As you know, the city-state of Singapore has firmly won the status of one of the economic leaders not only in the region of Southeast Asia but throughout the world. The rapid growth of economic stability and financial well-being of Singapore received thanks to the wise policy of the Great Prime Minister Lee Kuan Yew, who performed a real "economic miracle" in the second half of the 20th century.

However, the world is constantly changing. New strong players are entering the arena, striving to satisfy their ambitions and oust the existing leaders. It is known that any stagnation will inevitably lead to the loss of a leading position, which will not be easy to return. In this regard, Singapore does not stand still, constantly improving various areas of economic activity, including "working through" mechanisms for protection against illegal actions.

New anti-tampering mechanisms - MAS platform

The official answer to the upcoming challenges will be the new MAS platform, which will strengthen the regulator's ability to exchange information in the field of AML/CTF. According to analysts' forecasts, it will preserve existing achievements, enhance protection against illegal activities such as money laundering or terrorist financing, and ensure economic stability.

The program's primary focus is the exchange of information within the framework of the new Fi-Fi ISP (Information Sharing Platform) for AML/CTF. The parties that will participate in the exchange include not only financial institutions (FI). Clients who exceed the risk limit will be in the zone of increased attention.

The platform is owned by MAS (Monetary Authority of Singapore). The information-sharing platform sounds like Collaborative Sharing of ML/TF Information & Cases, unofficially called COSMIC.

What is known today:

• Initially, a limited number of banks will participate in COSMIC. It applies to those financial institutions that MAS has identified as major players that will be in demand in the Singapore financial market;
• In the future, participation in COSMIC will become mandatory for all financial market participants;
• Gradual strengthening of MAS control over the financial sector will make it possible to detect violations on the part of those structures that do not participate in the information exchange platform;
• If such a migration is detected, MAS should prepare recommendations as soon as possible to eliminate the identified deficiencies;
• At the time of writing this material, the status of COSMIC may be considered introductory;
• The powers of the MAS have not been fully revealed yet. We will provide a more detailed report on the activities of the platform only after the platform "works" in full force and its provisions for the exchange of information are finalised;
• Unless fundamental changes are made to the COSMIC provisions during the discussion, the information exchange platform will include the function of combating money laundering, the financing of terrorism and the proliferation of mass destruction weapons.

Important! The platform's final version hasn't included the information exchange function to counter base erosion and tax evasion.

• The discussion period ended at the end of 2021, the text of the draft platform activities is subject to approval. However, the actual launch of COSMIC is scheduled for the first half of 2023.

If you need more detailed information on the licensing of investment activities in Singapore, please contact us via any communication channels indicated on the website. We are waiting for your requests!

Assumed risks and thresholds for information exchange:

According to analysts, the presence of an information exchange platform will allow solving new tasks relevant to Singapore.

What is Singapore's most essential role in creating a platform?

The interest of MAS in COSMIC is primarily in creating a mechanism for protecting the interests of Singapore as a global financial centre and measures to increase the effectiveness of the fight associated with the spread of the latest challenges and threats.

According to preliminary forecasts of experts, the platform can prevent:

- violations during the registration of companies and opening a corporate bank account for it.

The most important issue is the exchange of information. By using the platform, you can avoid problems for legal businesses.

- concealment of information on the origin of income that was obtained illegally through the movement of cross-border financial flows;

- financial participation of businesses in Singapore or outside of it in financing the development/production of mass destruction weapons. As a rule, it happens through shell companies or fictitious intermediary firms.

Are there any differences between the information exchange platform represented by MAS and traditional developments that solve similar problems? There are no apparent differences. The goals are the same for everyone, and the platform's priorities are trustworthy MAS solutions.

The initiatives achieved are aimed at maintaining stability throughout the world. The significance of these agreements is so global that it is impossible to overestimate them. At the same time, the interests of individual states, unfortunately, are not always considered.

The interests of Singapore are the priority of the MAS information exchange platform. Therefore, the opposition to trends and currents that can shake the existing status quo of the city-state is of paramount importance. In this sense, looking at COSMIC from a security standpoint explains some controversial points.

Are there real security threats, and what illegal calls can the COSMIC system respond to:

• creation of business links/networks of accounts/systems of interaction between different financial structures;
• blocking illegal transactions;
• suspension of the regulator's actions on fictitious documents.

Serious financial crimes that the MAS Information Sharing Platform in Singapore can detect:

• the company's profile is fictitious/bogus/fake;
• conducting suspicious transactions with an indistinct purpose. For example, payments between companies that operate in completely different business areas, refunds to the sender, fast transfers, and payments between companies operating in various business areas.
• signs of falsification characterise explanatory documents provided by the company;
• the same persons control characteristic features of several companies that are unrelated to each other.

