Money laundering is a financial crime that involves disguising the origins of criminally obtained money so that it appears to be from a legitimate source.
It often accompanies activities like illegal arms sales, embezzlement, smuggling, bribery, insider trading, computer fraud schemes and organised crime. Financial institutions have an obligation to perform anti-money laundering (AML) activities to comply with legal requirements to identify and report suspicious activities.
In 1989, the global Financial Action Task Force (FATF) was formed to promote international standards to prevent money laundering. Its mandate was expanded following the 9/11 attacks to combat the financing of terror activities as well. TA low estimate of the amount of money laundered globally in a year is between US$800 billion and US$2 trillion.
The primary law in Singapore relating to money laundering is the Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act (CDSA) and, for terrorist financing, it is the Terrorism Suppression of Financing Act. In January 2020, the Payment Services Act (PSA) took effect, superseding two previous acts. Amendments to the act in January 2021 set out additional regulatory expectations for payment service providers.
In addition to adhering to AML standards for the purposes of combatting money laundering and maintaining compliance, financial institutions benefit through protection of their brand reputation and shareholder value. Usually, the risks of not following the AML regulatory framework falls into the following risks:
The Monetary Authority of Singapore also issues notices of secondary legislation with guidelines on Anti Money Laundering and Terrorism Financing to Payment Service Licensees to adhere to. The RAS focuses on training members on this area and has conducts at least 2-3 workshops annually for the benefit of members.
PS Notice 01 depicts the regulatory requirements for Anti Money Laundering which Payment Services Licensees need to follow.Download PSN 01 here