Singapore Strengthens AML/CFT Regime to Reduce Risk and Vulnerability to Financial System
From its humble beginnings as a British trading colony in the early 19th century, the Republic of Singapore is a tiny island nation that continues to reinvent itself as a financial and technological hub in the Asia-Pacific region. Despite its small geographic size and population, it possesses a very strong and successful free-market economy and boasts a per capita gross domestic product that is higher than most developed countries.
Singapore constantly attracts investment from abroad as well as foreign businesses seeking to open offshore bank accounts there due to its stable and well-regulated financial system. The Monetary Authority of Singapore (MAS) forms financial policy and oversees all financial institutions, and the Commercial Affairs Department of Singapore regulates and investigates financial crimes in the country.
Although Singapore has been recognized as a desirable place for financial services and commerce, the first-ever national money laundering and terrorist financing risk assessment report published in 2014 provided a dire warning for regulators. The report found that the nation has become a victim of its own success, with its popularity as an international transport hub and financial center leaving it exposed and particularly vulnerable to money laundering and terrorist financing.
As a result of the risk assessment report’s findings, the government introduced a bill to amend to the MAS Act in April 2015, aligning Singapore’s anti-money laundering (AML) and countering the financing of terrorism (CFT) regulations with accepted international standards set by the Financial Action Task Force (FATF). Among the new powers given to the MAS include the authority to require financial institutions to conduct customer due diligence (CDD) and to keep proper records, with penalties for non-compliance.
Undoubtedly, Singapore takes its regulatory responsibilities seriously as it desires to maintain an environment that is both safe and attractive to investment by foreign companies. Ensuring that the country’s financial system is held to FATF compliance standards can only add to Singapore’s appeal as a good place to do business, as a highly industrious nation with a well-educated and hard-working labor force.
What impact do you think tougher AML/CFT regulations will have on foreign investment in Singapore?