15/05/23

SINGAPORE: MAS gets green light to build financial crime framework.

As published on fintech.global, Monday 15 May, 2023.

The Monetary Authority of Singapore (MAS) has secured approval to develop a legislative framework that lets banks share customer information.

According to the Straits Times, amendments to the Financial Services and Markets Bill lay the groundwork for the first centralised digital platform that will allow financial institutions to request and share targeted information on individuals and companies confidentially to help flag, detect and prevent money laundering, terrorism financing and proliferation financing.

The platform, which will be known as Cosmic – short for Collaborative Sharing of Money Laundering/Terrorism Financing Information and Cases – will be initially opened to six banks when it is rolled out from the second half of 2024.

Cosmic will initially focus on three key risks – shell companies that conceal true ownership, trade-based cross-border transactions that disguise crime proceeds, and shell companies that facilitate indirect trade and payments to sanctioned countries.

Straits Times highlighted that the initiative will be expanded to include more financial institutions and key risks down the road.

The changes to the law passed on Tuesday allow banks to share information when they detect suspicious transactions that meet a stipulated threshold. They can also request information from other banks and warn financial institutions of possible bad actors.

In the first phase, information sharing will be on a voluntary basis before becoming mandatory.

Alvin Tan – Singaporean Minister of State for Trade and Industry – told Parliament that MAS is the owner of Cosmic and will ensure that data is exchanged and stored securely.

He said, “The platform will have robust controls, including cyber-security measures such as data encryption, and firewalls to block unauthorised external access. It will also have strict user access limitations. These controls will be subject to periodic audits to ensure the efficacy.”

Tan added that no red-flag indicators will be triggered for most customers, adding that the amendments have legal and operational safeguards to protect the confidentiality of the information being shared and the interests of legitimate customers.

The Monetary Authority of Singapore recently launched its Finance for Net Zero (FiNZ) Action Plan to accelerate their plans toward net zero.