On 14 May, the Anti-Money Laundering and Countering the Financing of Terrorism Industry Partnership (ACIP) in Singapore has published two best practice papers for financial institutions to guard against trade-based money laundering and the misuse of company structures for illicit purposes.

Set up in April 2017, the ACIP is a private-public partnership co-chaired by CAD and MAS, and is supported by a steering group comprising 8 banks and ABS. ACIP brings together both stakeholders from industry and government and provides a dedicated platform to discuss key transnational illicit finance risks confronting Singapore’s financial and non-financial sectors as well as identify and promote areas to uplift risk understanding of money laundering and terrorism financing in Singapore.

The two papers, titled Legal Persons – Misuse Typologies and Best Practices and Best Practices for Countering Trade Based Money Laundering, discuss common red flags linked to trade-based money laundering, as well as recent typologies involving the misuse of companies and other legal persons. The two papers also recommend measures that financial institutions can take to identify or prevent such activities.

The Papers were produced by two industry-led working groups, comprising representatives from major banks, professional service providers and government agencies in Singapore. The recommendations are also relevant for professional service providers outside the financial sector, such as lawyers, accountants and company services providers.

In addition, ACIP has set up a data analytics working group to leverage the collective experience of its members in using AML/CFT data analytics to better detect suspicious client profiles, activities or transaction patterns. The working group will also identify areas where closer collaboration between industry and government can enhance enforcement efforts against criminals who abuse Singapore’s financial system.

“We are heartened by the industry’s commitment in tackling money laundering, terrorism financing and other illicit activities. As criminals employ increasingly sophisticated means to launder money, financial institutions, intermediaries and gatekeepers must remain vigilant and take pre-emptive measures to combat such risks,” said Mr Chua Kim Leng, Special Advisor of MAS’ Financial Supervision Group.

In his keynote speech at the ACIP Industry Dialogue 2018, Mr Chua also mentioned the use of data analytics in anti-money laundering (AML) and countering the financing of terrorism (CFL). According to Mr Chua, a number of bank have started to integrate data analytics tools into their anti-money laundering and countering terrorism financing controls and transaction monitoring.

He announced that ACIP member banks have come together to form a new workgroup to share their collective experience, provide practical insights on understanding, acquiring, building or co-creating AML/CFT analytics solutions. The group will also identify areas where closer collaboration between the industry and the government could lead to substantive and transformative change. I look forward to the group’s findings and recommendations later in the year.

At the same time, Mr Chua also shared that the Monetary Authority of Singapore (MAS) has been incorporating data analytics into our supervisory work.

“One promising area is in STR analytics. Through the use of network analysis, we have been able to identify groups of related STRs across banks and over time among the numerous STRs that banks file every year. In some cases, there could be potential illicit activities. This is one area where banks could look into gaining deeper insights from the information you already have,” he said.

“Another aspect is in the conduct of our inspections. Data analytics has helped us better identify problem areas, such as higher-risk accounts or transactions, for targeted reviews. This has made our inspections more focused and effective, and has yielded findings that would be more useful to the banks in enhancing their AML/CFT systems and implementation,” he added.

The Papers are available on the website of the Association of Banks in Singapore (ABS). The Commercial Affairs Department (CAD) and the MAS encourage all relevant firms to adopt the red flag indicators and recommended measures to strengthen resilience against money-laundering and terrorism-financing risks.