The Monetary Authority of Singapore (MAS) will launch a data and information-sharing platform as a new layer of digital security to prevent money laundering, terrorism funding, and proliferation financing.
The central bank plans to launch the ‘collaborative sharing of ML/TF information and cases’ (COSMIC) platform in the first half of 2023, which will be available to the city-state's six biggest commercial banks in the initial phase. COSMIC will enable financial institutions to securely share information about customers or transactions where they cross material risk thresholds.
Loo Siew Yee, assistant managing director for policy payments and financial crime at MAS said, "The information-sharing framework is designed to target serious criminal behaviors and enable financial institutions to detect the bad actors to purge and deter them".
Financial hubs like Singapore are vulnerable to money laundering due to large border flows. MAS said a common challenge faced by financial institutions is not being able to warn each other about unusual activity in the customers' accounts. This gap is frequently exploited by criminals to make illegal purchases which result in loss of money for customers.
COSMIC is the result of the collaboration of MAS and large commercial banks
MAS said the new security service is the first centralised platform of its kind as a result of its cooperation with large banks such as DBS, OCBC, United Overseas Bank, Standard Chartered Bank, Citibank, and HSBC.
Loretta Yuen, head of group legal and regulatory compliance at OCBC Bank said, "Bad actors in financial crimes typically use bank accounts from different banks to hide and spend the illicit funds".
"By sharing data and information of suspicious accounts at the first instance on a common platform, it will send red flags immediately across the network to stop other banks from being used in financial crimes," she said.
COSMIC will initially focus on three key financial crime risks in the banking sector which are an abuse of shell companies, misuse of trade finance for illicit purposes, and rapid increase in financing. More key areas will be added later.
MAS will provide in the legislation that this information sharing by financial institutions is permitted only for the purpose of combating money laundering, funding terror and proliferation financing. COSMIC will have strong security features to avoid unauthorised access to information and will be operated by MAS.
Some countries have introduced arrangements for information sharing among financial institutions, but COSMIC will be the first centralised platform, in which information is shared in a structured format that enables seamless integration with data analytics tools. This will help financial institutions to collaborate productively and at scale. COSMIC’s regulatory framework will clearly specify the types of information to be shared, and the circumstances under which the information sharing will be permitted or mandated.
Lam Chee Kin, group head of legal, compliance and secretariat at DBS Bank said technology and public-private partnerships are game-changers in the fight against financial crime.
Jamil Ahmed, chief compliance officer at HSBC Singapore said, “COSMIC will enable the bank to build its existing capabilities to detect, analyse and mitigate financial crime”.