The Republic’s central bank is creating a digital platform that will compel financial institutions to securely exchange information on questionable clients or transactions in order to cleanse fraudsters who are transferring filthy money via Singapore’s financial institutions.
The new platform, Dubbed Cosmic (Collaborative Sharing of Money Laundering and Terrorist Financing Information and Cases), will focus on three key financial crime risks in commercial banking, including the abuse of shell companies, trade-based money laundering, and proliferation financing, according to the Monetary Authority of Singapore (MAS) on Friday.
The new Act will include Cosmic’s proposed legislative structure as well as the platform’s functionality. Regulators will undertake legal reforms to lift banking secrecy as a result of this action.
Safe-harbor laws allow financial firms to share information in jurisdictions such as the United States and the United Kingdom. These are legal provisions that limit or remove legal responsibility in specific situations.
The Banking Act of Singapore presently requires licensed financial institutions and their officials to maintain confidentiality while handling client information. Currently, financial institutions in Singapore can exchange information on a case-by-case basis with law enforcement agencies.
With Cosmic, a bank that notices several red flags in the behavior of its clients may seek information from other financial institutions to analyze its odd discoveries. The bank should next notify its peer institutions, which have connections to higher-risk operations, of these red flags. Using a watchlist, the bank should then warn other financial institutions of suspicious rogue actors.
The MAS stated in a consultation paper issued on Friday that information sharing via Cosmic will not be mandatory in the initial rollout, but will be mandated in later phases. Financial institutions that violate these criteria may face penalties, as may those who reveal risk information to their counterparts without first fulfilling the platform’s requirements.
To avoid bogus inquiries or “fishing expeditions,” certain criteria are established into the platform. When questionable actors are detected across financial institutions, the Cosmic platform would immediately elevate such information to the MAS.
MAS said in a statement on Friday: “While other countries have implemented information-sharing arrangements among financial institutions, the Cosmic platform will be the first centralized platform where information is shared in a structured format that allows for seamless integration with data analytic tools. This will allow financial institutions to work more successfully and at a larger scale.”
The MAS will collaborate with six major Singapore commercial banks, including DBS, OCBC, UOB, Standard Chartered, Citibank, and HSBC, to develop the platform. It is planned to be rolled out to these six banks in H1 2023, followed by other financial institutions in later phases. At a later time, other danger zones might be added.
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