A Guide to Anti-Money Laundering for Crypto Firms
According to a report in Regulation Asia, a senior official at the Monetary Authority of Singapore (MAS) has recently spoken about the value being gained by businesses deploying new technologies to meet their Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) obligations.
Speaking at an Association of Certified AML Specialists (ACAMS) conference on April 27, MAS Assistant Managing Director Ms. Loo Siew Yee told the audience that many financial institutions had been upgrading their AML/CFT controls and platforms with data analytics and Regulatory Technology (Regtech). Ms Loo commented that the use of ‘big data’ and new technologies was having a positive impact on the AML/CFT effectiveness in the financial services sector.
In a wide-ranging speech, Ms. Yee pointed to a number of examples across the private and public sectors in Singapore to support her assessment. She noted how several financial institutions had applied new tools to identify networks of anonymous shell companies and pass-through transactions in their bank accounts, with the resulting leads and typologies being shared through Singapore’s AML/CFT Industry Partnership (ACIP). According to Ms. Loo, this had led to the interdiction of $69 million (Singapore), $19 million of which was blocked from being deposited into accounts from outside the jurisdiction.
She also noted how improved digital processes had been used to enhance the efficiency of public-private collaboration more directly. Under Project ‘POET’ (Production Orders: Electronic Transmission), the use of digital technology and better automation had increased the speed and comprehensiveness of the private sector response to police-issued production orders. “Project POET has dramatically cut the turnaround time for this process by up to 97%,” she said.
Ms. Loo stressed that such examples were only a beginning, moreover; there were likely to be many further opportunities for the use of data, analytics, and technology to improve AML/CFT performance in the future. She highlighted the potential for Regtech to provide more granular, agile, and dynamic means of conducting and updating Customer Due Diligence (CDD), as well as ongoing suspicious transactions monitoring. “Identifying and acting quickly on such triggers, whether from singular factors or a combination of multiple red flags, could make a critical difference in stopping criminals before the damage is done,” she said.
Ms. Loo also commented that it was important for firms to have strong governance in place to optimize the use of new technologies, especially at scale. Financial institutions should identify clear objectives and desired outcomes for the adoption of each platform, she argued, to prevent the use of inappropriate tools for key tasks. Ms. Loo added that MAS took platform governance extremely seriously, and would therefore be consulting across the industry on the need for new principles-based guidance on the issue.
Taken as a whole, Ms. Loo’s remarks reinforce many of the messages that have come from MAS and other leading regional regulators, such as the Hong Kong Monetary Authority (HKMA), over recent years. From the perspective of the most progressive agencies, the application of new technologies to long-standing AML/CFT obligations is a development to be encouraged, rather than feared. Indeed, a key element in Ms. Loo’s own comments – the need for an ongoing evaluation of whether the tools being used are the most effective available – suggests that firms must treat technology innovation as a process, and not an event.
Originally published May 12, 2021, updated May 5, 2022
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