Jul 15 MAS takes firm stance against illicit financing

THE Monetary Authority of Singapore (MAS) on Friday detailed the hard line it has taken against firms flouting rules aimed at preventing money laundering and terrorism financing here.

In the past three years, the MAS has fined 22 financial institutions (FIs) here and restricted the operations of seven.

It also issued 47 warnings and reprimands and has revoked or not renewed the licences of 13 money changers and remittance agents for weak controls, said its assistant managing director Lee Boon Ngiap.

Some FIs were told to hire external consultants to review their anti-money laundering and counter-terrorism financing framework or dedicate more resources to it.

"Like any international financial centre, we recognise that Singapore is vulnerable to being used as a conduit for illicit funds," said Mr Lee. "There is no room for complacency."

He was giving his keynote address at the ABS Financial Crime Seminar 2013 held at Raffles City Convention Centre yesterday.

Singapore rejects "tainted money" but welcomes legitimate funds drawn to the Republic's stability, regulations, rule of law and conducive financial system.

"Singapore will not tolerate the use of its financial system to conduct criminal activities," he said.

Mr Lee also warned that FIs which allow controls in these areas to be compromised owing to the "overly aggressive pursuit of revenue growth" will be closely scrutinised. "We expect the board and senior management of financial institutions to play a key role in setting the right tone." He added that Singapore would continue to strengthen its regime in line with the strengthening of international standards.

Singapore has intensified efforts to guard its status as an attractive private banking hub and international financial centre. In a landmark new law, tax crimes were designated as a money laundering offence, effective from July 1. The new law makes it tougher for tax cheats to park their illicit funds here.

"This is a clear message that Singapore neither wants nor will tolerate such illicit flows," said Mr Lee.

Tax evasion in wealth management is a hot-button issue.

Switzerland's status as the world's largest offshore wealth centre is being challenged as many of its private banks, including Credit Suisse and Julius Baer, face United States probes in relation to tax-dodging bank clients.

To fight cross-border tax offences, Singapore is strengthening its international cooperation. The number of jurisdictions it can trade information with on tax issues now has expanded to 11.

But a robust legal and regulatory framework by itself is not enough to address risks of money laundering and terrorism funding, said Mr Lee.

It also requires effective supervision. Between 2010 and last year, MAS carried out 108 on-site inspections of FIs in relation to controls for money laundering and terrorism financing. While the FIs have improved their controls, inspections also show that some institutions can do better.

With the new measures in effect, banks will have an expanded scope of offences to consider when conducting their KYC (know your client) checks, said WongPartnership's joint head of financial services regulatory practice Elaine Chan.

They also have to play their part in deterring illicit funds from being deposited here, she added.