Singapore’s updated Money Laundering National Risk Assessment (MLNRA) has highlighted significant risks and vulnerabilities posed by digital payment token (DPT) service providers in the Anti-Money Laundering (AML) landscape.

The extensive 126-page report identifies new risk sectors not included in the previous report released in 2014. These include DPT service providers and precious stone and metal dealers.

The banking sector, including wealth management, is identified as posing the highest money laundering risks. Banks are more susceptible to criminal exploitation due to their role in facilitating large volumes of transactions and servicing high-risk customers.

Within the financial sector, DPT service providers, also known as virtual asset service providers, stand out as a high-risk category. The MLNRA highlights an increase in reported money laundering cases involving DPTs and a variety of exploitation methods.

Despite the relatively small portion of global DPT activities in Singapore, the authorities closely monitor the associated risks. Other high-risk financial industry sectors include payment institutions offering cross-border money transfer services and external asset managers.

In the risk assessment report, Singapore said its key money laundering threats stemmed from fraud — particularly cyber-enabled fraud — organized crime, corruption, tax crimes and trade-based money laundering.

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Typical money laundering methods include hiding illegal funds in Singapore bank accounts, using fake companies and investing in valuable assets like real estate or precious metals.

The MLNRA report combines insights from Singapore’s supervisory and law enforcement agencies, including the Financial Intelligence Unit, as well as feedback from private sector entities and foreign authorities.

Money laundering in Singapore

Singapore’s status as an international financial hub and its economic openness expose it to money laundering risks. Criminals exploit the country’s financial and business infrastructure to launder or transfer illicit funds.

Additionally, the conversion of illicit funds into assets such as real estate, digital payment tokens or precious metals poses significant threats, according to the report.

In April, the Monetary Authority of Singapore announced that it would implement amendments to the country’s Payment Services Act to expand the scope of regulated services related to digital payment token service providers.

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