SINGAPORE - The Monetary Authority of Singapore (MAS) has intensified efforts to stamp out money laundering and terrorism financing, but more could still be done, assistant managing director Chua Kim Leng said on Thursday (July 27).
Mr Chua told a financial crime seminar organised by the Association of Banks in Singapore that stepping up such efforts is ever more important today as criminals are constantly finding more creative ways to perpetrate crimes, be it laundering money, financing terrorism or weapons proliferation, or engaging in fraud or insider trading.
Technology can help, he added, noting that the MAS is working closely with a group of banks in Singapore that have come together to build a joint utility for Know Your Customer (KYC) processes.
"Robust KYC processes are the frontline of our defences. The utility... can free up resources and allow banks to focus on the more complex aspects of customer due diligence and ongoing monitoring, including monitoring and investigating unusual and suspicious transactions," he said.
"A well-designed and well-executed utility can also offer efficiencies of scale and reduce the need for customers to provide the same information to multiple institutions."
Such a utility is pertinent, as the MAS has observed, through the course of its supervisory work and industry engagement, that one common way criminals get their funds into the financial system is by abusing offshore companies and investment funds.
"A small number of individuals may use trust and company service providers to set up a large number of corporate structures in multiple countries. Many of these are shell companies with no apparent economic purpose," he said.
These companies and investment funds open numerous bank accounts in different jurisdictions, then move large sums of money back and forth among themselves.
Such "layering" and "pass-through" methods are used to disguise the origin and ultimate destination of the money, as well as the true beneficiaries and purpose of these transactions.
And so banks need to know their customers well, and be alert to patterns, behaviours and transactions that are inconsistent with what they know of their customers' wealth, business and risk profile, because these could potentially be tell-tale signs of illicit activities, Mr Chua said.
He added that there is also room in the area of transactions monitoring and, here, technology could also help.
Current systems largely flag out transactions based on pre-set rules, thresholds and scenarios, which generate a high rate of false positives. These alerts require extensive human effort to review.
"Throwing more 'warm bodies' at the problem is not a sustainable solution," he said.
"This is where better use of technology can help. The next generation of surveillance systems utilise sophisticated, techniques, such as machine learning, which can help identify unusual patterns of transactions across a network of entities and across time."
These systems show promise and could succeed in picking out suspicious activities that are impossible for the human eye today, he added.