Why the FATF mutual evaluation on Singapore matters

 

As most of you have seen, some months ago - early in May this year - the Financial Action Task Force (FATF) published its peer evaluation report on Singapore.

 

We have included a summary below but of course the key question is ‘why does this matter to financial institutions in Singapore?'

First, the desired economic crime landscape in Singapore is shaped by regulations, but the actual situation is determined by all participants and players in the market. That means all staff and stakeholders in the financial market have a role to play, need to know what matters and be pro-active in complying with regulatory requirements and implementing risk-mitigating measures.

From our point of view, it all starts with training. Senior management and compliance officers are usually aware of what is expected by MAS. But others in the organisation, specifically client facing and operations staff, are further away from regulatory requirements while they should know what matters.

Sanctions regulations are quite well known throughout the industry although hard to implement. Money laundering regulations are firmly embedded in most financial institutions. On the other hand, a topic like proliferation financing is seen of increasing importance by FATF and regulators but knowledge and awareness across employees in financial institutions is still limited.

Raising awareness and all-staff training is therefore still of utmost importance and at i-KYC we can help financial institutions just arranging that from start to finish. Hassle-free, customised to your organisation, flexible and fast.

So maybe that's a reason to get in touch with us.

Alright – back to the report and the findings. As expected, the report confirms once more that Singapore has a robust and effective framework to prevent and counter money laundering (ML), terrorism financing (TF), and proliferation financing (PF) but the report lists - not surprisingly to practitioners in the market - some areas of improvement as well.

 

·     Overall, the Singapore rating has been moved up from “enhanced follow-up” to “regular follow-up”, while the Singapore financial crime regime is considered competent and coordinated.

·     Furthermore, the FATF observes that Singapore is not effective in 3 out of 11 Immediate Outcomes.

 

The following areas for improvement are mentioned:

·     Singapore is only moderately effective in transparency and beneficial ownership, money laundering investigations and prosecutions, as well as in proliferation financing.

·     Only 682 out of 11,189 reported money laundering investigations or 5.6% resulted in prosecution. Moreover, no assets were frozen under the UN Al-Qaeda and ISIS sanctions regime despite exposure that was found.

The Singapore regulator has replied that the recommendations will be studied, and additional measures will be carefully considered.