The government of Singapore has published a document covering the risk of terrorism financing (TF) and financial services. The report was compiled by a consortium of agencies including the Monetary Authority of Singapore, Ministry of Home Affairs, and the Ministry of Finance.
To quote the document:
“Terrorist groups that posed the most significant terrorism threat to Singapore and the region were identified, and the primary ways these groups were financed were examined. The TF threats posed to the different sectors were outlined, substantiated by information from investigations and financial intelligence including Suspicious Transaction Reports (STRs), Requests for Assistance (RFAs), Mutual Legal Assistance (MLA) requests, and supported through participation in regional CFT projects and surveillance of regional and international typologies … Regulators/supervisors oversaw their respective sectors’ vulnerability assessments, taking into consideration their sector’s key TF threats, and how certain products, services, and activities within the sector might be exploited for TF purposes.”
So what sector of finance is at the highest risk of abuse by TF? According to the report, money remittances, or cross-border money transfers, hold the highest risk followed by banks. The use of unlicensed money remitters poses the biggest risk as they operate outside the regulatory regime. The document says these agents typically do not comply with AML/KYC rules.
Banks hold a “medium-high” risk for abuse with Singapore’s status as an international financial center exposing it to such acts. While banks adhere to AML/KYC/CFT rules, abuses can occur as perpetrators move smaller amounts of funds that appear to be legitimate and do not trigger and warnings.
Jumping to digital payment tokens (DPTs), or virtual assets/currencies, the report says that there is no evidence of widespread abuse but terrorist may be looking at virtual currencies to back their nefarious acts.
“…we are cognisant of the higher inherent TF risk posed by the anonymity, speed and cross-border nature of transactions facilitated by DPT service providers, and we are watching this space closely,” states the document.
Tumblers and other anonymizing tools, such as privacy coins, may make crypto more appealing to bad guys over time.
MAS has boosted its supervisory efforts and robust AML/CFT-focused licensing checks have been instituted according to the report.
The Terrorism Financing National Risk Assessment is embedded below.
Singapore Terrorism Financing National Risk Assessment 2020