Money Laundering In Singapore: Definition, Risks, And Stakeholder Impact

Why Is Money Laundering?

How Is Money Laundering Done In Singapore?

This study deals with defining money laundering and its consequence on recent economy of Singapore[1]. The current segment defines money laundering as a process that in real is used by criminals to obtain money through illegal means such as drug trafficking, terrorist activity and many others. The next segment give proper reason on what makes Singapore the main attraction for these types of activities as it is known that Singapore is the destination of money laundering activities. The present study gives an overview of facts where it explains reasons behind money laundering activities and the viewpoint of money launderers in the given society. Money laundering is a serious issue that should be managed by the stakeholders (Commercial Affairs Department and Monetary Authority of Singapore) on an urgent basis. Currently, money laundering as well as terrorism financing had been increased under the global attention with Singapore as it is the financial hub place. Singapore, being the international financial center remains extremely vulnerable to the effects of terrorism[2]. To that, acts of terrorism in Singapore actually affect the assurance as well as status of the country as a safe and trusted worldwide financial centre

Money laundering is one of the processes that create the appearance where large amount of money are obtained by serious crimes such as terrorist activity, drug trafficking that are originated from legitimate source.

There are three steps involved in the procedure of laundering money and these steps are placement, layering and integration. Each of the steps is mentioned below with proper justification:

Placement- Placement is one of the steps of money laundering that refers to the act of introducing dirty money that is obtained through criminal means and illegitimate way into the financial system in some or other way[3].

Layering- Layering is one of the steps of money laundering that is the act of concealing the source of that money by means of series of complex transactions as well as bookkeeping activities.

Integration- Integration is one of the steps of money laundering that refers to the act of acquiring that money through use of legitimate means[4].

In this study, proper emphasis had been given on explaining money laundering in Singapore. Singapore is an attractive destination for money laundering activities because of bank secrecy laws as well as lack of usual currency coverage requirements. Hence, Singapore is a country where money laundering is possible in great ways such as drug trafficking, terrorist organization, criminals as well as their group seeking to launder money. Money laundering in Singapore is one of the significant issues that need urgent attention. Singapore is considered as one of the country that is international financial and investment center for this money laundering activities that takes place in this offshore financial center in Singapore. On analysis, it is noted that money laundering takes place majorly in the offshore sector and non-bank uch as large number of moneychangers as well as remittance agencies[5].

Money Laundering in Singapore

Singapore preserve as one of the lowest domestic crime rates in and across the world and thus the bulk of Singapore disclosure to money laundering risks takes place mainly from offenses committed activities or operations. It was argued by Financial Action Task Force in a statement that it is important to assess Singapore efforts against money laundering as well as countering the financing of terrorism at the same time[6]. The Financial Action Task Force came amid with the ongoing problems of Singapore such as money laundering that links to Malaysian State Fund and reveals a limelight on one of the foremost wealth management centers (1 Malaysia Development Berhad).

An International Group had monitored the cases of money laundering in Singapore that they should follow more offenders that are otherwise involved in international cases as well as take action to seize suspicious funds from moving to other city or state. Examination was conducted by the task force in Singapore in the year 2015 before Singapore ordered the shutdown of Swiss private bank that charges people in association with the probe as well as announced seizure of $240 million worth of assets. The task force did not mention about 1 Malaysia Berhad in their report.

It is important to know the underlying fact regarding why people launder money. Criminals obligate three types of crime such as crimes of passion or credit, economic crimes and crimes of violence. These are the crimes committed by the criminals to make money. Criminals commit crime to prove that they can do anything to get away with it through use of illegal means. The other reason is that they think of making more cash from the crime than they can make it from the same amount of lawful Endeavour[7].

When the criminals make money from crime, they actually use of three main purpose. The first one is to invest in another crime; the second one is hiding to use the money for later and third one is to spend the money now.

It is the tax evaders who launder money so that they can lie about money as well as assets that come from in order to avoid tax. They even hide the money in bank accounts that they think that revenue establishment can find out. They do it either by naming their children or any elderly relatives to hide the money. They even operate outside the part of the country where they live in and keep the records[8].

