Singapore flags real estate, casinos, corporate service providers among non-bank money laundering risks

Corporate service providers, real estate, casinos as well as precious stones and metals are among the non-banking sectors that pose higher money laundering risks to Singapore, indicated the updated Money Laundering National Risk Assessment published on Thursday (Jun 20).

The banking sector, which includes wealth management, was assessed to pose the highest money-laundering risk to the country.

But some designated non-financial businesses and professions also pose high risks.

Corporate service providers, for example, provide upstream services such as incorporation of companies and "are linked to the misuse of legal persons in some instances", said the Ministry of Home Affairs, Ministry of Finance and Monetary Authority of Singapore in a joint press release.

Another higher-risk sector is licensed trust companies, which may deal with customers with risks of corruption or tax evasion. Such companies also deal with complex legal structures and handle high-value, cross-border transactions.

Key threats

Updated for the first time since 2014, the Money Laundering National Risk Assessment highlights that Singapore's key money laundering threats stem from fraud - especially cyber-enabled fraud orchestrated by criminal syndicates, typically located overseas.

The agencies noted that the increased use of technology has enabled "rapid and large" transactions across borders, often involving the use of sophisticated money laundering structures and arrangements.

"Other key money laundering threats relate to foreign predicate crimes, such as organised crime, corruption, tax crimes and trade-based money laundering," said the agencies.

The report also laid out the most common methods of money laundering.

These include illicit funds flowing into or through Singapore via bank accounts; the misuse of legal persons such as shell companies to channel funds; and putting illicit funds into high value assets such as real estate and precious stones and metals.

In the financial sector, banks have higher exposure to money laundering threats and are more easily exploited by criminals, the report indicated. This is due to their role in facilitating large volumes of transactions and servicing customers with higher money laundering risks, including those from higher-risk jurisdictions

Within the financial sector, digital payment token (DPT) service providers were also flagged as a higher-risk sector.

There have been more reported cases involving DPTs, and there are a number of ways that such tokens can be exploited, said the authorities. "Hence, while DPT activities in Singapore form a small portion of global activities, Singapore authorities are closely monitoring the risks involving the sector."

Other higher-risk sectors within the financial industry are payment institutions that provide cross-border money transfer services, such as remittance agents, and external asset managers.

Continued efforts

The updated national risk assessment will guide ongoing efforts to ensure that Singapore's anti-money laundering regime keeps pace with identified risks, said the authorities.

"These include continued risk-targeted efforts to sensitise financial institutions and DNFBPs to the key, new and emerging money laundering risks, as well as to allow more timely detection, disruption and enforcement of illicit activities by law enforcement and supervisory agencies," they said.

They added that financial institutions and DNFBP sectors should take reference from the updated report in assessing their risks and enhance their controls accordingly.

Singapore's most recent high-profile money laundering bust, last August, has since led to the imprisonment of 10 foreign nationals and the seizure of more than S$3 billion in assets. The last suspect involved, Su Jianfeng, was sentenced to 17 months in prison on Jun 10.

As part of a case study in the updated risk assessment, the agencies found that financial institutions had filed multiple suspicious transaction reports that helped the Suspicious Transaction Reporting Office and law enforcement agencies seize around S$1.5 billion in financial assets.

More than 200 properties were also purchased by these foreign nationals, some of whom purchased multiple properties in the same development for investment purposes.

Of the 10 foreign nationals, six were also found to have resided in local properties under rental arrangements.

Two corporate service providers and their registered qualified individuals were also found to have facilitated the incorporation of 18 companies, which were used to legitimise persons of interest's stay in Singapore. They were investigated and had their registrations cancelled for non-compliance with their anti-money laundering obligations.

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This article was first published in The Business Times. Permission required for reproduction.