Misuse of trade finance, abuse of shell companies and proliferation financing targeted in Singapore’s digital platform for information sharing

Countering the misuse of trade finance for illicit purposes, abuse of shell companies and proliferation financing (PF) will be the initial three key financial crime risks in commercial banking focused on in Singapore’s new ambitious digital platform for financial institutions (FIs) to share information.

The digital platform and an accompanying enabling regulatory framework will be introduced by the Monetary Authority of Singapore (MAS) for FIs to share with one another relevant information on customers and transactions to prevent PF, money laundering (ML) and terrorism financing (TF).

The authority is now seeking feedback on the proposed legislative framework for and features of the platform called COSMIC, which stands for Collaborative Sharing of ML/TF Information and Cases.

Lack of information exchange

An essential aim of the platform is to address the challenge most FIs face of being unable to warn one another about unusual activity in customers’ accounts.

The lack of information exchange between FIs is frequently exploited by financial criminals to make illicit transactions through a web of entities with accounts in different FIs, such that each FI on its own does not have sufficient information to detect these transactions in a timely manner.

COSMIC aims to enable FIs to securely share information on customers or transactions, where they cross material risk thresholds according to MAS, which says such information sharing will help FIs identify and disrupt illicit networks.

Co-created with banks

The COSMIC platform is co-created by MAS and six major commercial banks in Singapore – DBS, OCBC, UOB, SCB, Citibank and HSBC – and the authority says it will have strong security features to prevent unauthorised access to information.

It will be operated by MAS and the authority will provide in legislation that information shared by FIs will only be used to combat ML, TF and PF. All participants on the platform will be required to implement robust measures to safeguard against unauthorised use and disclosure of COSMIC information.

MAS claims that the platform, which it plans to launch in the first half of 2023, will be the first centralised platform where information is shared in a structured format that allows for seamless integration with data analytics tools to help FIs collaborate productively and at scale.

Call for feedback

Feedback is now being sought by MAS on the proposed legislative framework for COSMIC, as well as the platform’s features.

MAS invites interested parties to submit their comments by 1 November 2021 on the proposals and legislative amendments outlined in its Consultation Paper on the FI-FI Information Sharing Platform for AML/CFT, which can be accessed here.


Categories: Trade Based Financial crimes News

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