The Monetary Authority of Singapore (MAS) is taking a major step in its ongoing battle against money laundering and the financing of criminal activity with the launch of a groundbreaking digital platform that will enable banks to share information on customers and transactions.
The Collaborative Sharing of ML/TF Information and Cases (COSMIC) platform will for the first time enable financial institutions (FIs) within the country to digitally warn each other about unusual activity in customers’ accounts – a gap currently exploited by criminals to make illegal transactions through a web of different entities with accounts in different FIs.
The platform has been co-created by MAS and six major commercial banks – DBS Group, Oversea-Chinese Banking Corporation, United Overseas Bank, Standard Chartered Bank, Citibank, and HSBC.
FIs will be able to share information securely through the platform when ‘material risk thresholds’ are breached, ‘red flagging’ transactions to enable easier tracking and faster responses to criminal behavior.
“The information-sharing framework is designed to target serious criminal behaviors and allow financial institutions to more quickly detect the bad actors to purge and deter them,” said Loo Siew Yee, MAS’s assistant managing director for policy, payments, and financial crime.
The platform and enabling regulatory framework are due to be introduced in early 2023, with the launch iteration focusing on three key financial crime risks in commercial banking – abuse of shell companies, misuse of trade finance for illicit purposes, and proliferation finance (PF).
Next level of customer oversight
This merging of technology and a public-private partnership will enable a more joined-up approach for compliance teams, reducing the risk that banks are working in silos, viewing transactions and customers in isolation, and providing a bigger picture of criminal activity that may currently be going unnoticed.
MAS says it will use the information from COSMIC in its risk surveillance to detect illicit networks operating in the financial system and will target these activities for “timely supervisory intervention”.
COSMIC effectively connect the dots via a common tech platform, taking initiatives such as AUSTRAC’s Fintel Alliance – a knowledge sharing public-private partnership against AML/CFT that includes major banks, remittance service providers, and gambling operators, as well as law enforcement and security agencies from Australia and overseas – to the next level.
MAS puts a clear focus on ensuring that the platform will not compromise customer privacy. Strong security features will prevent unauthorized access to information, and legislation will ensure that information sharing by FIs is only permitted to tackle the three key financial crime risks. Participants will need to implement robust safeguard measures and actions will be taken against errant FIs.
Although only some of the larger banks will be involved initially, MAS plans to “progressively extend COSMIC’s coverage to more FIs and focus areas and make some aspects of sharing mandatory.”
Compliance staff from all FIs should learn more about the consultation to understand how COSMIC will be used, particularly as the initiative is likely to expand to other banks and focus areas. There is also an opportunity to provide feedback and help shape how this information-sharing platform will work.
Our State of Financial Crime 2021 report noted that public/private partnerships have become a growing trend globally. Download the report to learn more about the work of the Fintel Alliance in Australia, and how countries in the Asia Pacific are continuing to innovate in the field of anti-money laundering and terrorist financing risk assessment.