Effectiveness of COSMIC as Platform for Financial Institutions to Share Information on Customers Showing Money Laundering Red Flags

13 Ms He Ting Ru asked the Prime Minister and Minister for Finance (a) what assessment the Government has made of the effectiveness of Collaborative Sharing of Money Laundering/Terrorism Financing (ML/TF) Information & Cases (COSMIC) as a platform for financial institutions to share information on customers exhibiting money laundering red flags; and (b) what is the timeline of implementation for the planned expansion of COSMIC to include additional major banks and a wider range of significant cases.

The Minister of State for Foreign Affairs and National Development (Mr Alvin Tan) (for the Prime Minister and Minister for Finance): Sir, the Monetary Authority of Singapore (MAS) launched the Collaborative Sharing of Money Laundering/Terrorism Financing Information and Cases (COSMIC) on 1 April 2024, to facilitate the sharing of risk information among banks to detect and disrupt illicit fund flows in the financial sector. COSMIC's initial phase involved six major commercial banks in Singapore, and targeted three key financial crime risks: (a) misuse of legal persons; (b) misuse of trade finance for illicit purposes; and (c) proliferation financing.

Since its launch, COSMIC has enhanced participant banks' ability to detect bad actors and strengthened our financial sector's defences against financial crime. Arising from information shared on the platform, COSMIC participant banks filed additional suspicious transaction reports. Further, following participant banks' review and investigations, a significant number of suspicious customer accounts were closed.

The information shared on COSMIC also allowed participant banks and the MAS to identify suspicious networks for timely review and supported authorities' investigations. COSMIC's effectiveness was affirmed in the recent Mutual Evaluation assessment of Singapore by the Financial Action Task Force (FATF).

Given these positive outcomes, MAS has been working with the industry to expand the use of COSMIC. We are widening COSMIC's scope beyond the three targeted financial crime risk areas that I have mentioned above, and we are also onboarding other major banks that are close partners in our Anti-Money Laundering, Countering the Financing of Terrorism efforts. This expansion is scheduled for completion within two years. MAS will carefully manage COSMIC's expansion, to reap the benefits of information sharing while at the same time, balancing against considerations of undue de-risking and confidentiality of customer information.

Mr Speaker: Ms He.

Ms He Ting Ru (Sengkang): I thank the Minister of State for the update. I have some supplementary questions.

The first is, given that this is a more or less voluntary platform to which the six banks are contributing information, I would like to ask the Minister of State on what is the participation rate and a bit more details about the volume of transactions that were shared. The Minister of State had mentioned earlier that there was a significant number that were eventually followed up on.

And then, my next supplementary question relates to how MAS assesses the effectiveness of COSMIC against other platforms, such as the United Kingdom's Schengen Information System (SIS) and also Hong Kong's Financial Intelligence Evaluation Sharing Tool (FINEST) system? What are the specific metrics that the MAS uses to do the evaluation?

And the last supplementary question is whether or not there is any indication or any exploration about whether or not the platform will eventually be shifted from a voluntary regime to a mandatory one?

Mr Alvin Tan: Sir, I thank Ms He Ting Ru for questions. I think her questions revolve primarily around the effectiveness of COSMIC. As I mentioned, we are expanding the scope. We are also expanding to have more other participant banks to join COSMIC. We have a two-year timeframe to do so.

I can give her some specifics. In the first year of operations, COSMIC participant banks filed additional Suspicious Transaction Reports (STRs) relating to aggregate fund flows of more than $1.6 billion dollars. And following the participant banks' review and investigation, more than1,000 suspicious customer accounts were closed.

So, we are reviewing the efficacy and effectiveness of COSMIC, and the mutual evaluation by the FATF also gives us some feedback on whether this is effective.

We will continue to monitor this as we expand the scope of the offences and the financial crime, as well as expand the number of participant banks into this. So, we will continue to monitor this and review this COSMIC platform.