Specifically, the Parliament passed the Financial Services and Markets (Amendment) Bill, and the information-sharing platform will be developed by the Monetary Authority of Singapore in partnership with six commercial banks: DBS, OCBC, UOB, Standard Chartered Bank, Citibank and HSBC.
The banks in question will also receive access to the platform, which will be named Collaborative Sharing of Money Laundering/Terrorism Financing Information and Cases (COSMIC). The project will roll out in several phases, with the first starting in the second half of 2024.
This initial phase will last for two years, during which the sharing of information will be optional. The first phase will also see COSMIC focusing on three financial crime risks in commercial banking, namely misuse of trade finance for illicit purposes, abuse of shell companies, and financing that aids the proliferation of weapons of mass destruction.
The aim is to allow the platform to achieve operational stability while the MAS works with various financial institutions to calibrate the platform’s features and address operational issues. In the later stages of the programme, the MAS wants to make it mandatory to share information, particularly for high-risk situations.
Financial institutions working with COSMIC will only be allowed to share information about a customer if his behaviour or transactions show red flags across stipulated thresholds, which suggests that potential financial crime could be taking place. These pre-determined red flags and stipulated thresholds will be revealed in a private directive issued by the MAS to the financial institutions.
A financial institution that takes note of red flags crossing the stipulated thresholds will be able to request information about the customer or transaction from its peers. In the case of multiple red flags crossing a higher stipulated threshold, a financial institution should provide information to other financial institutions with links to the customer or transaction, and it should also file a suspicious transaction report to authorities and inform others in the industry via a watchlist.
The initiative aims to strengthen Singapore’s defences against money laundering and financing of criminal activity. According to MAS officials cited by channelnewsasia.com, financial institutions are currently unable to warn one another about unusual activities involving their customers due to customer confidentiality obligations. This is exploited by bad actors who perform illicit transactions through different financial institutions to avoid detection.
COSMIC was designed to tackle these informational blind spots and make it easier for financial institutions to detect and deter criminal activity.
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