It can be assumed that the new information exchange platform in Singapore, which MAS is developing, will have the option of modifying the thresholds, the so-called "red flags". However, all participants in the MAS system should be aware that to prevent the dissemination of information that could "deceive" COSMIC, it is crucial to maintain the confidentiality of the red flag.

The working mode of the information exchange system

The platform is in the testing phase. How long the trial period will last is hard to say. However, interest in the MAS system is high. In this regard, we can assume that the project will get its implementation. But while the system exists in a test mode, some information exchange formats may be subject to adjustment.

What options are available now:

- request: there is indisputable evidence that there are signs of "red flags" in the client's behaviour. In this regard, it is possible to request information on client risks. The information obtained will be used to accurately assess the client according to the AML/CFT criteria;

- preliminary provision of information on the sum of signs: this verification mechanism is "connected" only if the specified threshold of risks of the client's financial activity is exceeded. In this case, the financial institution begins to conduct an in-depth AML/CFT check and, if necessary, additional information is requested;

- warning: this mechanism is activated in case of high risks (as in the previous paragraph) and if the financial institution refuses to cooperate with the client. Under such circumstances, the information is "sent" to the COSMIC watchlist. It is done to exchange information so all platform users can receive appropriate warnings.

It should be borne in mind that financial institutions participating in the work of COSMIC indicate in the request information about the reason for the request. According to analysts, banks will continue to "reinsure themselves" and request data from COSMIC, even if there are no objective reasons for this. It should be noted that the mere fact that a company is on the COSMIC watch list does not compromise the client in any way and does not affect the "automatic" refusal of financial organisations to cooperate with him.

In accordance with the regulations of the platform for the exchange of information, the client must give explanations to a specific bank.

COSMIC Deployment:

MAS does not yet give accurate forecasts on the information exchange platform integration within the AML/CFT. Information about the platform's launch requires explanation; only specific plans for the system's deployment are known (the starting point is its actual commissioning).

However, there are several key steps:

- the initial stage is designed for two years: for the first COSMIC participants, the requirements are voluntary;

- the second stage is designed for two years: for the first members, the requirements will become mandatory;

- the main stage: the rules will be adjusted. New rules will apply to subsequent COSMIC participants, according to which they will start working in the future.

Privacy and information security issues:

The notion of privacy has almost disappeared with the use of traditional AML/CFT rules. In this regard, it is unlikely that the bank's client will now be able to remain in the shadows. Today, no one doubts that the days of absolute banking secrecy are over.

Singapore has its position on the AML/CFT account and willingly uses its powers. MAS does not require the Information Sharing Platform members to provide information about themselves “by default”. Information will be transmitted in a limited amount, and an “automatic” exchange system is not yet provided.

Grounds for activating the information transfer procedure:

- used to counter ML (money laundering, money laundering);

- TF (terrorism financing, financing of terrorism) is applied;

- PF (proliferation financing, financing of creation/distribution/use of weapons of mass destruction).

Such actions for exchanging information occur only between the COSMIC platform participants in one of the three agreed modes.

The scope of information is limited by the financial institution's regulations for verifying the client and alerting others to the COSMIC member.

The Financial Services and Markets Bill (FSMB) uses an approach comparable to the Banking Act, Section 47, Chapter 19. Therefore, cases in which disclosure of customer information is prohibited will be strictly limited.

Conditions under which bank guarantees are provided when exchanging information (disclosing it) on the COSMIC platform:

- in case of group risk management ML/TF/PF;

- assisted by requirements for risk management and outsourcing of operational functions.

MAS plans include:

- providing financial institutions with protection from civil liability;

- creating conditions of reasonable prudence (reasonable care) and conscientiousness of actions (good faith).

Conclusions:

The emergence of a new platform for exchanging information within the AML/CFT is long overdue and is not a revolutionary topic. Nevertheless, in some respects, much of the development of the new platform differs significantly from similar systems in Europe and the United States.

The new platform at least carries out a more thorough study of issues related to protecting personal data.

When the real launch of COSMIC will take place is still unknown. However, we hope it will not face the fate of some initiatives that have not received their actual implementation. Nevertheless, the oriented MAS system is undoubtedly a more progressive model than the standard rules, destroying bank deposits' secrecy.

You can get complete information on the operation of the MAS system from the materials of the articles posted on the company's website or use the services of experts. Although we provide quality services without violating the law and maintaining confidentiality, we implement standard and "custom" projects of any complexity. By contacting us, you can choose the format of service that suits you as part of an individual consultation. We are waiting for your requests!