Singapore’s Response to Emerging Threats and Regulatory Pressures 2024

In late 2023, a high-profile money laundering scandal exposed significant vulnerabilities in Singapore’s financial crime defences, with over $3 billion in assets seized across high-value sectors like real estate and luxury goods.  

This incident raised questions around regulatory lapses in identifying high-risk entities and beneficial owners involved in complex cross-border transactions. The Monetary Authority of Singapore (MAS) responded decisively to protect Singapore’s status as a secure financial hub, especially with a Financial Action Task Force (FATF) evaluation set for July 2025. 

The response is an enhanced anti-money laundering (AML) regime, ranging from targeted Source of Wealth (SoW) requirements to innovative collaboration initiatives like Collaborative Sharing of Money Laundering/Terrorism Financing Information and Cases (COSMIC), aiming to strengthen Singapore’s defences and bolster international confidence in its regulatory framework. 

Crisis as an Opportunity 

The scandal underscored areas needing reform, particularly Singapore’s ability to track beneficial ownership and control complex transaction flows across jurisdictions.  

The recently completed National Risk Assessment (NRA) compounded the urgency of this response. Banking was identified as particularly vulnerable to money laundering, alongside corporate services providers.  

Key Regulatory Enhancements 

Realizing Singapore's economic reputation is at stake, MAS and Singapore’s Inter-Ministerial Committee introducedAML reforms focusing on proactive prevention, timely detection, and effective enforcement. 

Overhauling Source of Wealth and Source of Funds in Private Banking 

In response to gaps in verifying clients’ wealth origins, MAS issued the 2024 Circular on Establishing Source of Wealth (SoW) for High-Risk Customers, which mandates stricter requirements for documenting and verifying the origins of high-risk customers’ wealth. These requirements focus especially on private banking clients, with measures including: 

• Enhanced Due Diligence (EDD) 

Financial institutions (FIs) are required to conduct detailed SoW and Source of Funds (SoF) assessments at onboarding, revisiting this information periodically. 

• Risk-Based Verification 

MAS now requires a risk-based approach for SoW verification, prioritizing high-value accounts and clients from high-risk jurisdictions. 

• Continuous Monitoring 

SoW verification is an ongoing process, with FIs required to adjust their due diligence measures as client risk profiles evolve over time. 

Enhanced Cross-Border Transaction Monitoring 

Singapore’s status as a global financial centre makes it susceptible to cross-border money laundering risks. MAS has expanded its cross-border transaction monitoring requirements, with FIs now encouraged to implement advanced AI-powered monitoring systems to detect complex, layered transactions with minimal delay. 

• Automated Monitoring  

MAS emphasizes the need for AI-driven transaction monitoring tools to identify anomalous patterns, allowing institutions to detect and report suspicious activities quickly. 

• Jurisdictional Risk Focus 

FIs must evaluate the AML standards of involved jurisdictions, tailoring transaction scrutiny based on country-specific risks to improve detection rates. 

COSMIC Initiative: A Collaborative Approach 

In a groundbreaking move, MAS launched the COSMIC platform. This initiative allows FIs to share real-time intelligence on suspicious entities, enabling a more proactive, collaborative approach to financial crime prevention. COSMIC’s core elements include: 

• Centralized Intelligence Sharing 

COSMIC acts as a hub where FIs can exchange critical data on suspected illicit activity, fostering cooperation among financial institutions to combat cross-border threats. 

• Enhanced Government and Industry Coordination 

The platform enables faster communication and response between FIs and relevant government agencies, reducing response times and improving the overall quality of intelligence shared. 

COSMIC places Singapore at the forefront of collaborative AML strategies, aligning with international best practices and enhancing Singapore’s credibility as a secure financial jurisdiction. 

Strengthened Beneficial Ownership Requirements 

The recent reforms also emphasize transparency in ultimate beneficial ownership (UBO), a critical area identified in both the scandal and the NRA report. Key components include: 

• Verification of UBOs 

MAS has tightened expectations for FIs to identify and verify UBOs, especially in cases with complex corporate ownership structures. 

• Enhanced Due Diligence for Layered Ownership 

MAS requires FIs to take extra measures when dealing with corporate entities with intricate ownership chains, ensuring concealed relationships are scrutinized for potential risks. 

Industry-Wide Audits: Association of Banks in Singapore (ABS) Guidelines 

It’s not only MAS spearheading change in the Singaporean anti-financial crime regime. Recognizing the need for industry collaboration, the Association of Banks in Singapore (ABS) has introduced AML audit peer group guidelines.

These guidelines promote consistent compliance standards, allowing peer audits to identify common weaknesses and share best practices. Through this initiative, the ABS encourages an industry-wide commitment to maintaining high AML standards, especially across private banking, which was heavily implicated in the recent scandal. 

Key Findings From the 2024 National Risk Assessment 

The 2024 NRA identified significant AML risks within the banking sector which, as Singapore’s core financial industry, is fundamental to its global standing. The NRA findings are driving MAS’s sector-specific response, addressing unique vulnerabilities associated with cross-border transactions and high-value accounts. 

• Sector-Specific Strategies 

MAS’s post-NRA approach tailors AML requirements for high-risk sectors, including high-value goods and cross-border financial services. 

• Emerging Threat Awareness 

The NRA underscores MAS’s commitment to data-driven, evidence-based responses, ensuring that policies remain adaptive to new and evolving threats. 

Inter-Ministerial Committee Recommendations: A Unified National Response 

In line with the NRA’s findings, Singapore’s Inter-Ministerial Committee issued a framework for enhancing the nation’s AML regime through a three-pronged approach: Proactive Prevention, Timely Detection, and Effective Enforcement.  

This framework provides a comprehensive strategy, integrating cross-departmental collaboration to mitigate risks across the financial ecosystem and ensure timely intervention against emerging threats. These recommendations have been taken have become the key 3 pillars of Singapore’s National Anti-Money Laundering Strategy published in late October. 

Read more on how Singapore is responding in our KYC Trends report