Big data and machine learning are being considered as weapons against money laundering as the Monetary Authority of Singapore works to restore Singapore's reputation as a clean financial centre.
MAS managing director Ravi Menon told a briefing on Monday: "We are using data analytics to enhance market surveillance, to help us identify potential market misconduct and investigate specific offences.
"For example, we are exploring the use of machine learning algorithms to identify manipulative trading behaviour in the capital markets or to detect patterns across suspicious money-laundering transactions."
His comments came in response to breaches of anti-money laundering rules related to the 1MDB scandal, which "have made a dent in our reputation as a clean and trusted financial centre", added Mr Menon.
While the MAS has vowed to step up supervision and enforcement, including starting a dedicated anti-money-laundering department, technology needs to play an equally important role, experts said.
"Modern analytics platforms enable blending of many sources of data, reducing the time to build data store to satisfy the analysis," said Mr Stuart Ward, financial services director of Qlik Asia Pacific, which provides solutions for data analytics and business intelligence. "Compliance teams are increasingly moving away from periodic audits to real-time alerting and the building of a database of suspicious activity markers."
These steps could cover the gaps in internal controls that can be abused as illicit activity becomes increasingly sophisticated.
Dr K. N. Kumar, area head for IT at S P Jain School of Global Management, noted: "A lot of of internal controls have serious weaknesses that may be exploited."
But machine learning - a form of artificial intelligence that can learn and adapt on its own - is still a new frontier for the financial industry.
"The use of machine learning technology... represents an interesting and exciting opportunity to enhance the prevention and detection of financial crimes, including money laundering," said PwC Singapore partner Richard Major, who focuses on financial crimes.
Regulators and banks are spending huge sums to improve their monitoring capabilities, he added.
Dr Kumar said collaboration is another approach: "There is a strong opportunity for the MAS and banks to collaborate with the vibrant fintech start-up ecosystem."
