As published on finews.asia, Wednesday 10 May, 2023.
The Monetary Authority of Singapore (MAS) will establish a common digital platform for financial institutions to help fight money laundering and terrorism finance.
The platform will be named COSMIC, which is short for the collaborative sharing of money laundering or terrorism financing information and cases, according to a bill read in parliament on Tuesday, with the relevant comments subsequently published by the MAS on its website.
COSMIC, which may be launched as soon as the second half of 2024, will enable financial institutions to share information on customers who show multiple red flags that could potentially hint at financial crime activity. The platform will also make it easier for financial institutions to detect and deter criminal activity, MAS said.
Currently, in many financial centers around the world, banks and other institutions are required to file suspicious transaction reports with police authorities in a similar fashion to those submitted to the Singapore Police Force’s Suspicious Transactions Reporting Office. In most jurisdictions, however, that information, which is usually deemed highly sensitive and confidential, remains off-limits to third parties.
There will be three key areas of risk that the platform will focus on. The first will be the misuse of legal persons for criminal activities, the second trade-based money laundering, and the last will be proliferation financing and international sanctions evasion.
The MAS and the Commercial Affairs Departments (CAD) have indicated those specific areas as benefiting most from an information-sharing platform. According to the MAS, they are "also high on Singapore’s priority list of risks, as identified through our continued risk surveillance."
COSMIC will be introduced in phases by the MAS, and the Singapore authority will then make a decision as to the exact parties able to participate.
In the first phase, six major banks in the city-state will be eligible to join COSMIC. They include DBS, OCBC, UOB, Stanchart, Citibank, and HSBC, although the MAS indicated that the sharing of information will be voluntary in the first phase.
It is noticeable that no Swiss bank, including UBS or Credit Suisse, is a participant in the first phase, although this is likely due to the fact that neither has a retail business in the city-state. In all likelihood, they also only have modest commercial banking exposure limited to Swiss multinationals, something that may also have factored into the decision.
Subsequently, the MAS will expand COSMIC’s coverage to more focus areas and financial institutions, and usage of the sharing platform will become mandatory in high-risk circumstances.