BANKS and political figures support the tough rules being proposed to combat money laundering and terrorism financing, despite being the two groups most likely to be affected.
They told The Straits Times that tighter regulations will help uphold Singapore's reputation as a major financial hub.
The rules, outlined in a Monetary Authority of Singapore (MAS) consultation paper released on Tuesday, propose that financial institutions perform enhanced checks on customers. These include taking a risk-based approach for certain categories of what are termed "politically exposed persons".
This refers to people entrusted with prominent public functions, such as government ministers, senior public servants and top party officials.
Other proposals involve financial institutions formalising the need to screen customers and their connected parties.
The proposals, which are generally being carried out by financial institutions already, are to boost Singapore's status as a clean and safe money harbour.
They are based on international best practices and the latest recommendations of the global standard- setter, the Financial Action Task Force (FATF).
Singapore Management University associate law professor Eugene Tan noted that money laundering and terrorism funding practices are becoming more sophisticated and evolve rapidly.
"It is imperative that we do not play catch-up in combating these scourges and that our law enforcement agencies are on top of the game," said Prof Tan. "I see the proposed enhanced measures as building upon the existing know-your-customer regime that we have here. They should not be seen as 'nice to have' but instead treated as 'must-haves'."
Compliance costs for banks are expected to rise but the lenders are taking it all in their stride.
Ms Loretta Yuen, OCBC's head of legal and regulatory compliance, said the bank already has in place a number of the proposed risk assessment practices.
"Over the years, the costs that banks worldwide have to incur to comply with more and increasingly complex anti-money laundering and counter-financing of terrorism regulations have risen," Ms Yuen noted.
"But having in place a rigorous regime is critical in combating the increasingly sophisticated methods used... to conceal the source and use of funds."
A DBS spokesman added: "We take the issue of financial-system integrity seriously, and have robust policies and procedures in place to ensure customers use our facilities only for legitimate purposes."
A UOB spokesman also said the bank has measures to manage the risks of money laundering and terrorist financing.
Non-compliance by financial institutions could be costly. An MAS spokesman said an errant institution can be fined up to $1 million and, in the case of a continuing offence, given a further fine of $100,000 for every day during which the offence continues after conviction.
SMU's Prof Tan, who is also a Nominated MP, is not too concerned about the enhanced checks that could be conducted on political figures like himself. "It comes with the turf. The key concern is for the checks to be done in a sensitive and efficient manner," he said.
Sembawang GRC MP Ong Teng Koon noted that even though the enhanced checks could lead to an intrusion of privacy, they aim to strike a balance between protecting individual rights and upholding Singapore's financial hub status.
"Security and privacy concerns are not mutually exclusive concepts," he added.
Another proposed rule is that financial institutions must impose additional requirements for cross-border wire transfers exceeding $1,500, down from $2,000 previously. The MAS said this is due to the strengthening of the Singapore dollar, relative to international benchmarks set by the FATF of either US$1,000 (S$1,242) or €1,000.
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