SINGAPORE: A digital platform for financial institutions in Singapore to share information on suspicious customers or transactions will be set up after parliament passed the Financial Services and Markets (Amendment) Bill on Tuesday (May 9).
The new platform will be jointly developed by the Monetary Authority of Singapore (MAS) and six major commercial banks – DBS, OCBC, UOB, Standard Chartered Bank, Citibank and HSBC.
These banks will be given access to the platform, called the Collaborative Sharing of Money Laundering/Terrorism Financing Information and Cases (COSMIC).
It is set to be rolled out in phases, starting from the second half of 2024.
In the initial phase, COSMIC will focus on three key financial crime risks in commercial banking, namely abuse of shell companies, misuse of trade finance for illicit purposes and financing that aids the proliferation of weapons of mass destruction.
Sharing of information will be voluntary during this initial phase that will last for two years.
This is to allow the platform to achieve operational stability while MAS engages financial institutions to calibrate features and address operational issues, said Minister of State for Trade and Industry Alvin Tan as he tabled the Bill for a second reading.
MAS intends to make information sharing mandatory for higher-risk situations in the later stages, as well as widen COSMIC’s coverage to include more risk areas and financial institutions.
Further legislative amendments will have to be proposed in the later stages to effect these mandatory requirements. MAS will consult the industry and the public before introducing these amendments, a spokesperson told CNA.
WHY IS THIS NEEDED?
The initiative is part of efforts to beef up Singapore’s defences against money laundering and financing of criminal activity.
Mr Tan, who is a board member of MAS, said that while financial institutions have made significant strides in this aspect, they are currently unable to warn one another about unusual activity involving their customers given customer confidentiality obligations.
“Criminals exploit this by making illicit transactions through different financial institutions to avoid detection,” he added.
COSMIC, which aims to eliminate these information gaps, will “make it easier for financial institutions to detect and thereby deter criminal activity”, Mr Tan told the House.
Currently, Singapore’s Banking Act mandates that regulated financial institutions and their officers uphold confidentiality when handling customer information.
A private-public partnership, dubbed Anti-Money Laundering and Countering the Financing of Terrorism Industry Partnership (ACIP), was established in 2017 to allow the MAS, the Commercial Affairs Department (CAD) and financial institutions to share specific information on a case-by-case basis.
Such a mechanism has “built trust among stakeholders” and demonstrates the benefits of information sharing, MAS said in response to CNA’s queries.
COSMIC will allow such information sharing “to be conducted at scale and in a structured format, to more efficiently and effectively pick out suspicious actors”, the spokesperson said.