S’pore tough on financial crime but some improvements needed: Global financial watchdog report

A report by the Financial Action Task Force (FATF) points to successes in Singapore’s fight against financial crime, but says improvements are needed in measures to tackle money laundering and terrorist financing.

The global financial crime watchdog noted the Republic’s innovative approaches towards tackling financial crime, and said strong coordination has helped the country successfully close loopholes and combat scams.

Ms Elisa de Anda Madrazo, the president of FATF, said: “Facing unique and accelerating illicit finance risks, Singapore has had success in following the money, thanks to new and innovative approaches.

“As one of the epicentres of the global fraud epidemic, Singapore has made important strides in addressing the rising threat of fraud. Singapore must now step up efforts to ensure action is targeted towards the biggest threats.”

Fraud, particularly scams and cyber-enabled fraud, is the most prominent money laundering threat facing Singapore, FATF said.

It noted that over the last five years, Singapore’s law enforcement agencies have opened more than 11,000 money laundering investigations.

However, a majority of the investigations involved low-level money mule cases related to cyber-enabled fraud.

The assessment found this limits the pursuit of higher-value and more complex money laundering networks, and the recovery of more substantial criminal assets connected to transnational actors.

Formed in 1989, the 40-member FATF sets international standards to help the authorities target illegal funds linked to serious crimes.

Members undergo periodic peer reviews to assess the effectiveness of their systems across 11 key areas, known as immediate outcomes, and 40 technical compliance aspects.

Singapore, which joined the group in 1992, is among the first few countries to undergo the process in the fifth round of FATF’s mutual evaluations.

Following a July 2025 on-site visit by an international assessment team, the watchdog’s latest assessment of the period from 2020 to 2025 found that Singapore remains in good standing, building on its strong 2016 evaluation.

In the 300-plus page report, FATF flagged concerns regarding representation offices of foreign flag states.

Under maritime law, ships must register under a state flag, which dictates compliance with international regulations.

Private companies often register vessels on behalf of these states for a share of the profits, and several such offices operate in Singapore.

The report found that these offices are highly exposed to proliferation financing risks due to Singapore’s geographical position and its status as an international financial centre, and a hub for trade, transport, maritime and virtual assets.

Proliferation financing involves funding weapons of mass destruction and evading international sanctions.

North Korea, for instance, frequently bypasses global sanctions using tactics like illegal ship-to-ship transfers at sea, with the most recent incident reported by New Zealand in April.

According to the FATF report, if the offices in Singapore fail to prevent these complex evasion techniques or illicit financial flows, they could inadvertently facilitate illegal weapons programmes.

The watchdog said that when its assessment team met with these entities, it found that the staff had very low awareness of their legal obligations, particularly regarding compliance with sanctions against North Korea.

Singapore’s effectiveness rating for counter-proliferation financing fell from “substantial” in 2016 to “moderate” in the latest review.

FATF noted that the Maritime and Port Authority of Singapore and the Monetary Authority of Singapore (MAS) have recently begun engaging with these offices.

But oversight remains a challenge, as some of these private companies have offices within embassies, which may grant them diplomatic immunity.

Asset recovery

The report showed Singapore’s ratings improved in four immediate outcomes – asset recovery, terrorist financing investigations and prosecutions, supervision and preventive measures among financial institutions and virtual asset providers, including cryptocurrency exchanges, and supervision and preventive measures among non-financial businesses and professions such as real estate agents and dealers of precious metals.

The effectiveness of all four was bumped up to “substantial”, indicating that only moderate improvements are needed.

Cases like the $3 billion money laundering probe demonstrated Singapore’s strengths in asset recovery, the use of financial intelligence, and its political commitment to preventing the misuse of its financial system, the report said.

FATF said Singapore can improve its measures in dealing with unregistered foreign companies.

The report noted that while such companies are incorporated outside of Singapore, they can legally operate here without registering with the Accounting and Corporate Regulatory Authority if they restrict their activities to things like maintaining a bank account, investing funds, or holding property.

This was because of a threshold set over 50 years ago and does not reflect Singapore’s current risks as a financial hub, the report said.

FATF made a number of recommendations following the assessment, including the expansion of COSMIC, which stands for Collaborative Sharing of Money Laundering/Terrorism Financing Information and Cases.

The centralised digital platform launched in 2024 has enabled the six major commercial banks in Singapore to voluntarily share information with one another about suspicious customers.

In its first year of operation, this led to the closure of over 1,150 suspicious customer accounts and the detection of two suspicious networks.

The FATF assessment also found that Singapore performed very strongly overall across the 40 technical compliance aspects, with 24 “compliant” ratings and 14 “largely compliant” ratings.

There were two “partially compliant” ratings, with some gaps in how Singapore verifies the accuracy of beneficial ownership information and trusts.

