Measures to Enhance Anti-money Laundering Compliance
Ministry of National DevelopmentSpeakers
Summary
This question concerns additional measures to enhance anti-money laundering compliance following BSI’s licence withdrawal and the mitigation of associated compliance costs, as raised by Mr Ong Teng Koon. Minister Lawrence Wong, on behalf of Deputy Prime Minister Tharman Shanmugaratnam, stated that MAS is consolidating supervisory responsibilities and establishing a new enforcement department to better investigate illicit financing. Minister Lawrence Wong detailed policy measures including criminalising serious tax offence laundering, updating regulatory guidelines, and increasing inspections to ensure financial institutions maintain robust controls. Minister Lawrence Wong affirmed that firm actions will be taken against non-compliant institutions, including license withdrawals and referring errant senior management and staff to the Public Prosecutor. On competitiveness, Minister Lawrence Wong noted that higher compliance costs are an across-the-board reality under international standards that all financial institutions must bear to combat global illicit flows.
Transcript
19 Mr Ong Teng Koon asked the Prime Minister what additional measures are being taken to enhance anti-money laundering compliance by financial institutions in the wake of the withdrawal of BSI's merchant banking licence.
The Minister for National Development (Mr Lawrence Wong) (for the Prime Minister): Madam, I am taking this question on behalf of Deputy Prime Minister Tharman Shanmugaratnam who is also Chairman of the Monetary Authority of Singapore (MAS). As Singapore's financial centre grows in scale and sophistication, we have to be vigilant against the risk of its abuse for illicit financing activities. Indeed, all international financial and business centres face the risk of being used as a conduit for money laundering and terrorist financing activities. Singapore has taken this risk very seriously and we have in recent years significantly enhanced our regime for tackling money laundering and illicit financing risks.
Our regime against money laundering comprises four key elements: strict regulations, rigorous supervision, effective enforcement and good cross-border cooperation.
Financial institutions are the critical gatekeepers against the flow of illicit funds. So, we require financial institutions to comply with strict anti-money laundering regulations and to have in place robust controls to detect and deter illicit activities. More recent measures taken to strengthen our regime include criminalising the laundering of serious tax offences; enhancing MAS' Notices and Guidelines in line with evolving international standards; and stepping up our inspections of financial institutions.
MAS will not hesitate to take firm actions against financial institutions whose anti-money laundering controls are found to be lacking. As Mr Ong has highlighted, MAS decided to withdraw the merchant bank status of BSI Bank for recurrent and serious breaches of anti-money laundering control requirements and MAS has also referred six members of the bank's senior management and staff to the Public Prosecutor. Our regulatory and law enforcement agencies also share information and cooperate closely with their foreign counterparts.
We are also making organisational changes so as to enhance MAS' supervisory focus and effectiveness at a time of increasing sophistication of illegal money flows globally. So, MAS will consolidate supervisory responsibilities relating to money laundering and other illicit financing risks in a dedicated department. MAS will also have a new enforcement department that will work closely with the Commercial Affairs Department (CAD) to investigate money laundering and other financial market offences.
Mr Ong Teng Koon (Marsiling-Yew Tee): I would like to thank the Minister for his comprehensive reply. It is heartening to know that we have a robust suite of measures. But I would like to ask the Minister how he intends to mitigate the higher operating costs for financial institutions to comply with these enhanced anti-money laundering measures in order to help them stay competitive globally.
Mr Lawrence Wong: Madam, I understand the Member's concerns about the competitiveness of our banks and financial institutions. And, indeed, the higher cost will be a cause for concern with regard to competition if our banks were to do it alone whereas other banks elsewhere do not have to comply with these same requirements.
But the reality is that these new requirements are imposed across the board. These are new international standards that all financial institutions are complying with. So, it does increase compliance cost but it is being done across the board and is applied on all financial institutions, be it in Singapore or internationally. So, I think this is an increased cost but it is a cost that financial institutions would have to bear in order to be more effective in the global fight against money laundering and against terrorism financing.