News Risk Management16 May 2018

Singapore:Industry watchdog sets up data analytics working group for AML/CFT

16 May 2018

Singapore's Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) Industry Partnership (ACIP) has set up a working group to leverage the collective experience of its members in using AML/CFT data analytics.

This will enable better detection of suspicious client profiles, activities or transaction patterns. The working group will also identify areas where closer collaboration between industry and government can enhance enforcement efforts against criminals who abuse Singapore’s financial system, said the ACIP in a statement issued on Monday. The ACIP, set up in April 2017, is co-chaired by the Singapore Police Force’s Commercial Affairs Department (CAD) and the Monetary Authority of Singapore (MAS) and is supported by a steering group comprising 8 banks and Association of Banks in Singapore (ABS).

The ACIP has also recommended a set of best practices for financial institutions to guard against trade-based money laundering and the misuse of company structures for illicit purposes. It noted that as an international financial centre and transport hub, Singapore must continue to be vigilant to guard against the risk of being a transit point for illicit funds.

The ACIP best practice papers, ‘Best Practices for Countering Trade Based Money Laundering’ and ‘Legal Persons- Misuse Typologies and Best Practices’ highlight the ‘red flag’ customer behaviours or transaction patterns that financial institutions can look out for to detect illicit financial activities. They also recommend measures that financial institutions can take to identify or prevent such activities.

The papers were produced by two industry-led working groups, comprising representatives from major banks, professional service providers and government agencies in Singapore. The recommendations are also relevant for professional service providers outside the financial sector, such as lawyers, accountants and company services providers. The CAD and MAS encourage all relevant firms to adopt the red flag indicators and recommended measures to strengthen resilience against money-laundering and terrorism-financing risks.

Speaking at the AML/CFT Industry Partnership Dialogues on Monday, MAS’ financial supervision group special advisor Chua Kim Leng noted some typologies highlighted in the papers, such as ‘round-tripping’ of funds through companies controlled by the same or related individuals, the use of entities with names similar to those of established or well-known companies despite the former being non-legitimate and “cloned” trade documents that look virtually identical to genuine ones.

On the use of data analytics, he noted that the MAS has already made progress in incorporating data analytics into its supervisory work.  One promising area is in Suspicious Transaction Report (STR) analytics.  Through the use of network analysis, MAS has been able to identify groups of related STRs across banks and over time among the numerous STRs that banks file every year, some of which could be potential illicit activities, and gain deeper insights from existing information. 

Another aspect is in the conduct of inspections, where data analytics has helped better identify problem areas, such as higher-risk accounts or transactions, for targeted reviews.  This has made inspections more focused and effective, and has yielded findings that would be more useful to the banks in enhancing their AML/CFT systems and implementation. 

“Everyone has a part to play in combating financial crime.  Through deeper collaboration between the private and public sectors, and better use of technology, we can be more effective at detecting financial crimes and mitigating such risks,” said Mr Chua.

CAD director David Chew said, “ACIP’s first year has been a fruitful one. We have had open discussions about emerging financial crime typologies and enriched our collective understanding of the threats facing Singapore. I hope ACIP continues to build on this foundation of trust, as we move towards closer cooperation.”

The ACIP’s best practice papers are available on the ABS' website.

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