In a joint statement, MAS, the Ministry of Home Affairs and Ministry of Finance welcomed FATF’s recommendations and said that Singapore will continue to maintain an effective regime to safeguard its reputation as a credible financial centre and business and trading hub.

The agencies said that similar to mutual evaluations of other jurisdictions, FATF had identified areas where Singapore can further strengthen its framework.

For example, the report noted that Singapore’s financial institutions and virtual asset service providers generally demonstrate a good understanding and awareness of their proliferation financing risks and counter-proliferation financing obligations.

The agencies acknowledged that the level of proliferation financing risk awareness can be improved in certain sectors that are not traditionally subject to FATF obligations, such as representation offices of foreign flag states.

The agencies added: “We are aware that Singapore, like other open economies, will continue to face nefarious actors who seek to exploit our economy and financial system for illicit purposes.

“Singapore will carefully study the recommendations by the FATF and assess how we can adopt them in Singapore’s context and in a risk-proportionate manner.”

$3b money laundering case exposed gaps in S’pore’s corporate gatekeeping systems: FATF

The largest money laundering case here demonstrated the strengths of Singapore’s asset recovery capabilities, but also exposed vulnerabilities in its corporate gatekeeping systems.

In its latest assessment report on Singapore released on May 6, the Financial Action Task Force (FATF) said the $3 billion case, one of the world’s largest crackdowns on money laundering in 2023, showed how attractive the Republic is to criminals.

The probe came in the wake of a surge in luxury property purchases in Singapore in 2021, with reports raising concerns about sources of wealth, including dubious support documentation.

Over a period of 18 months, a multi-agency task force coordinated intelligence and investigations, with the police sending 33 informal requests to 10 jurisdictions and Singapore’s financial intelligence unit engaging with the units of at least 10 other jurisdictions.

At the same time, the police received 63 requests from 18 jurisdictions.

On Aug 15, 2023, simultaneous raids were conducted across the island. It led to the arrest of 10 foreigners who were linked to organised crime, including scams and online gambling.

Some $3 billion in assets, including cash, properties, cars, liquor, jewellery, watches and luxury bags, were seized.

The 10 were later convicted and jailed, while 15 others who left Singapore earlier agreed to forfeit about $1.85 billion worth of assets in exchange for having the Interpol notices on them withdrawn.

According to the assessment report, the case highlighted the quality of Singapore’s law enforcement and its political commitment to preventing the misuse of its financial system.

It noted how the case had accounted for 47 per cent of the $6.3 billion in seizures from 2020 to 2024. This, it said, showed Singapore’s strength in asset recovery.

The report also highlighted how the police had been able to manage an unprecedented volume of luxury goods, including purses and cars, and had preserved both the integrity of the evidence and the value of the items.

FATF said the case showed that Singapore was able to effectively handle complex money laundering cases and dismantle sophisticated organised crime networks, but it also exposed weaknesses in corporate governance.

The police had investigated over 20 companies linked to the 10 foreigners, and conducted probes into six professional intermediaries, including bankers, corporate service providers and real estate agents.

The report noted that lawyers and law practice entities were implicated in 26 breaches linked to the case, and the Ministry of Law took four law firms and a lawyer to task for breaches over the purchase of properties linked to the case.

Two property agents were fined for their involvement, and a corporate service provider allegedly linked to the case is facing forgery charges.

The Monetary Authority of Singapore took action against nine financial institutions, handing them $27.45 million in composition penalties for flouting anti-money laundering controls. It also took action against 18 individuals who worked for the financial institutions at the time.

In addition, a total of six single-family office funds in Singapore that were given tax benefits were found to be linked to the case and had their tax benefits withdrawn.

In the light of the case, the Government set up an inter-ministerial committee to review and improve Singapore’s anti-money laundering controls.

This led to several changes to the laws and the introduction of new data-sharing mechanisms, which the FATF report said show Singapore’s commitment to tackling financial crime.

FATF, in its assessment report, noted that as a result of the $3 billion case, Singapore had exemplified “its high-level political commitment to preventing the misuse of its financial system” and set up an inter-ministerial committee to review and improve the country’s anti-money laundering, counter-terrorist financing and counter-proliferation financing system.

“This committee and the measures it has put in place, including innovative amendments to legislation and new information and data-sharing mechanisms, represent the clearest manifestation of Singapore’s ongoing and active implementation of incremental and unique measures to take on those attempting to misuse Singapore’s financial system,” the global financial watchdog added.

International standards

Formed in 1989, the 40-member FATF sets international standards to help the authorities target illegal funds linked to serious crimes.

Members undergo periodic peer reviews to assess their systems’ effectiveness across 11 key areas, known as immediate outcomes, and 40 technical compliance aspects.

Singapore, which joined the group in 1992, is among the first few countries to undergo the process. This is the fifth round of the FATF mutual evaluations for the Republic.

Source: The Straits Times © SPH Media Limited. Permission required for reproduction.

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