MAS launches centralised digital platform against money laundering, terrorism financing

THE Monetary Authority of Singapore (MAS) launched Cosmic – which stands for Collaborative Sharing of Money Laundering/Terrorism Financing Information and Cases – to facilitate customer information-sharing among financial institutions (FIs).

On Monday (Apr 1), the central bank said Cosmic is the first centralised digital platform that will combat money laundering, terrorism financing and proliferation financing globally.

The Financial Services and Markets (Amendment) Act 2023 and accompanying subsidiary legislation, which set out the legal basis and safeguards for such sharing, commenced on Monday as well. 

This comes after the Financial Services and Markets Act 2022 (FSMA) was amended in May 2023 to set out the legislative framework for Cosmic.

Using the platform, participating FIs may share customer information with another participant if the customer’s profile or behaviour displays certain objectively defined indicators of suspicion, or “red flags”.

The FSMA requires participants to have policies and operational safeguards in place to protect confidentiality of information shared.

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This will allow them to share information on potential criminal behaviour while safeguarding the interests of the vast majority of customers who are legitimate, said MAS.

“Customers are encouraged to continue to provide timely responses if requested by FIs to provide clarifications on their risk profiles or transactions, so that FIs can make informed risk assessments.”

Cosmic was co-developed by MAS and six major commercial banks in Singapore: OCBC, UOB, DBS, Citibank, HSBC and Standard Chartered.

These banks will be participant FIs on the platform during its initial phase.

MAS said information sharing between them is currently voluntary, and will be focused on three key financial crime risks in the commercial banking sector: the misuse of legal persons; the misuse of trade finance for illicit purposes; and proliferation financing.

“(Cosmic) complements the industry’s existing close collaboration with MAS and law enforcement authorities to combat financial crime. This will strengthen Singapore’s capabilities to uphold our reputation as a well-regulated and trusted financial centre,” said Loo Siew Yee, assistant managing director for policy, payments and financial crime at MAS.

Pua Xiao Wei, Citi Singapore’s compliance risk country officer, said the bank has been ramping up its anti-money laundering data analytics initiatives over the past years – resulting in an increased capacity for Citi to identify suspicious activities.

Through Cosmic, Citi intends to share information of potential bad actors flagged by its anti-money laundering detection programme, and notify its peer banks of any “noteworthy risks that impact Singapore”.

“Through such sharing, we can collectively prevent these bad actors from using Singapore’s banking network for illegal activities,” said Pua.

Loretta Yuen, OCBC’s head of group legal and compliance, lauded the platform as a “significant development that will sharpen the banks’ abilities to discern, purge and deter criminals in a timely manner”.

The launch of Cosmic is a “leap in the right direction” towards combatting money laundering and strengthening Singapore’s AML/CFT (anti-money laundering and combating the financing of terrorism) arsenal, she said.

“A centralised platform like Cosmic that allowed information sharing to be seamlessly integrated into participant banks’ data analytics tools is necessary.

“Participating banks like OCBC will be able to leverage the risk detection capabilities of other banks, enabling us to efficiently identify both upstream and downstream illicit activity,” commented Yuen.

DBS’ group head of legal and compliance Lam Chee Kin viewed the platform as a “game changer”, as it provides banks, regulators and law-enforcement agencies with information-sharing opportunities “in a very controlled and targeted manner”.

He believes the platform will cover more financial crime typologies.

“At the same time, we are mindful that legitimate customers should not be denied access to financial services and have worked closely with fellow participant banks and MAS on a set of guiding principles to ensure appropriate use of information derived from Cosmic,” he added.