Money laundering events in Singapore rose by 79%

SINGAPORE: In 2023, the money laundering events in Singapore rose by 79% compared to 2022, according to credit ratings agency Moody’s, which has raised concerns about the city-state’s financial sector.

Chua Choon Hong, a senior director and head of the financial crime practice group for Asia-Pacific and the Middle East at Moody’s, provided insights into the issue.

In a report by The Business Times, he explained that Singapore’s open economy and high volume of international transactions make it more vulnerable to money laundering risks.

Despite the country’s strong compliance reputation, as noted in the Monetary Authority of Singapore’s national risk assessment, Mr Chua warned of potential complacency among financial institutions and other businesses.

He explained that while increased regulatory scrutiny might lead to higher compliance costs, it is essential for fostering trust in the economy’s integrity.

This scrutiny also promotes trade and transactions in the region and helps mitigate the impact of financial crime.

Moody’s data shows a steady increase in money laundering events across the Asia-Pacific region from 2018 to 2023. In Southeast Asia, such incidents rose by 64% in 2023 compared to 2018.

Thailand, Singapore, Malaysia, Indonesia, and the Philippines are the top five countries facing these challenges.

A notable trend in Singapore is the increasing number of users of corporate service providers to create entities that could potentially function as shell companies. 

Moody’s data also revealed that over 8% of the 1.7 million registered entities in Singapore have directors with an unusually high number of concurrent directorships or directorships at inactive companies.

This raises concerns that nominee directors might be used to hide true ownership.

Mr Chua believes that corporate service providers and legal persons dealing with these entities on behalf of clients should be subject to the same level of scrutiny as financial institutions.

This is essential for enhanced due diligence and effective risk mitigation. He also noted that the stringent due diligence practices by financial institutions have led to longer client onboarding times.

However, he emphasized that this measure is necessary due to the increased inflow of wealth into Singapore and the need to scrutinise the source of these funds. /TISG

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