Speech by Mr Shanmugan, Minister for Law and 2nd Minister for Home Affairs, at the Opening Ceremony of the 13th Annual Meeting of Asia-Pacific Group on Money Laundering on Tuesday, 13 July 2010 at 9.00am
Mr Tony Negus and Mr Ong Hian Sun, Co-chairs of the APG
Dr Gordon Hook, Executive Secretary of the APG
Ladies and Gentlemen
1 Good morning. It is my pleasure to be here today at the 13th Annual Meeting of the Asia-Pacific Group on Money Laundering. On behalf of the Government of Singapore, I extend a warm welcome to all participants present, and wish you all a fruitful and enjoyable stay in Singapore.
2 APG has grown in strength since 13 years ago. It now boasts a membership of 40 jurisdictions, 4 observer jurisdictions and 20 observer organizations, making it the largest FATF-Style Regional Body (or FSRB). This is a strong statement of the region’s commitment to combating money laundering and terrorist financing.
Waging the Global War against Money Laundering and Terrorist Financing
3 Without funding, criminals and terrorists will not be able to carry out their activities for long. Their survival depends on their continued ability to manipulate flows of money through financial systems.
4 The ease at which capital can now move across global financial markets has presented criminals and terrorists with opportunities to move their resources quickly, and hide their tracks. Advances in technology, such as pre-paid cards, mobile payments and internet payment services, have made the task of enforcement agencies and regulatory authorities more difficult. One thing is clear. A national-level response is not going to be enough to defeat a transnational enemy. Every member of the global community will need to have in place equally robust anti-money laundering and counter terrorist-financing – or AML/CFT – regimes. And increasingly, we should recognize that strong AML/CFT regimes must go beyond detection and enforcement, to actively deter and prevent terrorists and criminals from even attempting such activities in the first place. Criminals and terrorists have learnt to use these technologies to their advantage, and agencies must evolve to meet these challenges.
Importance of Continual Review of the FATF Standards
5 FATF, together with the FSRBs, tracks the development of international money laundering and terrorist financing trends, which facilitates the early detection of new modus operandi. Such data is used to review and strengthen the international AML/CFT standards, namely the 40 FATF Recommendations and 9 Special Recommendations. Through these recommendations, FATF advises jurisdictions on how best to tackle money laundering and terrorist financing activities, and provides a framework for the implementation of these standards through comprehensive evaluations.
6 FATF is taking an active hand to further elevate standards by shifting its focus from implementation to the overall effectiveness of their application. There is a renewed focus on a risk-based approach which devotes resources to higher-risk areas. For an AML/CFT regime to be successful, it should be effective on all fronts - enforcement, detection, deterrence and prevention. Only when jurisdictions have in place regimes capable of not only catching and penalizing launderers and terrorist financiers, but also deterring them from action will the region be much safer from criminal and terrorist elements.
7 In this regard, we commend Dr Gordon Hook and his dedicated team at the APG Secretariat for their efforts to conduct regionally-focused typologies studies to improve the region’s awareness of new money laundering and terrorist financing threats. The APG should also be lauded for its efforts to extend technical assistance to lower-capacity jurisdictions, thus enhancing the overall regional operating capacity through a better application of FATF standards.
8 As we enhance our regimes, FATF and its FSRBs need to develop new ways to measure a regime’s effectiveness in deterring financial crimes, focusing not only on conviction rates, but measuring the actual level of deterrence and disruption on the group. Furthermore, a more comprehensive set of indicators is needed, one that takes into cognizance each jurisdiction’s unique circumstances, so that initiatives are operationalised pragmatically for maximum effectiveness, and not just compliant in form. This will ensure that the right capabilities and commitments are in place for each jurisdiction in the fight against financial crimes.
Singapore’s Commitment to the Fight against ML and TF
9 Allow me now to touch briefly on Singapore’s own efforts to combat money laundering and terrorist financing. Our financial sector is a key pillar of our economic sector and growth. Hence, we take a very strict view of any attempt to exploit our financial system. We have in place a robust and cohesive regime that brings together multiple government agencies in a concerted effort to combat money laundering and terrorist financing. To build a coordinated and holistic framework, a high-level Steering Committee comprising senior officials from the Home and Finance ministries as well as the Monetary Authority of Singapore was set up in 1999. The Committee is apprised of all AML/CFT developments and is able to craft policy responses quickly and effectively. In 2006, the Committee decided that Singapore would no longer require a bilateral treaty to provide mutual legal assistance, based on our belief in the strength of international cooperation. We wanted to send a strong message to criminals. Last year, Singapore processed more than 70 mutual legal assistance requests. Our Financial Intelligence Unit also continues to actively share information with its foreign counterparts. Our system has worked well. It is an indication of Singapore’s strong commitment to prevent and deter cross border flows of criminal proceeds.