Why People Launder Money

Singapore has been busy with thinking of its defenses by drafting new laws as well as rolling out new measures for curbing the crime. The lawyers as well as accountants are getting on the act after aligning with the association for setting out guidelines and organizing workshops. There are significant gaps present that need right individual to deal the matter or work upon the transaction.

Singapore is a member of FATF as well as adopts government approach for fighting money laundering activities and intimidation financing. Recently, the Republic had been strengthened with regulatory oversight of the financial sector and non-financial sectors that include accountants, lawyers, real-estate salespersons and corporate service providers.

The Monetary Authority of Singapore had set up an Anti-money laundering department for streamlining the tasks for authoritarian strategy in relation to money laundering as well as other illegal financing risks. The role of central bank is to establish a enthusiastic supervisory team for monitoring these risks as well as carrying out on-site direction on how financial institutions supervise the risks as far as possible[9].

Commercial Affairs Department and Monetary Authority of Singapore are industry partner stakeholders who are fighting against any financial crimes. Both the stakeholders of Singapore announce the start of a government-industry company that will reinforce the ability to fight against money laundering as well as terrorism financing. These stakeholders bring together selected industry participants, law enforcement agencies regulators as well as other government entities that collaborates its identity, assessment as well as mitigating the key money laundering risks that is faced by Singapore[10]. These partner stakeholders actually enhance the detection as well as lessening of transnational risks that arises from Singapore position as the country is an global financial hub and trade hub.

The stakeholders comprise a Steering Group that supports working groups that look into detailed risk areas as well as topics in relation to money laundering activities. The Steering Group comprises by 8 banks as well as association banks of Singapore that identifies and prioritizes key money laundering risks for focusing on and communion in different working groups for studying these risk in the near future. There are different industry partners that will be present in both sides of financial sector and invited for sharing and contributing to these working groups and include of Steering Group and other representatives from the broader business. Furthermore, the working groups share the key facts with the private sector as well as other stakeholders for enhancing the communal considerate and improvement of money laundering risks[11].

Singapore's Defenses Against Money Laundering

The real-estate sector in Singapore whose Anti-Money Laundering necessities were also fairly promising needs to have time for instilling greater consciousness among its stakeholders and property manager recently

According to Monetary Authority of Singapore, Financial institutions are expected for reviewing the efficacy if and when needed in their existing Anti-Money Laundering controls that ensure that they can detect money of serious tax crimes that is either fraudulent or willful tax evasion[12]. This move actually affirms Singapore for taking allegations and undermines the level of competiveness in serious way and does not allow its financial system to be abused for facilitating serious tax crimes. In that way, it need to function as an assurance to economic stakeholders in and across the world where Singapore has the necessary framework for combating money laundering activities as well as bolstering its efforts for checking out the accounts that actually threatens peace and reputation. The partnered stakeholders actually institutionalize the close partnership between Singapore Government in the anti-money laundering matters. They need to engage in collaborative approach that will help in identifying as well as addressing money laundering risks from different viewpoint for better detection and defending Singapore against financial crimes.

It is noted that financial crimes topologies are increasing at fast pace where countries like Singapore need to find out smarter ways so that crimes can be minimized. The partnered key stakeholders will be the key enabler in this Endeavour. These stakeholders encourages and welcomes the industry members from both within as well as outside the financial sector for contributing actively to work with the partners and share the relevant products and better practices with the rest of the financial industry[13].

Money laundering is not an ethical term; rather it is a process where money can be obtained by criminal or illegitimate means such as corruption, drug trafficking and other serious crimes.

In Singapore, there are four different types of money laundering offences that is criminalized under CDSA. These offenses are committed when an individual commits the following crimes that are listed below:

Section 46 (1) and 47 (1): Under this section, a person conceals or disguises with any property that is derived from Drug Trafficking or from criminal behavior that transfers the property or removes it from Singapore[14].

Section 46 (3) and 47 (3): Under this section, a person can be punished if they know or has any sensible grounds to consider that any property is derived from Drug Trafficking or from criminal behavior where property is obtained from insufficient deliberation

Stakeholder Impact on Money Laundering

Section 46 (2) and 47 (2): Under this section, a person can be punished when it can be known that they are assisting any other person to commit offence that is mentioned above for avoiding any type of prosecution of money laundering for avoiding the enforcement of a elimination order for the given act.

