Singapore launches new platform ‘COSMIC’ to combat money laundering and terrorism financing in the country

Recently in April, 2024, the Monetary Authority of Singapore (“MAS”) has launched a new digital platform “COSMIC” to combat financial crimes like money laundering (ML), terrorism financing (TF) and proliferation financing (PF). ‘COSMIC’ or ‘Collaborative Sharing of ML/TF Information and Cases’ allows the financial institutions (FIs) to securely share with one another, information on customers who exhibit multiple “red flags” that may indicate potential financial crime concerns. The information from COSMIC will be also used by MAS in its risk surveillance to detect illegal networks operating in the financial system.

The above measure has been taken in the backdrop of the fact that Singapore being a key financial hub, it needs to protect its financial system from criminal abuse so that its integrity and reputation as a financial centre is maintained. The major existing regulatory measures imposed under Anti Money Laundering (AML) policies and regulations include the following:

1. Accessing Books and Records by Authority: The Financial Services and Markets Act, 2022[1] imposes duties on FIs[2] to provide access to books and records to the AML/CFT Authorities in case there is any inspection.
2. Maintenance of Records: As a part of recordkeeping activities, each financial institution is under obligation to keep records of the financial transaction document for the minimum retention period applicable to the document.
3. Reporting of Suspicious Transaction: Institutions must promptly report any transaction that they suspect might be linked to money laundering or terrorist financing.
4. Customer Due Diligence: Under the Corruption, Drug Trafficking and other Serious Crimes (Confiscation of Benefits) Act 1992[3], institutions have to perform customer due diligence before entering into one or more cash transaction (which exceeds prescribed amount) with a customer. In addition to this, record of these transactions must be maintained by institutions along with all information that has been obtained during the course of conducting customer due diligence.
5. MAS has issued notices[4] directing financial institutions to put in place internal controls to deter the flow of illicit funds through the country’s financial system. Requirements like risk assessment, risk mitigation, customer due diligence, record keeping are few of the examples of the stringent compliance obligations of the financial institutions. 
6. The Terrorism (Suppression of Financing) Act, 2002[5] prohibits providing and collecting of property[6] or financial services on having reasonable grounds to believe that the property will be used to commit terrorist activities.
7. AML measures for entities engaged in dealing with precious stones: Precious Stones and Precious Metals (Prevention Of Money Laundering And Terrorism Financing) Act, 2019[7] prescribes measures for businesses engaged in manufacturing, importing, selling or purchasing any precious stone etc. in order to combat money laundering. All such businesses have to conduct customer due diligence before entering into any transaction with them in this regard.
8. AML measures for real estate: As real estate industry is a target for money launderers and terrorists to carry out illicit activities or illegitimate transactions, the Estate Agents (Prevention of Money Laundering and Financing Of Terrorism) Regulations 2021[8] mandates that Estate agencies have to conduct a rigorous due diligence before entering into agreements with clients and record the findings.
9. Singapore is a member of the international Financial Action Task Force (FATF), which develops and implements international standards to combat money laundering and terrorism financing. Recognizing that crime is ever-changing and requires continuous monitoring and enforcement action, FATF recommendations have been implemented in local laws and regulations in every applicable sector (e.g. banking, legal etc).

However, despite the above regulations, it was observed that a weakness remained around detection of illicit financial flows because the FIs were not able to alert each other to unusual activity in their customers’ accounts. Financial criminals continued exploiting these “information silos” by making illicit transactions through a web of accounts in different FIs and moving from one FI to another to avoid detection. To eliminate this information gap, the COSMIC platform has been launched which will initially focus on three key financial crime risks in commercial banking, namely,

1. misuse of legal persons
2. misuse of trade finance for illicit purposes, and
3. proliferation financing.

Six major commercial banks in Singapore (DBS, OCBC, UOB, SCB, Citibank, HSBC) are to participate in it in the first phase and MAS plans to progressively extend COSMIC’s coverage to more FIs and focus areas. Now, let us see how it pans out to curb money laundering and terrorism financing.

Considering the significant and extensive regulatory requirements an FI has to comply with, compliance management solutions can also be a great help to businesses to streamline their compliance procedures by ensuring adherence to AML legislations in Singapore. Understanding and complying with AML laws is critical for businesses operating in the financial hub of Singapore. With a proactive approach and the right tool, businesses can successfully navigate this landscape and contribute to the global fight against financial crime while remaining compliant.

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[1] https://sso.agc.gov.sg/Acts-Supp/18-2022/Published/20220511?DocDate=20220511

[2] “financial institution” (FI”) means —

(a)any bank;

(b)any merchant bank licensed under the Banking Act 1970;

(c)any finance company licensed under the Finance Companies Act 1967;

(d)any person that is approved as a financial institution under section 4;

(e)a person granted a licence under the Payment Services Act 2019;

(f)any insurer licensed or regulated under the Insurance Act 1966;

(g)any insurance intermediary registered or regulated under the Insurance Act 1966;

(h) any financial adviser licensed under the Financial Advisers Act 2001;

(i) any approved holding company, approved exchange, recognised market operator, licensed trade repository, licensed foreign trade repository, approved clearing house, recognised clearing house, authorised benchmark administrator, authorised benchmark submitter, designated benchmark submitter or holder of a capital markets services licence under the Securities and Futures Act 2001;

(j) any trustee for a collective investment scheme authorised under section 286 of the Securities and Futures Act 2001, that is approved under that Act;

(k) any trustee-manager of a business trust that is registered under the Business Trusts Act 2004;

(l) any licensed trust company under the Trust Companies Act 2005;

(m) any designated financial holding company under the Financial Holding Companies Act 2013;

(n) any person licensed under the Banking Act 1970 to carry on the business of issuing credit cards or charge cards in Singapore;

(o) any operator of a designated payment system regulated under the Payment Services Act 2019;

(p) any person licensed under this Act to carry on the business of providing any type of digital token service; and

(q) any other person licensed, approved, authorised, designated, recognised, registered or otherwise regulated under this Act or any other MAS scheduled Act —

(i) including any person who is exempted under this Act or any other MAS scheduled Act from being licensed, approved, authorised, designated, recognised, registered or regulated; but

(ii) not including any collective investment scheme that is authorised under section 286, or recognised under section 287, of the Securities and Futures Act 2001,

but does not include (whether in respect of the whole, or any Part or provision, of this Act) such person or class of persons as the Authority may, by regulations made under section 192, prescribe

[3] https://sso.agc.gov.sg/Act/CDTOSCCBA1992

[4] Notice 626 Prevention of Money Laundering and Countering the Financing of Terrorism – Banks (mas.gov.sg)

[5] https://sso.agc.gov.sg/Act/TSFA2002

[6] “property” means —

(a) assets of every kind, whether tangible or intangible, movable or immovable, however acquired; and

(b) legal documents or instruments in any form, including electronic or digital, evidencing title to, or interest in, such assets, including, but not limited to, bank credits, travellers cheques, bank cheques, money orders, shares, securities, bonds, drafts and letters of credit

[7] https://sso.agc.gov.sg/SL/PSPMPMLTFA2019-S306-2019?DocDate=20231110&WholeDoc=1

[8] https://sso.agc.gov.sg/SL-Supp/S555-2021/Published/20210729?DocDate=20210729&WholeDoc=1#pr3-

Written by: Bitasta Ganguly

Co-authored by: Amiya Mukherjee