Singapore’s central bank expresses money laundering concerns with digital assets

Singapore’s central bank, the Monetary Authority of Singapore (MAS), has identified digital payment tokens (DPTs) as a potential avenue for money laundering, alongside casinos and precious stones and metals. In its ‘2024 Money Laundering Risk Assessment Report,’ MAS highlighted formal banking as the highest-risk sector for money laundering, despite implementing stronger controls. MAS also flagged DPT service providers (DPTSPs) as a medium-risk sector. The report revealed that cyber-enabled fraud, ransomware, darknet transactions, hacks, and terrorist financing are significant sources of illicit transactions involving digital assets. While there has been an increase in reported cases involving digital assets, MAS noted that regulated sectors dealing with DPTs have improved their risk understanding and awareness, leading to a rise in suspicious transaction reports (STRs). The central bank has increased its oversight of the industry with the implementation of the Payment Services Act, requiring virtual asset service providers to obtain licenses. Despite the vulnerability of digital assets to money laundering, MAS is less concerned due to the small volume of Singaporean DPT activity globally and their limited use for local payments. Singapore is recovering from a recent money laundering scandal involving digital assets and has taken steps to mitigate anti-money laundering (AML) deficiencies, including expanding its jurisdiction over VASPs through new amendments to the Payment Services Act.