Earlier this month, the Monetary Authority of Singapore (MAS) indicated that the Financial Services and Markets(Amended) Bill (FSM(A)B had been passed by parliament. The aim of the new legislation is to create a regulatory framework for MAS’ secure information-sharing platform which is set to be rolled out during 2024 and will require Financial Institutions (FI) to make use of the network to share customer and transaction information when “material risk thresholds” are breaches.

Currently, banks only have a single customer view hence when customer information can be shared between FIs where customers have multiple accounts with various institutions, behavioural trends become much more transparent and as a result, illicit activities can be identified more effectively.

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Detection and prevention of financial crime

Known as the Collaborative Sharing of Money Laundering/Terrorist Financing Information and Cases (COSMIC)platform, the FSM (A)B bill will allow FIs to share information digitally in order to detect and prevent serious financial crime and in the process protect the privacy of legitimate customers.

The bill sets clear parameters regarding the way that information can be shared among participating FIs and the various scenarios that warrant the sharing of information. There are three ways that information can be shared which include:

·       When customers are placed on a watch list to alert participating FIs.

·       When FIs request information from other FIs.

·       When FIs provide information to one another in a proactive manner.

The new bill is applicable to the six major commercial banks in Singapore including Standard Chartered Bank,Citibank, DBS, UOB, HSBC and UOB and these institutions were jointly involved in the development of the digital platform. According to media outlets, the sharing of information between MAS and the mentioned FIs will occur on a voluntary basis in the initial phase which is expected to last two years. CNA reported that this approach will allow the platform to achieve operational stability while MAS engages FIs to calibrate features and address operational challenges. Following this, MAS aims to make the sharing of date mandatory for higher risk situations and will subsequently impose penalties on lenders that do not comply with the requirement of sharing information via the platform.

Priority areas

MAS has identified three major risk areas, based on past surveillance, which will be prioritised on the platform and include trade-based money laundering, the exploitation of legalpersons and proliferation financing and the evasion of international sanctions. Going forward, MAS plans to include more focus areas.

One of the board members of MAS, Mr. Tan said in a statement that while FIs have made significant strides in the fight against financial crime, they are currently unable to warn one another about unusual activity involving their customers given customer confidentiality obligations. He added that “Criminals exploit this by making illicit transactions through different financial institutions to avoid detection”. According to CNA reports, the bill also provides FIs with statutory protection from civil liability in respect of their disclosure of information via COSMIC, provided that the disclosure was done in accordance with the thresholds and made with reasonable care and in good faith.

Expert assistance

In the interest of complying with the new AML legislation, firms will have to ensure that their financial crime frameworks are aligned with the new requirements which include all AML policies and procedures.

Therefore, from a reputational point of view and to avoid hefty fines, it is imperative that firms remain compliant by implementing robust financial crime frameworks and constantly evaluate and mitigate all identified risks. Even well-established, global firms must review and test their controls on a regular basis to ensure its effectiveness.

Lysis Group can support firms in this regard because we have been designing and implementing effective and efficient global Financial Crime Compliance (FCC) and Client Lifecycle Management (CLM)solutions for more than 20 years.

Health Checks and Maturity Assessments are the first steps in assessing a firm’s financial crime framework because it depicts the current state of a firm’s AML and Counter Financing of Terrorism (CFT) controls and the level of regulatory compliance. The process can identify any regulatory gaps and/or areas of concern where the firm should take remedial steps to address the gaps.  The assessments are completed in line with current industry regulations and best practices against the firm’s business model and risk appetite.

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