Singapore's framework against financial crimes such as money laundering shows marked improvement: Report

Singapore received the strongest possible outcome in the latest assessment published by the Financial Action Task Force (FATF), reflecting the existence of a robust framework to combat financial crimes.

The assessment, conducted between 2020 and 2025, showed that Singapore's governance structures and legal framework to address money laundering, terrorism financing and proliferation financing risks are in line with the international body's expectations. 

This was announced by the Monetary Authority of Singapore (MAS), the Ministry of Home Affairs and the Ministry of Finance in a joint press release on Wednesday (May 6).

The FATF is a 40-member body that sets international standards to ensure that national authorities can effectively go after illicit funds linked to drug trafficking, illicit arms trade, cyber fraud and other serious crimes. 

FATF members are periodically assessed through peer reviews to determine and monitor their level of compliance with the FATF Standards and effectiveness of their existing systems to combat financial crimes.

Singapore was one of the first few countries to undergo the fifth round of the FATF mutual evaluation process, and was subsequently placed on regular follow up — the strongest possible outcome.

The latest outcome is also a notable improvement from the previous report published in 2016, where Singapore received an enhanced follow up rating.

The improved rating also marks significant advancements in Singapore's defence against financial crimes - including robust legal framework and inter-agency cooperation to detect and investigate money laundering - especially as the assessment was conducted based on enhanced FATF standards, said the three ministries.

Low levels of violent crime

The evaluation process, which assessed countries based on technical compliance and the effectiveness of their systems, found that Singapore is a globally significant international financial centre with low levels of violent crime and high levels of wealth and trust in institutions.

The report also referenced the $3 billion money laundering case, in which the MAS meted out a total $27.45 million in penalties to nine financial institutions that were linked to the case.

Referred to as "one of the world's largest crackdowns on money laundering in 2023", the case highlighted the quality of Singapore's law enforcement and high-level political commitment to preventing the misuse of its financial system, said the FATF report.

While Singapore received positive feedback, it also received several recommendations on how to further strengthen its existing framework.

For example, the report found that Singapore has a reasonably sound understanding of risks related to legal persons and legal arrangements, and that law enforcement agencies have been able to obtain beneficial ownership information in a timely manner.

Singapore should strengthen its understanding of risks

However, the report recommended that Singapore can further enhance its risk understanding and mitigation measures in areas such as foreign legal persons, and foreign legal arrangements.

"Singapore remains firmly committed to complying with the FATF Standards, and welcomes the FATF's recommendations. We are aware that Singapore, like other open economies, will continue to face nefarious actors who seek to exploit our economy and financial system for illicit purposes," said the three ministries.

They also adding that they will carefully study the FATF's recommendations and assess how they can be adopted in a risk-proportionate manner that will help maintain Singapore's position as a trusted financial centre and trading hub.

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dana.leong@asiaone.com