On July 25, Ravi Menon, managing director of the Monetary Authority of Singapore (MAS), announced that MAS will pursue more “intrusive” money-laundering inspections of financial institutions that MAS has identified as having a “higher risk” of being conduits for money laundering and illicit financing. This announcement came after the discovery that local financial institutions had been used as conduits for funds in transactions connected to 1Malaysia Development Berhad (1MDB), the government development fund of Malaysia.
On August 1, MAS introduced a dedicated anti-money laundering department to streamline anti-money laundering and counterterrorist financing (AML/CFT) policies. A dedicated supervisory team is being established to monitor risks and perform on-site inspections of financial institutions. This department will perform functions that were previously divided among MAS departments. MAS is also in the process of forming a separate enforcement department to investigate suspected violations.
MAS also declared in its 2015-16 annual report that it will be “exploring the use of machine learning algorithms to … detect patterns across suspicious money laundering transactions” and “using data analytics to enhance market surveillance.”
In view of this more aggressive supervisory and enforcement regime, it is critical for financial institutions with operations in Singapore to review their AML/CFT due diligence processes and policies and step up ongoing monitoring.