Singapore Passes Bill to Establish Information-Sharing Platform for Banks

On May 9, 2023, the Monetary Authority of Singapore (MAS) announced that the Financial Services and Markets (Amended) Bill (FSM(A)B) had been passed by parliament, creating a regulatory framework for MAS’ secure information-sharing platform that is due to launch in the second half of 2024. Known as the Collaborative Sharing of Money Laundering/Terrorist Financing Information and Cases (COSMIC) platform, financial institutions (FIs) will be required to use the network to share information about customers and transactions when “material risk thresholds” are breached.

The bill had its first parliamentary reading in March. As the bill moves into its second reading, MAS can move forward with the platform and add further enhancements at a later stage.  

Aspects of the Bill

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. The FSM(A)B takes this route and permits information sharing between FIs for financial crime prevention and detection purposes within tightly controlled parameters. At its core, the bill seeks to strike a balance between protecting the privacy of legitimate customers and preventing criminal abuse of this protection to conceal serious financial crime. 

The bill also sets out how this information can be shared among participant FIs and the types of scenarios that are serious enough to warrant such sharing. The three ways FIs will be able to share information include:

• An FI requesting information from another.
• An FI proactively providing information to another.
• An FI placing a customer on a watchlist to alert other FIs.

The participant FIs alluded to in MAS’ announcement refer to the six major commercial banks that are co-developing the platform – DBS, OCBC, UOB, Standard Chartered Bank, Citibank, and HSBC. Information-sharing between MAS and these six banks will be voluntary in the first phase, which is due to last two years. After this period, MAS intends to make the data-sharing practices mandatory, imposing penalties on lenders that do not share information on the platform. 

Priority Risk Areas

At its outset, the platform will focus on three risk areas that are high on Singapore’s priority list of threats, as identified through MAS’ continued surveillance. These include the misuse of legal persons, trade-based money laundering (TBML), and proliferation financing and the evasion of international sanctions. In subsequent phases of the platform’s launch, MAS plans to extend COSMIC’s coverage to include additional focus areas.

Regional Collaboration

In addition to greater information sharing within Singapore, there is evidence of increasing coordination at a regional level too. In early 2023, the Global Coalition to Fight Financial Crime (GCFFC) announced the launch of an APAC Regional Chapter. Led by co-chairs from DBS Bank, Westpac, and Napier Technologies, the APAC chapter aims to bring key industry partners and regional subject matter experts together to work towards a common goal to increase effectiveness and make constructive efforts in the fight against global financial crimes.

Key Takeaways

As the launch of COSMIC draws closer, firms should consider (if they have not begun to do so already) educating staff and building awareness around the platform. Certain processes and procedures may also require updating in light of the new information-sharing techniques. 

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