Singapore’s recently updated Money Laundering National Risk Assessment (MLNRA) has brought attention to the substantial risks and vulnerabilities associated with digital payment token (DPT) service providers in the Anti-Money Laundering (AML) landscape.
The comprehensive 126-page report has identified new sectors at risk that were not previously included in the 2014 report. These sectors include DPT service providers, as well as dealers in precious stones and metals.
The banking sector, including wealth management, has been identified as posing the highest risks in terms of money laundering. Banks are particularly susceptible to criminal exploitation due to their involvement in facilitating large transactions and servicing high-risk clients.
Within the financial sector, DPT service providers, also known as virtual asset service providers, stand out as a high-risk category. The MLNRA highlights an increase in reported cases of money laundering involving DPTs, along with various methods of exploitation.
Despite the relatively small portion of global DPT activities taking place in Singapore, the authorities are closely monitoring the associated risks. Other high-risk sectors within the financial industry include payment institutions offering cross-border money transfer services and external asset managers.
The risk assessment report states that Singapore’s main money laundering threats stem from fraud, particularly cyber-enabled fraud, as well as organized crime, corruption, tax crimes, and trade-based money laundering.
Typical methods of money laundering involve concealing illegal funds in Singaporean bank accounts, using fictitious companies, and investing in valuable assets like real estate or precious metals.
The MLNRA report combines insights from Singapore’s supervisory and law enforcement agencies, including the Financial Intelligence Unit, as well as feedback from private sector entities and foreign authorities.
Singapore’s status as an international financial hub and its economic openness make it vulnerable to money laundering risks. Criminals take advantage of the country’s financial and business infrastructure to launder or transfer illicit funds.
Furthermore, the conversion of illicit funds into assets such as real estate, digital payment tokens, or precious metals poses significant threats, according to the report.
In April, the Monetary Authority of Singapore announced that it would implement amendments to the country’s Payment Services Act in order to expand the scope of regulated services related to digital payment token service providers.