Monetary Authority of Singapore Increases Anti-Money Laundering Scrutiny

On August 13, Reuters reported that a senior official of the Monetary Authority of Singapore (MAS) stated that the MAS “is raising its guard against money launderers increasingly using onshore shell companies to mask their transactions.”

In an interview with Reuters, Valerie Tay, head of the MAS’s anti-money laundering (AML) unit, said that over the past year, banks in Singapore had closed accounts of several onshore shell companies they detected unlawful transactions.  However, when the MAS looked more deeply into the risks, Tay noted,

we realised that while criminals may still be using offshore companies, actually they have shifted to using onshore companies to evade detection. . . . And that’s when we started to be concerned. Because when the modus operandi of criminals shifts to evade detection and the industry isn’t vigilant enough, the criminals can get their way.

Tay also reportedly said that “red flags at shell companies included disproportionately large or high-velocity transactions and unusual patterns in dealings.”  Accordingly, she stated, the MAS has told banks to “actively look for shell companies that can be abused for illicit financing.  So there’s a supervisory expectation for pro-active detection and disruption of illicit finance.”

The origins of the MAS’s heightened attention to money laundering can be traced to 2015, when Singaporean authorities found that certain funds associated with 1MDB had been laundered through Singapore’s banking system.  That, in Tay’s words, “was a wake-up call for everyone,” which led to a spate of MAS enforcement actions.

Note: Until fairly recently, Singapore had been viewed by some as “an increasingly popular haven for money laundering and tax evasion.”  But several developments since 2013 — including a substantial increase in the number of Suspicious Transaction Reports filed and the 1MDB scandal – led to more vigorous governmental responses, such as the MAS’s shuttering and fining of various banks and the enactment of increased criminal penalties for money laundering and terrorist financing.  In addition, since the release of the Panama Papers in 2016, the MAS has taken note of the fact that, as Tay put it, “foreign criminals have turned their attention to using Singapore shell companies for nefarious activities.”  The MAS will need to use all of the tools at its disposal, such as the public-private AML/CFT Industry Partnership and its oversight and enforcement authority, on a sustained basis if it is to have a substantial effect on that problem.

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