Banking sector poses highest money laundering risk in Republic: Report

The outsize role banks play in Singapore’s financial sector puts them at highest risk of being used by criminals seeking to launder dirty money.

- Angela Tan

The observation came in an updated government report released on June 20 that outlined just how vulnerable banks here are to criminal exploitation.

“As an international business, financial and trading centre with an open economy, Singapore is inevitably exposed to the threats of complex transnational money laundering, including by criminal syndicates and professional criminal elements seeking to... launder illicit funds from abroad,” said the joint report by the Ministry of Home Affairs, Ministry of Finance and Monetary Authority of Singapore (MAS).

Singapore, whose banking sector had a total asset size of almost $3.5 trillion as at the end of 2023, has been ranked by the International Monetary Fund as one of 29 systemically important financial centres in the world.

The country hosts more than 1,000 financial institutions and has one of the world’s fastest growing wealth management centres, with 76 per cent of the assets under management originating from outside Singapore as at the end of 2022.

The authorities have observed a wide range of laundering techniques, including complex and syndicated money laundering involving bank accounts and payment accounts, structures such as shell companies and trusts, and other structures spanning multiple jurisdictions and sectors.

Money laundering and terrorism financing have become more complex due to geopolitics and the increased use of sophisticated financial and business structures, said the report, which has been updated from 2014.