Singapore effective in tackling financial crime including money laundering: Report

SINGAPORE – The Financial Action Task Force (FATF) found Singapore to have a competent and coordinated regime to tackle financial crime challenges, in a report released on May 6.

The 40-member global financial watchdog sets international standards to help the authorities target illegal funds linked to serious crimes.

Members undergo periodic peer reviews to assess their systems’ effectiveness across 40 technical compliance aspects and 11 key areas, known as immediate outcomes, which are rated as high, substantial, moderate or low.

Following a July 2025 on-site visit by an international assessment team, Singapore was rated substantial in seven areas and moderate in four, in the watchdog’s latest assessment of the period from 2020 to 2025. This is an improvement from the last report in 2016, when Singapore received four “substantial” ratings, six “moderate” and one “low”. The rating with regard to proliferation financing, which refers to funding weapons of mass destruction and evading international sanctions, was the only one that was downgraded from substantial to moderate.

This was after the watchdog looked at certain sectors that are not traditionally subject to anti-money laundering, counter-terrorist financing and counter-proliferation financing obligations, such as representation offices of foreign flag states.

Under maritime law, ships must register under a state flag, which dictates compliance with international regulations.

Private companies often register vessels on behalf of these states for a share of the profits, and several such offices operate in Singapore.

1. Risk, policy and coordination

The 300-plus page report found that Singapore has strong political commitment to tackle financial crime. It added that it takes a coordinated approach across the Government to do so.

However, Singapore could improve in its understanding of risks, which currently lacks nuance and details in certain areas such as cross-border flows. It also requires clearer specific actions, deliverables and implementation timelines, and greater consistency in operational alignment and supervisory coverage.

2. International cooperation

Singapore has a sound framework, allowing it to seek a broad range of international assistance. It executes a majority of the mutual legal assistance requests it receives, though FATF noted that this is partially hindered by a high legal bar that requires them to be of “substantial value” to be executed.

The report noted that the Republic also seeks international cooperation through formal and informal channels, driven mainly by fraud cases.

3. Financial sector and virtual asset service providers

Financial institutions and virtual asset service providers, such as cryptocurrency exchanges, have a solid understanding of financial crime risks here because of efforts by the authorities. There have also been increased sanctions against individuals who breach regulations, though FATF noted that these remain relatively low. It suggested more deterrent measures and greater outreach, particularly in higher-risk sectors, and the expansion of digital platform COSMIC (Collaborative Sharing of Money Laundering/Terrorism Financing Information and Cases).

Launched by the Monetary Authority of Singapore (MAS) in 2024, the platform allows financial institutions to securely share with one another information on customers who exhibit multiple “red flags” that may indicate potential financial crime concerns.

4. Non-financial sector

The understanding of financial crime risks varied among those in the non-financial sector. FATF found that while those in mature sectors like casinos and accountants showed good compliance, newer regulated sectors like precious stones and metals dealers have a less granular but improving understanding. It also said that financial penalties from sanctions were not dissuasive.

5. Transparency and beneficial ownership

Singapore has a reasonable understanding of financial crime risks from companies here, but has a weaker grasp when it comes to foreign trusts, unregistered foreign companies and more complex company structures.

There are gaps in coverage for such entities when it comes to identifying their beneficial owners, with heavy reliance on corporate service providers at the point of incorporation.

FATF said this is insufficient to deal with the risks, and that laws with regard to unregistered foreign companies may be outdated as they are from over 50 years ago.

6. Financial intelligence

Singapore’s financial intelligence unit, the Suspicious Transaction Reporting Office, has received over 280,000 reports since 2020. It uses sophisticated systems to produce financial intelligence, but more could be done to use it for higher-risk offences, said FATF.

7. Money laundering

There were over 11,000 money laundering investigations opened by law enforcement from 2020 to 2025, which is very significant for a small country like Singapore. However, most of these related to scams and focused on money mules, with fewer investigations into tax crimes and corruption.

FATF said the focus on scams and resources poured into such cases were at the expense of major transnational investigations.

8. Asset recovery

Asset recovery is a political priority, and Singapore has shown it is effective in this aspect. However, issues with regard to identifying beneficial owners and breaking down complex corporate structures limit asset tracing, and in turn hinder recovery.

FATF noted that Singapore appears to be seeking assistance from foreign counterparts mostly through informal channels, and is less successful in its use of formal international cooperation. It added that the Republic does not seek the enforcement of its own foreign confiscation orders abroad, which may lower the chances of final confiscation or repatriation of assets to Singapore.

9. Terrorist financing investigations and prosecutions

Singapore opened 126 terrorist financing investigations in a five-year period, prosecuting six cases that involved individuals sending small amounts of their salaries overseas to support global terrorist activities.

FATF said that while investigative techniques were sound, there were opportunities for broader investigation of potential organisational terrorist financing and concealed income. It recommended that policies and procedures be enhanced to have a broader suite of tools, including other criminal justice measures, to disrupt terrorist financing where it is not practicable to secure a conviction.

10. Terrorist financing preventive measures and sanctions

During the assessment period from 2020 to 2025, Singapore froze a total of $1.3 million linked to terrorist financing.

Financial institutions and virtual asset service providers in Singapore showed a sound understanding of their obligations to prevent terrorist financing, but there were varying levels of understanding among those in the non-financial sectors.

FATF said there was room for improvement in the freezing of funds and assets linked to terrorist financing, rather than immobilising only the individuals investigated for such offences.

11. Proliferation financing

This was the only area in which Singapore’s rating was downgraded from the previous report.

While FATF said the country has a strong legal framework when it came to proliferation financing obligations, it took issue with the representation offices of foreign flag states operating in Singapore. These offices appeared to have a very low awareness of their obligations, particularly when it came to sanctions against North Korea.

FATF noted that they do not appear to be complying with their obligations, and Singapore’s outreach to them was a recent development.