Singapore designates digital payment tokens as highrisk in antimoney laundering AML landscape

Singapore’s recently updated Money Laundering National Risk Assessment (MLNRA) has drawn attention to the significant risks and vulnerabilities posed by digital payment token (DPT) service providers in the Anti-Money Laundering (AML) landscape.
The comprehensive 126-page report has identified new sectors of risk that were not included in the previous 2014 report. These sectors include DPT service providers, as well as precious stone and metal dealers.
Among the various sectors within the financial industry, DPT service providers, also known as virtual asset service providers, have been identified as a high-risk category. The MLNRA report highlights an increase in reported cases of money laundering involving DPTs, along with a variety of exploitation methods.
Despite the relatively small portion of global DPT activities in Singapore, the authorities are closely monitoring the associated risks. Other high-risk sectors within the financial industry include payment institutions that offer cross-border money transfer services and external asset managers.
According to the risk assessment report, Singapore has identified its key money laundering threats as stemming from fraud, particularly cyber-enabled fraud, as well as organized crime, corruption, tax crimes, and trade-based money laundering.
Typical methods of money laundering involve hiding illegal funds in Singapore bank accounts, using fake companies, and investing in valuable assets such as real estate or precious metals.
The MLNRA report combines insights from Singapore’s supervisory and law enforcement agencies, including the Financial Intelligence Unit, as well as feedback from private sector entities and foreign authorities.
Due to Singapore’s status as an international financial hub and its economic openness, the country is exposed to money laundering risks. Criminals take advantage of the country’s financial and business infrastructure to launder or transfer illicit funds. Additionally, the conversion of illicit funds into assets such as real estate, digital payment tokens, or precious metals poses significant threats.
In April, the Monetary Authority of Singapore announced its plans to implement amendments to the country’s Payment Services Act in order to expand the scope of regulated services related to digital payment token service providers.