Section 43 (1) and 44 (1): Under this section, a person can be punished if they assist any drug trafficker or a serious crime offender for retaining or controlling his benefits from the given criminal activities such as securing such funds or investing the funds[15].

TR (Suspicious Transaction Reports) need to be lodged if any person has the knowledge or has any sensible grounds to expect that any property is openly or ultimately associated with a criminal behavior or drug trafficking.

Under Section 39 (1) of the CDSA (Corruption, Drug Trafficking and other serious crimes or confiscation of benefits) Act, a person can imposes a duty where they can disclose any facts or doubt where any property indicate the property or linked or aligned to criminal activity[16].

f any person is found that they did not have nor report or lodge a complaint under the above section considered to be an offense under CDSA and punishable under Section 39 (2). By use of this section, a person, when found guilty will be liable on conviction to a fine that exceeds $20000.

The Singapore Government was of the opinion that enforcing agencies will help in strengthening their capabilities for identifying as well as investigating more money laundering cases of multifaceted transnational culture. In addition, the Paris-based Financial Action Task Force was of the opinion that Singapore has a rational understanding of its money laundering risks and get involved in taking steps for mitigating them as far as possible but there are still some gaps identified that need proper attention by the government. It is the responsibility of the law enforcing agencies for makes use of seizure as well as confiscation powers for seizing funds and assets that gets linked with crimes[17]. It was told by the Task Force to Financial institutions regarding demonstrating a sensibly good understanding of money laundering risks that impact domestic clients but less-developed understanding of risk of illegal flows in and across Singapore.

The Government of Singapore should find ways to reinforce its anti-money laundering command for dealing with precious stones as well as metal dealers at the same time. The authority of Singapore was of the opinion that they found problems with three top banks namely DBS Group, Standard Chartered Bank and UBS Group[18].

he Singapore authorities and government bodies are finding ways to work upon money laundering as well as terrorism financing with a new partnership. In addition, the Money Laundering and Countering the Financing of terrorism industry brings together different parties for fighting with such increased dangerous forces in and across the world. The Monetary Authority of Singapore as well as Commercial Affairs Department had together decided to fight against money laundering and terrorism financing. They need to work upon it as it will enhances the ability to combat crimes that took place from Singapore position as an international center and trade hub[19].

he Deputy Managing Director of Financial management at the Monetary Authority of Singapore kept a note that $1 trillion is the amount of money that is laundered around the word each year and reason is yet unknown to most of the authorities. These types of threats actually undermine the confidence as well as stability of financial systems that come with high social and political costs. This is the prime reason why it had been important for MAS and CAD to step up to combat money laundering activities in Singapore[20].

he Anti-money Laundering and Countering the Financing of Terrorism Industry Partnership had decided to make several groups that will study specific risk areas and topic related to money laundering as well as terrorism financing. These groups need to share the information with the private sector as well as other stakeholders that will aware everyone for better understanding of facts and finding ways to mitigate the risks. It will help in creating tangible, relevant as well as targeted products for the industry[21].

It is essential that the financial institutions to demonstrate better understanding of risk as well as have a good culture in and across organization. There are various international organizations like Financial Action Task Force and the Egmont Group that are mainly working on tackling some of the transnational clients and issues faced by Singapore. It was argued that financial crime topologies are increasing at a rapid pace so countries should find or explore smarter as well as effective ways to combat these types of crimes.

The Monetary Authority of Singapore anti-money laundering department had find ways to coordinate with the strategies in and across all economic sectors. It help in making use of various metrics that can intensify supervision on areas or business that are more prone to money laundering activities as well as terrorism financing risks where controls have been noted to be lack from past inspections. Therefore, Singapore need to be proactive in planning with the part for combating the threats as the country is home to several financial institutions[22].

Government as a regulator should constrict their watch on banks as well as financial institutions for preventing money laundering and terrorism financing offenses where criminals are shifting their illegal actions away from the financial sector and suspecting less regulated areas like property deals, metal trading as well as schools and charities[23].

