Money laundering events in Singapore up 79% in 2023: Moody’s

Money laundering events in Singapore rose 79 per cent in 2023 from 2022, according to data from credit ratings agency Moody’s.

Singapore may be susceptible to increased money laundering risks, with its open economy and high volume of international transactions, said Chua Choon Hong, senior director and head of the financial crime practice group for Asia-Pacific and the Middle East at Moody’s.

He noted an increasing risk of money laundering in the Republic’s financial sector, despite the country’s strong compliance reputation, as highlighted in the Monetary Authority of Singapore’s money laundering national risk assessment.

This suggests a potential complacency among financial institutions and designated non-financial businesses and professions, Chua said.

“While increased regulatory scrutiny may lead to higher compliance costs, it is essential for fostering trust in the integrity of the economy, promoting trade and transactions in the region, as well as mitigating the impact of financial crime.”

Moody’s database noted a steady increase in money laundering events across the Asia-Pacific region from 2018 to 2023.

In South-east Asia, money laundering risk events climbed 64 per cent in 2023 from 2018, with Thailand, Singapore, Malaysia, Indonesia and the Philippines forming the top five countries.

There is also a rising number of users of corporate service providers in Singapore for the creation of entities potentially used as shell companies.

According to Moody’s data, over 8 per cent of the 1.7 million registered entities in Singapore have directors that hold an anomalous number of concurrent directorships or directorships at inactive companies. A check with the Accounting and Corporate Regulatory Authority, however, showed that there are just under 600,000 live entities registered as of Jun 1, 2024.

Moody’s data suggest nominee directors are being used to mask ownership, Chua said.

He thinks corporate service providers or legal persons who deal with these entities on behalf of clients should be subject to the same scrutiny as financial institutions, as part of enhanced due diligence and risk mitigation measures.

Chua noted that stringent due diligence by financial institutions has led to longer client onboarding times. But this was necessary due to increased wealth inflows and the need to scrutinise the source of funds.