Singapore publishes updated ML/TF risk assessments, asset recovery and CFT national strategies

30 July 2024

The following documents have been issued by the Ministry of Home Affairs (“MHA”), Ministry of Finance (“MOF”), and Monetary Authority of Singapore (“MAS”):

  • Updated Money Laundering (“ML”) National Risk Assessment (“NRA”) on 20 June 2024
  • National Asset Recovery Strategy on 26 June 2024
  • Updated Terrorism Financing (“TF”) NRA on 1 July 2024
  • Refreshed National Strategy for Countering the Financing of Terrorism (“CFT”) on 1 July 2024

Additionally, on 16 July 2024, MAS issued Circular AMLD 07/2024 highlighting the updates to Singapore’s ML NRA and TF NRA to financial institutions (“FIs”) and reminding FIs to identify, assess and understand ML/TF risks at an enterprise-wide level. FIs should take reference from the ML NRA and TF NRA and assess the effectiveness of the relevant risk-focused anti-money laundering (“AML”)/CFT controls and ongoing monitoring of customers’ accounts and transactions.

Updated Money Laundering National Risk Assessment 

The updated ML NRA was published on 20 June 2024 and synthesises the ML risks observed by Singapore’s supervisory and law enforcement agencies and financial intelligence unit - the Suspicious Transaction Reporting Office - as well as feedback from private sector entities and counterpart foreign authorities. It identifies the most common ML typologies, including: (i) illicit funds flowing into or through Singapore via bank accounts; (ii) misuse of legal persons such as shell companies to channel illicit funds; and (iii) placement of illicit funds in high value assets such as real estate and precious stones and metals.

The banking (including wealth management) sector is assessed to pose the highest ML risks to Singapore. Among the Designated Non-Financial Businesses and Professions (“DNFBP”) sectors, corporate service providers (“CSPs”) pose higher ML risks given the role CSPs play in providing upstream services such as incorporation of companies, and that they are linked to the misuse of legal persons in some instances. Other DNFBP sectors which pose higher risks include real estate, licensed trust companies, casinos and precious stones and metals sectors.

Within the financial sectors, the ML NRA notes digital payment token (“DPT”) services providers (or virtual assets service providers) as a higher risk sector. There has been an increase in reported cases involving DPTs and there is a range of ways in which DPTs can be exploited. Other sectors within the financial industry posing higher ML risks are payment institutions providing cross-border money transfer services (including remittance agents), and external asset managers.

The findings in the updated ML NRA will guide Singapore’s ongoing efforts to ensure that its AML regime keeps pace with the identified risks. These include continued risk-targeted efforts to sensitise FIs and DNFBPs to the key, new, and emerging ML risks, as well as to allow more timely detection, disruption, and enforcement of illicit activities by law enforcement and supervisory agencies.

National Asset Recovery Strategy

The National Asset Recovery Strategy was published on 26 June 2024 and sets out the Government’s comprehensive approach towards the recovery of illicit funds and assets from criminals and the forfeiture of these assets or their return to victims.

A sizeable proportion of the money laundering cases in Singapore are transnational in nature, involving foreign predicate offences and foreign crime syndicates which employ sophisticated and complex methods, including layering tactics and digital technologies, to conceal the cross-border movement of their illicit funds. In this context, Singapore’s National Asset Recovery Strategy focuses on four pillars, namely to (i) detect suspicious and criminal activities by tracing the illicit funds, (ii) deprive criminals of their ill-gotten proceeds through prompt seizure and confiscation, (iii) deliver maximum recovery of assets for forfeiture and restitution to victims, and (iv) deter criminals from using Singapore to hide, move, or enjoy their illicit assets. Singapore implements these four pillars through upstream loss prevention efforts, and a whole-of-society approach.

Updated Terrorism Financing National Risk Assessment 

The updated 2024 TF NRA was published on 1 July 2024 and articulates the latest TF threats and vulnerable sectors in Singapore. It takes into account key developments since the last TF NRA in 2020, such as the evolving global and regional terrorism landscape, growth of the digital economy and financial services in Asia, and emerging TF risk typologies. Similar to 2020, the 2024 TF NRA has observed that the TF threat of raising and moving funds for terrorists and terrorism activities overseas remains pertinent in Singapore’s context. Self-radicalised individuals continue to pose the most salient TF threat to Singapore.

The following are key TF risk areas in 2024, which are largely similar to those identified in 2020:

  • Money remittances remain at high risk, with cross-border online payments identified as a potential new channel for TF activities;
  • Banks remain at medium-high risk, with new cross-border fast payment systems identified as a potential new channel for TF activities;
  • DPT service providers have been elevated from medium-low to medium-high risk;
  • Non-profit organisations remain at medium-low risk, with foreign online crowdfunding identified as an emerging TF typology of concern;
  • Cross-border cash movements remain at medium-low risk; and
  • Precious stones, precious metals, and precious products remain at medium-low risk.

National Strategy for Countering the Financing of Terrorism

The TF NRA supports the following refreshed objectives of Singapore’s National Strategy for CFT, which was launched in 2022:

  • Prevent: Proactively deter prospective terrorists, terrorist organisations, and sympathisers from exploiting Singapore’s openness for TF activities;
  • Detect: Promptly detect and trace TF activities through robust monitoring and tracking of red flag indicators, especially in high-risk sectors and emerging TF typologies of concern; and
  • Disrupt: Resolutely enforce against terrorists, terrorist organisations, and sympathisers seeking to raise, move, and use funds for terrorism activities, both locally and abroad.

To achieve the above objectives, Singapore will implement a refreshed five-pronged National Strategy for CFT: (i) coordinated and comprehensive risk identification, (ii) strong legal and sanctions frameworks; (iii) robust regulatory regimes, (iv) decisive enforcement actions, and (v) international partnerships and cooperation.

Related developments 

On 29 May 2024, MOF, MHA and MAS jointly announced the publication of the Environmental Crimes Money Laundering NRA. For more details, read our article “Singapore issues environmental crimes money laundering national risk assessment”.

Reference materials

The following materials are available on the MAS website www.mas.gov.sg and the Prime Minister’s Office website www.pmo.gov.sg: