Singapore’s recently updated Money Laundering National Risk Assessment (MLNRA) has drawn attention to the significant risks and vulnerabilities posed by digital payment token (DPT) service providers in the Anti-Money Laundering (AML) landscape.
The comprehensive 126-page report has identified new areas of risk that were not included in the previous report published in 2014. These new risk sectors include DPT service providers and dealers in precious stones and metals.
The banking sector, including wealth management, has been identified as having the highest risk of money laundering. Banks are particularly susceptible to criminal exploitation due to their involvement in facilitating large transaction volumes and servicing high-risk customers.
Within the financial sector, DPT service providers, also known as virtual asset service providers, have been highlighted as a high-risk category. The MLNRA report reveals an increase in reported cases of money laundering involving DPTs and various methods of exploitation.
Despite the relatively small portion of global DPT activities taking place in Singapore, the authorities are closely monitoring the associated risks. Other high-risk sectors in the financial industry include payment institutions that offer cross-border money transfer services and external asset managers.
The MLNRA report states that Singapore’s key money laundering threats come from fraud, particularly cyber-enabled fraud, organized crime, corruption, tax crimes, and trade-based money laundering.
Typical methods of money laundering involve concealing illegal funds in Singaporean bank accounts, using fictitious companies, and investing in valuable assets such as real estate or precious metals.
The MLNRA report combines insights from Singapore’s supervisory and law enforcement agencies, including the Financial Intelligence Unit, with feedback from private sector entities and foreign authorities.
Singapore’s status as an international financial hub and its economic openness make it vulnerable to money laundering risks. Criminals exploit the country’s financial and business infrastructure for laundering or transferring illicit funds.
Furthermore, the conversion of illicit funds into assets such as real estate, digital payment tokens, or precious metals poses significant threats, according to the report.
In April, the Monetary Authority of Singapore announced its plans to implement amendments to the country’s Payment Services Act in order to expand the scope of regulated services related to digital payment token service providers.