Fraud prevention: Customers are seen using ATMs at a DBS bank branch in Singapore. The lender, alongside five others, will collaborate with the Cosmic platform to thwart financial criminals who avoid detection through an ever-shifting web of accounts. — Bloomberg
SINGAPORE: Banks that agree to share details of customers suspected of money laundering on a proposed digital platform will be allowed to do so voluntarily in its initial phase.
This will give them time to get familiar with using the Collaborative Sharing of Money Laundering/Terrorism Financing Information and Cases (Cosmic) platform.
The Monetary Authority of Singapore (MAS) said the platform will also need time to reach operational stability.
A Bill to amend the Financial Services and Markets Act to set up Cosmic and set out rules governing its initial phase was put up for first reading in Parliament by minister of state for Trade and Industry Alvin Tan.
“During this voluntary phase, MAS will be closely engaging the participant financial institutions to understand and address any operational concerns, and make adjustments to the platform or requirements, as necessary,” the authority said in response to queries from The Straits Times.
MAS earlier said, in a statement, that it plans to make some aspects of information sharing mandatory and progressively extend Cosmic’s coverage to more areas and financial institutions in subsequent phases.
Jointly developed by MAS and six major banks in Singapore, Cosmic will allow enrolled institutions to request and share information on customers whose banking habits raise multiple red flags pointing to possible criminal activities.
The six banks – DBS Group Holdings Ltd, OCBC, UOB, Standard Chartered, Citibank and HSBC – will be the first to use Cosmic, which aims to thwart financial criminals who avoid detection through an ever-shifting web of accounts.
Cosmic will operate alongside existing requirements for all financial institutions to have robust controls to detect and prevent suspicious activity, as well as report such activity to the Suspicious Transaction Reporting Office of the Commercial Affairs Department, said MAS.
The proposed platform will initially focus on three key risks in commercial banking: abuse of shell companies; misuse of trade finance for illicit purposes; and financing that supports the proliferation of weapons of mass destruction.
In a consultation paper issued in October 2021 on Cosmic, these areas were identified as priority targets, in line with Singapore’s national strategy to fight serious financial crime.
The thresholds and red flags for suspicious banking behaviour will be based on past global and domestic cases in the key risk areas, but will remain confidential to prevent tipping off offenders.
The red flags could include signs of a fictitious company profile, financial transactions without a clear economic purpose such as “round tripping” funds back to the sender, or seemingly-unrelated companies that actually have the same beneficial owners doing business with each other.
The thresholds will be adjusted over time as criminals’ methods evolve. The six banks have said the new platform lets them collaborate on detecting illicit activity quicker and help preserve Singapore’s position as a global financial centre. — The Straits Times/ANN