Conclusion

At the end of the study, it is concluded that money laundering issues is emerging at a rapid pace that need to be checked by the partnered stakeholders such as Commercial Affairs Department and Monetary Authority of Singapore. Although laws have been constrict and becoming invasive for governing at-risk segments where criminals always fall through the cracks. This was true in case of emergence of advanced technology such as Bitcoin. Technology cannot be the only factor that had kept the regulators on their toes. It is also globalization and free movement of goods that opened up new avenues for financial crimes as well as increased level of difficulty for reducing such types of risks. The above analysis properly explains how the stakeholders are working hard to combat the money laundering activities on urgent basis. Apart from national security, the reputation of Singapore is a clean financial centre that is actually at stake where the republic does not want to be a weak link especially in the global fight against financial crimes. In addition, money laundering may be like a distant concept but in actual it affects the lives of Singapore residents. For that, strategies as well as control for money laundering had been turned to unlawful purposes such as terrorist financing.

References

Rahman, Combating money laundering and the future of banking secrecy laws in Malaysia. Journal of Money Laundering Control, 17(2), 219-229, 2014

R Alexander, Insider dealing and money laundering in the EU: law and regulation. Routledge, 2016

I Baird, The global land grab meta-narrative, Asian money laundering and elite capture: Reconsidering the Cambodian context. Geopolitics, 19(2), 431-453, 2014

S Berg, & K McCarthy, The economics of ISIS—A case of theft or money laundering?. Freedom from Fear, 2016(11), 80-85, 2016

W Byrnes, & R Munro, Money Laundering, Asset Forfeiture and Recovery and Compliance–A Global Guide. LexisNexis, 2017

K Choo, Designated non-financial businesses and professionals: A review and analysis of recent financial action task force on money laundering mutual evaluation reports. Security Journal, 27(1), 1-26, 2014

K Choo, Cryptocurrency and Virtual Currency: Corruption and Money Laundering/Terrorism Financing Risks?. Handbook of Digital Currency: Bitcoin, Innovation, Financial Instruments, and Big Data, 283, 2015

D Chuen, Handbook of digital currency: Bitcoin, innovation, financial instruments, and big data. Academic Press, 2015

R Dre?ewski, J Sepielak, & W Filipkowski, The application of social network analysis algorithms in a system supporting money laundering detection. Information Sciences, 295, 18-32, 2015

J Ferwerda, M Kattenberg, H Chang, B Unger, L Groot,  & A Bikker,  Gravity models of trade-based money laundering. Applied economics, 45(22), 3170-3182, 2013

Y Guo, & J Woo, States as Banking Powerhouses: Financial Sector Policy in Singapore and Switzerland. In SINGAPORE AND SWITZERLAND: Secrets to Small State Success (pp. 75-95), 2016

S Hameiri, & L Jones, Regulatory regionalism and anti-money-laundering governance in Asia. Australian Journal of International Affairs, 69(2), 144-163, 2015

C Liss, & J Sharman, Global corporate crime-fighters: Private transnational responses to piracy and money laundering. Review of International Political Economy, 22(4), 693-718, 2015[24]

A Loke,  Virtual Currency Regulation in Singapore. Journal of Financial Regulation, 1(2), 290-293, 2015

N Mugarura, Uncoupling the relationship between corruption and money laundering crimes. Journal of Financial Regulation and Compliance, 24(1), 74-89, 2016

N Omar, R Johari, M Azam, & N Hakim, Mitigating Money Laundering: The Role of Designated Non-financial Businesses and Professions in Southeast Asian Countries. In A New Paradigm for International Business (pp. 285-294). Springer Singapore, 2015

N Omar, R Johari, S Sukir, & J Said, Money Laundering and Terrorist Financing: Real Global Cases, Behavioural Theories and Internal Control Mechanism. In A New Paradigm for International Business(pp. 295-308). Springer, Singapore, 2015

N Omar, Z Johari, & R Arshad,  Money Laundering–FATF Special Recommendation VIII: A Review of Evaluation Reports. Procedia-Social and Behavioral Sciences, 145, 211-225, 2014

A Rahman, & A Rahman,  Anti-money laundering law: a new legal regime to combat financial crime in Malaysia?. Journal of Financial Crime, 23(3), 533-541, 2016

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E Tsingou, Money laundering. In Europe and the governance of global finance (pp. 141-154). Oxford: Oxford University Press, 2014

