Singapore's central bank to launch new digital platform to fight illicit banking transactions

The Cosmic platform has been co-created by MAS and six major commercial banks in Singapore. PHOTO: ST FILE

SINGAPORE - Singapore will be armed with a new digital layer of security by 2023 against financial transactions intended to fund criminal and terrorist activities and the development of weapons of mass destruction.

The Monetary Authority of Singapore (MAS), which regulates one of the most trusted and secure financial hubs, announced on Friday (Oct 1) that it will launch a data and information-sharing platform, named Cosmic, to prevent money laundering, terrorism funding and proliferation financing.

Cosmic will allow financial institutions to securely share in a timely manner with one another information on customers or transactions, where they cross material risk thresholds.

"Such information sharing will help financial institutions identify and disrupt illicit networks, thus helping to safeguard the Singapore financial centre," the Republic's central bank said in a statement.

The Cosmic platform has been co-created by MAS and six major commercial banks in Singapore - DBS, OCBC, UOB, Standard Chartered, Citibank and HSBC.

The six banks will continue to co-develop the platform with MAS, and will be the initial users when it is rolled out in 2023 alongside a regulatory framework to govern the information sharing.

MAS plans to progressively extend Cosmic's coverage to more financial institutions and make some aspects of sharing mandatory.

Cosmic will initially focus on three key financial crime risks in commercial banking - abuse of shell companies, misuse of trade finance for illicit purposes, and proliferation financing. More focus areas will be added later.

"MAS will provide in legislation that this information sharing by financial institutions is permitted only for the purpose of combating money laundering, funding terror and proliferation financing," the central bank said.

It will also start on Friday a public consultation process on the proposed legislative framework for Cosmic, as well as the platform's features.

"MAS invites interested parties to submit their comments on the proposals and legislative amendments, outlined in the consultation paper by Nov 1, 2021," it said.

The central bank said Cosmic will have strong security features to prevent unauthorised access to information, and will be operated by MAS.

MAS will also require all Cosmic participants to implement robust measures to safeguard against unauthorised use and disclosure of Cosmic information. It will supervise financial institutions (FIs) for compliance with these requirements and take action against errant ones.

Ms Loo Siew Yee, assistant managing director for policy, payments and financial crime at MAS, said Cosmic will significantly enhance the ability of FIs here to detect and curb suspicious activity, while minimising the impact on legitimate actors.

"The information-sharing framework is designed to target serious criminal behaviours and allow FIs to more quickly detect the bad actors to purge and deter them. It will strengthen Singapore's position as a trusted financial centre and place to do business, where FIs can better serve the vast majority of legitimate customers."

MAS said Cosmic, which stands for Collaborative Sharing of Money Laundering, Terrorism Financing Information and Cases, will help FIs warn one another about unusual activity in customers' accounts - a common challenge they face in most jurisdictions.

"This gap is frequently exploited by financial criminals to make illicit transactions through a web of entities with accounts in different FIs, such that each FI on its own does not have sufficient information to detect these transactions in a timely manner."

Mr Lam Chee Kin, DBS Bank's group head of legal, compliance and secretariat, said that technology, and public-private partnerships, are game changers in the fight against financial crime.

Ms Loretta Yuen, the head of group legal and regulatory compliance at OCBC Bank, said that while banks have been investing significantly in infrastructure over the years, they have been fighting these crimes very much on their own, which limits their ability to effectively prevent fallout.

"Bad actors in financial crimes typically use bank accounts from different banks over a period of time to hide and spend the illicit funds. By sharing data and information of suspicious accounts at the first instance on a common platform, it will send red flags quickly across the network to stop other banks from being used for financial crimes," she said.

Mr Jamil Ahmed, chief compliance officer of HSBC Singapore, said Cosmic will allow the bank to further build its existing capabilities to detect, analyse and mitigate financial crime.

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