Home Data Singapore introduces ‘COSMIC’ platform for banks to flag money-laundering concerns

Singapore introduces ‘COSMIC’ platform for banks to flag money-laundering concerns

Singapore: its monetary authority has developed the platform with six major commercial banks | Credit: Frank Zhang (Pixabay)

The Monetary Authority of Singapore (MAS) has this week launched ‘COSMIC’, billed as the first ‘centralised digital platform’ to facilitate sharing of customer information among financial institutions to combat money laundering, terrorism financing (TF) and proliferation financing globally.

The name of the platform – which has been co-developed by MAS and six major commercial banks – stands for ‘COllaborative Sharing of Money Laundering /TF Information & Cases’. It enables information to be shared among commercial banks in a structured format that should allow for seamless integration with data analytics tools globally. Its introduction is a significant change that involved the creation of safeguards designed to ensure that sharing occurs only where warranted and that law-abiding customers’ interests are protected. Confidentiality obligations had previously prevented banks from notifying each other about unusual customer activity.

The Financial Services and Markets (Amendment) Act 2023 and accompanying subsidiary legislation, which set out the legal basis and information-sharing safeguards, is now in force.

The platform has been co-developed by MAS and Citibank, DBS, HSBC, OCBC, Standard Chartered Bank and UOB. The six commercial banks will all participate on COSMIC ‘during its initial phase’, according to MAS’s COSMIC announcement.

“COSMIC will enable financial institutions to warn each other of suspicious activities and make more informed risk assessments on a timely basis,” said MAS assistant managing director (policy, payments and financial crime) Loo Siew Yee. “It complements the industry’s existing close collaboration with MAS and law enforcement authorities to combat financial crime. This will strengthen Singapore’s capabilities to uphold our reputation as a well-regulated and trusted financial centre.”

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‘Red flags’ to trigger info-sharing

MAS had initially planned to launch COSMIC during 2023. But the launch date was revised to the second half of this year to allow the project team further time to build the platform and put in place the necessary legislative instruments. Since then, progress has been relatively smooth, which has enabled the go-ahead this month (April 2024).

Following public consultation in October 2021, the Financial Services and Markets Act 2022 (FSMA) was amended in May 2023 to set out the legislative framework for COSMIC.

A COSMIC participant bank may share customer information with another participant bank only if the customer’s profile or behaviour displays certain objectively-defined indicators of suspicion, or ‘red flags’, MAS states.

‘The FSMA requires participant financial institutions [FIs] to have in place policies and operational safeguards to protect the confidentiality of information shared,’ MAS explains. ‘This will allow participant FIs to share information on potential criminal behaviour while safeguarding the interests of the vast majority of customers who are legitimate. Customers are encouraged to continue to provide timely responses if requested by FIs to provide clarifications on their risk profiles or transactions, so that FIs can make informed risk assessments.’

Proliferation financing refers to the raising, moving or making available of financing, funds, assets or other economic resources to individuals or entities to support the proliferation of weapons of mass destruction, including the proliferation of their means of delivery or related materials.

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‘High-risk actors and webs of anomalous activities’

Singapore is an active member of the Financial Action Task Force (FATF), the global standard-setting and oversight body for anti-money laundering (AML)/countering the financing of terrorism (CFT). As co-chair of its Policy Development Group, it collaborates closely with fellow AML/CFT policymakers and supervisors to develop international standards.

COSMIC itself has already attracted the attention of public servants outside Singapore with an interest in tackling money-laundering and financial crime. Its creation, for example, was referenced by during a panel session featuring three UK-based speakers on the topic of ‘Financial crime, fraud and payment scams’ at the ‘Payments Regulation and Innovation Summit’ in London on 25 January.

Efforts to tackle financial crime in Singapore were also highlighted by Australia’s assistant treasurer and minister for financial services, Stephen Jones, during a UK government-hosted ‘Global Fraud Summit’ (11-12 March).

In a speech in 2021, MAS’s then-managing director Ravi Menon described COSMIC as a ‘platform for information sharing and analysis [that] will generate a rich and dynamic data pool of high-risk actors and their webs of anomalous activities’. He said it would ‘enable seamless data exchange with financial institutions’ own data analytics systems so that they can effectively identify and disrupt criminal networks sprawling across multiple financial institutions.’

It was announded in September last year that Menon would be retiring from the Singapore public service at the end of 2023. It was announced last week that he has been appointed as the city-state’s first ambassador for climate action and senior adviser at its National Climate Change Secretariat (NCCS).

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