Skip to main content Skip to navigation

Launching AI-driven Fraud Detection

Singapore Progresses the Regulatory Framework for its Information-Sharing Platform

Latest News

On March 20, 2023, the Monetary Authority of Singapore (MAS) announced that the Financial Services and Markets (Amended) Bill (FSM(A)B) moved into its first reading in parliament. The proposed amendments to this legislation will help create a regulatory framework for MAS’ secure information-sharing platform, which is due to fully launch later in 2023.

Known as the Collaborative Sharing of Money Laundering/Terrorist Financing Information and Cases (COSMIC) platform, financial institutions will be able to use the network to share information about customers and transactions when “material risk thresholds” are breached.

While the Personal Data Protection Act (PDPA) is Singapore’s primary data protection regulation, the PDPA provides a legislative route for “other written law” to prevail over the act’s requirements. In light of this, MAS’ proposed legislative amendments to the FSMB are set to accommodate the sharing of risk information for anti-money laundering, combatting the financing of terrorism, and counter-proliferation financing (AML/CFT/CPF) purposes. 

The Financial Services and Markets (Amendment) Bill 2023

According to MAS, the FSM(A)B lays the groundwork for only the first phase of COSMIC’s launch. During this time, all information sharing will be voluntary among the six major commercial banks that are co-developing the platform – DBS, OCBC, UOB, Standard Chartered Bank, Citibank, and HSBC. 

In light of MAS’ explanatory brief, compliance staff should be particularly aware of the following proposed amendments:

  • Information-sharing among financial institutions will only be permitted to mitigate ML, TF, and PF risks. The bill’s amendment means firms can share relevant information despite any restrictions imposed by any written law or contract.
  • To ensure the information shared via COSMIC remains confidential, the bill’s amendment requires firms to implement tight cybersecurity controls to guard against unauthorized use.
  • The FSM(A)B will provide statutory protection against civil liabilities for disclosures on COSMIC, provided the disclosures are made in good faith, with reasonable care, and following the disclosure thresholds.
  • The amendment will also allow MAS and the Suspicious Transaction Reporting Office to access and use COSMIC information for AML/CFT purposes.

Initial Focus Areas

In a briefing document sent to The Straits Times, MAS noted that COSMIC will initially focus on three critical financial crime threats in commercial banking: 

  • The abuse of shell companies
  • The misuse of trade finance for illicit purposes
  • Financing that supports the proliferation of weapons of mass destruction

However, the authority said that despite working with and supervising firms to strengthen the country’s defenses against these three threats, a remaining weakness is the inability of financial institutions to alert each other to inconsistent or unusual activity in their customers’ accounts. According to MAS, criminals often exploit the disparate nature of these information silos, moving from one financial institution to another through a web of accounts to avoid detection. The regulator hopes that COSMIC will eliminate these information gaps and enable firms to “conduct sharper analysis of customer behaviors and activities.” 

In subsequent phases of the platform’s launch, MAS plans to extend COSMIC’s coverage to include additional focus areas.

Key Takeaways

Compliance teams looking to enhance their information exchange procedures should consider the additional resources the Financial Action Task Force (FATF) provides. These include:

As the launch date for COSMIC draws nearer, firms should ensure they understand how the platform will be used and keep up-to-date with the FSM(A) Bill as it makes its way through parliament.

For more information on how to comply with Singapore’s AML regime, compliance teams should review our 7 Tips To Help Fintechs Comply With Anti-Money Laundering In Singapore.

Regional Regulatory Trends

Uncover the evolving anti-money laundering regulatory landscape, examining global trends and key themes in major economies.

Download now

Originally published 30 March 2023, updated 03 April 2023

Disclaimer: This is for general information only. The information presented does not constitute legal advice. ComplyAdvantage accepts no responsibility for any information contained herein and disclaims and excludes any liability in respect of the contents or for action taken based on this information.

Copyright © 2023 IVXS UK Limited (trading as ComplyAdvantage).