10 Singapore also adopts a multi-pronged strategy in combating money laundering and terrorist financing. This “total” approach consists of proactive prevention and a rigorous regulatory regime across multiple sectors, reinforced by strong enforcement action and stern punitive measures for deterrence. For example, in 2007, Singapore observed several cases of syndicates operating scams involving extortion of monies through false lotteries, kidnapping threats and official impersonations. Subsequently, the proceeds from these crimes were channeled through accounts of third parties for layering purposes. We dealt with this comprehensively; by educating the general public and increasing awareness of such schemes to prevent further scams, facilitating greater cooperation amongst enforcement agencies, and meting out stiff deterrent sentences on those involved in the scams and laundering the monies. At the same time, we place strong emphasis on building a close partnership with relevant industry groups through regular outreach programs.
11 Much like FATF, we also continue to review and adapt our rules and regulations to address emerging money laundering and terrorist financing threats. Earlier this year, in February 2010, we made significant changes to our key anti-money laundering law, the Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act, or CDSA. These revisions enhanced the effectiveness of the CDSA in acting against third-party laundering. The number of predicate offences for money laundering was also increased in January, bringing the total count to more than 360. On the regulatory front, the Monetary Authority of Singapore has tightened the AML/CFT requirements for conducting simplified customer due diligence, and Singapore has ratified the United Nations Convention against Corruption.
12 Many of you would probably have noted the recent changes to our Marina Bay skyline. The first half of 2010 saw the opening of two Integrated Resorts with casinos in Singapore – one in Sentosa, and the other in Marina Bay. Casinos are vulnerable to money laundering risks by virtue of their nature as cash-intensive businesses with a high volume of daily transactions. Casinos have been listed by FATF as one of seven Designated Non-Financial Businesses and Professions susceptible to money laundering risks. We are aware of these risks. That was why even before the first foundations of these resorts were laid, we had taken steps to establish the Casino Regulatory Authority (or CRA) in 2008 – two years before the casinos opened. The CRA has mandated comprehensive AML/CFT regulations for casinos, which are prescribed in the Casino Control (Prevention of Money Laundering and Terrorism Financing) Regulations under the Casino Control Act. These are benchmarked against FATF standards, and on par with regimes applied by other jurisdictions on their casinos – such as the United States and Australia. This preemptive approach is another example of our determination to keep money laundering and terrorist financing off our shores. Our philosophy is to proactively deter criminal activity before the opportunity presents itself.
13 The continued evolution of finance and technology will present criminals with new gaps to exploit. It is our collective responsibility to shore up our region’s defences and ensure that any potential weaknesses are quickly addressed.
14 As part of our contribution to enhance AML/CFT governance, Singapore hopes to explore ways to enhance the region’s AML/CFT capacity through focused technical assistance efforts. Through collaborative efforts between industry and the Government of Singapore, we seek to work with like-minded partners such as the World Bank, the IMF, APG and FATF, amongst others, to kickstart a partnership initiative founded on three key pillars: capacity-building; outreach to industry; and policy research programs.
15 Through capacity building and policy research, we will work with relevant authorities and industry experts to increase awareness of new AML/CFT risks, and facilitate policy discussions on tools and frameworks to strengthen AML/CFT compliance. Such technical assistance will complement regional industry outreach which Singapore has been supporting for several years now. For example, the Association of Banks in Singapore (or ABS) holds a conference twice every year to discuss industry threat analyses and promote best practices and invites participation from compliance professionals in the region. These industry participants have no doubt benefited from the insights shared by our partners who speak at these sessions. ABS held its 7th conference yesterday, which was attended by over 350 private sector practitioners from the region and Singapore.
16 Singapore looks forward to working closely with like-minded partners and the region to enhance the value proposition of the Asia Pacific by strengthening our collective resilience towards financial crimes. Decisions at this Annual Meeting will further help the regional fight against money laundering and terrorist financing.