Singapore Has More Work Ahead in the Fight Against Money Laundering

September 27, 2016, 9:46 AM UTC
General Views Of Singapore Ahead Of Second-Quarter GDP Figures
Buildings in the central business district stand illuminated as the sun sets in Singapore, on Tuesday, July 9, 2013. Singapore will release second-quarter gross domestic product figures on July 12. Photographer: Nicky Loh/Bloomberg via Getty Images
Nicky Loh/Bloomberg via Getty Images

An international group that monitors money laundering said on Tuesday that Singapore should pursue more offenders involved in international cases and take more action to confiscate suspicious funds moving through the city-state.

“Singapore maintains one of the lowest domestic crime rates in the world and therefore the bulk of Singapore’s exposure to ML (money laundering) risks arises from offenses committed overseas,” the Financial Action Task Force (FATF) said in a report assessing Singapore efforts against money laundering and to counter the financing of terrorism.

The FATF assessment came amid Singapore’s ongoing probe into money laundering offenses linked to Malaysian state fund 1Malaysia Development Berhad (1MDB), which cast a spotlight on one of the world’s leading wealth management centers.

The task force’s examination of Singapore was conducted in late 2015, several months before Singapore ordered the shutdown of Swiss private bank BSI, charged people in connection with the probe and announced the seizure of S$240 million ($177 million) worth of assets.

The executive summary of the task force’s report did not mention 1MDB.

See also: Singaporean Banks Are Reporting Indonesians Who Embrace Tax Amnesty

The Singapore government said in a statement that law enforcing agencies will strengthen their capabilities to identify and investigate more money laundering cases of “complex transnational” nature.

The Paris-based FATF said Singapore has a reasonable understanding of its money laundering risks and had taken steps to mitigate them, but some gaps remain.

It said law enforcing agencies should make greater use of seizure and confiscation powers to seizes funds and assets linked to crime.

The task force said financial institutions generally demonstrated a reasonably good understanding of money laundering risks impacting domestic clients, but a less developed understanding of risk of illicit flows into and out of Singapore.

See also: How Singapore and Australia Are Working to Battle Tax Evasion Together

It said Singapore should strengthen its anti-money laundering regime for precious stones and metals dealers.

In July, Singapore authorities said that as part of its 1MDB-related probe it found problems at three banks, top local lender DBS Group (DBSDY); UBS AG (UBS), the world’s largest private bank; and Standard Chartered (SCBFF).

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An onsite inspection of another Swiss bank, Falcon PBS, owned by one of the world’s leading sovereign wealth funds – Abu Dhabi’s International Petroleum Investment Company (IPIC) – in April 2016 found “substantial breaches” of anti-money laundering regulations, Singapore’s central bank said.