into force January 1, 2004, expanded U.S. market access in goods, services, investment, and government procurement, enhanced intellectual property protection, and provided for cooperation in promoting labor rights and the environment.
The Government of Singapore (GOS) is strongly committed to maintaining a free market but also takes a leadership role in planning Singapore's economic development. The government actively uses the public sector as both an investor and catalyst for development. As of end February 2014, the top six Singapore-listed GLCs accounted for about 17.3 percent of total capitalization of the Singapore Exchange (SGX). Some observers have criticized the dominant role of GLCs in the domestic economy, arguing that it has displaced or suppressed private sector entrepreneurship and investment.
Singapore's aggressive pursuit of foreign investment as another pillar of its overall economic strategy has enabled the country to evolve into a base for multinational corporations (MNCs). The Economic Development Board (EDB), Singapore's investment promotion agency, focuses on securing major investments in high value-added manufacturing and service activities as part of a strategy to replace labor-intensive, low value-added activities that have migrated offshore.
As part of the government's strategy to develop Singapore into a premier financial center, GOS offers tax incentives for financial institutions looking to set up operations. Further information, details and guidelines are available at http://www.mas.gov.sg/Singapore-Financial-Centre/Value-Propositions/Setting-Up.aspx.
2014 - Singapore issues its inaugural national risk assessment (NRA)
report on money laundering and terrorist financing risks in the country
Singapore’s openness as an international transport hub and financial centre exposes it to inherent cross-border money laundering and terrorist financing risks. The more vulnerable sectors include those that are internationally-oriented and cash-intensive. These sectors are where preventive measures against money laundering and terrorist financing are most needed. For many of them, such as banks and casinos, the relevant controls are in place. These controls include customer due diligence, record keeping, ongoing transaction monitoring and rigorous supervision. In addition, Singapore has established an extensive international cooperation network for supervision and law enforcement to better combat transnational crime.
However, there are a number of sectors where controls are relatively less robust. These include remittance agents, money-changers, internet-based stored value facility holders, corporate service providers and pawnbrokers. Relevant government agencies will be strengthening the legislative and supervisory framework through the year to address the risks in these sectors more effectively.
As technology evolves and criminals become more sophisticated, several areas have also been identified for further study. These include virtual currencies, precious stones and metals dealers, and the Singapore Freeport. Authorities will seek to better understand how money laundering and terrorist financing can be carried out through these channels, as well as review international best practices, to determine whether any safeguards and mitigating measures are needed.
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