Singapore’s Updated Money Laundering National Risk Assessment: Key Findings and Implications

Today, Singapore released its updated Money Laundering (ML) National Risk Assessment (NRA) as part of ongoing efforts to maintain an effective anti-money laundering (AML) regime amid evolving risks. The updated ML NRA consolidates observations from Singapore’s supervisory and law enforcement agencies, the Financial Intelligence Unit (Suspicious Transaction Reporting Office – STRO), as well as feedback from private sector entities and foreign authorities. Since the last ML NRA in 2014, Singapore has closely monitored ML risks, including conducting thematic risk assessments related to the misuse of legal persons, virtual assets, and environmental crime ML. These efforts ensure timely identification of risks to facilitate targeted mitigation by relevant stakeholders.

Singapore’s status as an international financial center and trading and transit hub with a highly externally oriented economy makes it vulnerable to criminal exploitation. This includes laundering or moving illicit funds and assets through the financial system and converting them into assets like real estate or precious metals. Economic and geopolitical changes have heightened these risks, while increased technology use has enabled rapid, large cross-border transactions often involving sophisticated ML structures.

The updated ML NRA identifies the following key points:

1. Key ML Threats:
   • Predominantly stem from fraud, especially cyber-enabled fraud both foreign and domestic, often orchestrated by overseas criminal syndicates.
   • Other significant threats include foreign predicate crimes such as organized crime, corruption, tax crimes, and trade-based money laundering.
2. Common ML Typologies:
   • Illicit funds flowing into or through Singapore via bank accounts.
   • Misuse of legal entities like shell companies to channel illicit funds.
   • Placement of illicit funds in high-value assets such as real estate and precious stones and metals.
3. High-Risk Sectors:
   • Banking Sector: Faces the highest ML risks due to its role in facilitating large transaction volumes and servicing high-risk customers, including those from high-risk jurisdictions.
   • Designated Non-Financial Businesses and Professions (DNFBP):
     • Corporate Service Providers (CSPs) pose higher ML risks due to their role in company incorporation and links to misuse of legal entities.
     • Other high-risk DNFBP sectors include real estate, licensed trust companies, casinos, and precious stones and metals sectors.
   • Digital Payment Token (DPT) Service Providers: Although DPT activities in Singapore are a small portion of global activities, there is an increase in reported cases involving DPTs, necessitating close monitoring by authorities.
   • Other Financial Sectors: High-risk sectors include payment institutions providing cross-border money transfer services (e.g., remittance agents) and external asset managers.

Singapore is committed to continually reviewing and implementing measures to address identified risks. The findings from the updated ML NRA will guide efforts to keep the AML regime aligned with current risks. This includes risk-targeted initiatives to educate Financial Institutions (FIs) and DNFBPs about emerging ML risks and enhancing timely detection, disruption, and enforcement actions by law enforcement and supervisory agencies.

The updated ML NRA findings, along with other risk assessments, serve as a guide for all stakeholders, including FIs and DNFBPs, to strengthen risk-based measures in combating ML. FI and DNFBP sectors should use the updated ML NRA to assess their risks and improve their controls. A copy of the ML NRA is available here.