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S Zolkaflil, N Omar, & S Syed Mustapha Nazri, Comprehensive cross-border declaration system as money laundering prevention mechanism. Journal of Money Laundering Control, 20(3), 201

[1] S Zolkaflil, N Omar, & S Syed Mustapha Nazri, Comprehensive cross-border declaration system as money laundering prevention mechanism. Journal of Money Laundering Control, 20(3), 2017

[2] B Unger, J Ferwerda, M van den Broek, & I Deleanu, The Economic and Legal Effectiveness of the European Union s Anti-Money Laundering Policy. Edward Elgar Publishing, 2014

[3] E Tsingou, Money laundering. In Europe and the governance of global finance (pp. 141-154). Oxford: Oxford University Press, 2014

[4] J Ferwerda, M Kattenberg, H Chang, B Unger, L Groot,  & A Bikker,  Gravity models of trade-based money laundering. Applied economics, 45(22), 3170-3182, 2013

[5] R Dre?ewski, J Sepielak, & W Filipkowski, The application of social network analysis algorithms in a system supporting money laundering detection. Information Sciences, 295, 18-32, 2015

[6] P Rao, How Did the Globally Top Competitive Countries Perform?. Economics, 4(3), 138-146, 2016

[7] D Chuen, Handbook of digital currency: Bitcoin, innovation, financial instruments, and big data. Academic Press, 2015

[8]A Rahman, & A Rahman,  Anti-money laundering law: a new legal regime to combat financial crime in Malaysia?. Journal of Financial Crime, 23(3), 533-541, 2016

[9] K Choo, Cryptocurrency and Virtual Currency: Corruption and Money Laundering/Terrorism Financing Risks?. Handbook of Digital Currency: Bitcoin, Innovation, Financial Instruments, and Big Data, 283, 2015

[10] N Omar, Z Johari, & R Arshad,  Money Laundering–FATF Special Recommendation VIII: A Review of Evaluation Reports. Procedia-Social and Behavioral Sciences, 145, 211-225, 2014

[11] N Omar, R Johari, S Sukir, & J Said, Money Laundering and Terrorist Financing: Real Global Cases, Behavioural Theories and Internal Control Mechanism. In A New Paradigm for International Business(pp. 295-308). Springer, Singapore, 2015

[12] K Choo, Designated non-financial businesses and professionals: A review and analysis of recent financial action task force on money laundering mutual evaluation reports. Security Journal, 27(1), 1-26, 201

[13] N Omar, R Johari, M Azam, & N Hakim, Mitigating Money Laundering: The Role of Designated Non-financial Businesses and Professions in Southeast Asian Countries. In A New Paradigm for International Business (pp. 285-294). Springer Singapore, 2015

[14] W Byrnes, & R Munro, Money Laundering, Asset Forfeiture and Recovery and Compliance–A Global Guide. LexisNexis, 2017

[15] N Mugarura, Uncoupling the relationship between corruption and money laundering crimes. Journal of Financial Regulation and Compliance, 24(1), 74-89, 2016

[16] S Berg, & K McCarthy, The economics of ISIS—A case of theft or money laundering?. Freedom from Fear, 2016(11), 80-85, 2016

[17] A Loke,  Virtual Currency Regulation in Singapore. Journal of Financial Regulation, 1(2), 290-293, 2015

[18] I Baird, The global land grab meta-narrative, Asian money laundering and elite capture: Reconsidering the Cambodian context. Geopolitics, 19(2), 431-453, 2014

[19] A. Rahman, Combating money laundering and the future of banking secrecy laws in Malaysia. Journal of Money Laundering Control, 17(2), 219-229, 2014

[20] C Liss, & J Sharman, Global corporate crime-fighters: Private transnational responses to piracy and money laundering. Review of International Political Economy, 22(4), 693-718, 2015

[21] R Alexander, Insider dealing and money laundering in the EU: law and regulation. Routledge, 2016

[22] S Hameiri, & L Jones, Regulatory regionalism and anti-money-laundering governance in Asia. Australian Journal of International Affairs, 69(2), 144-163, 2015

[23] Y Guo, & J Woo, States as Banking Powerhouses: Financial Sector Policy in Singapore and Switzerland. In SINGAPORE AND SWITZERLAND: Secrets to Small State Success (pp. 75-95), 2016