The Monetary Authority of Singapore (MAS) announced on Oct 1 that it will introduce a digital platform and enabling regulatory framework for financial institutions (FIs) to share with one another relevant information on customers and transactions to prevent money laundering (ML), terrorism financing (TF) and proliferation financing (PF).
The platform is named COSMIC which stands for Collaborative Sharing of ML/TF Information & Cases. The COSMIC platform is co-created by MAS and six major commercial banks in Singapore, DBS, OCBC, UOB, SCB, Citibank and HSBC.
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The COSMIC platform will enable FIs to securely share information on customers or transactions, where they cross material risk thresholds. Such information sharing will help FIs identify and disrupt illicit networks, thus helping to safeguard Singapore's financial centre. The COSMIC platform will also be the first centralised platform where information is shared in a structured format that allows for seamless integration with data analytics tools. This will help FIs collaborate productively and at scale.
MAS plans to launch the COSMIC platform in the first half of 2023. COSMIC will initially focus on three key financial crime risks in commercial banking, namely, abuse of shell companies, misuse of trade finance for illicit purposes, and PF. The six banks involved in COSMIC’s development will participate and be permitted to share information in COSMIC during this initial phase.
Loretta Yuen, OCBC's group head of legal and regulatory compliance says COSMIC is a step in the right direction to combat an increasingly bold and sophisticated web of financial crimes. "While banks have been investing significantly in the infrastructure over the years, we have been fighting these crimes very much on our own. This limits the ability to effectively prevent the fall-out.
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"In OCBC, we developed our own in-house system leveraging machine learning and data analytics, which has helped us detect suspicious transactions and negate the impact. However, we do not know what we do not see. Bad actors in financial crimes typically use bank accounts from different banks over a period of time 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 quickly across the network to stop other banks from being used for financial crimes. If we do this well, criminal activities can be disrupted earlier to prevent more victims from falling prey," says Yuen.
Meanwhile, Dylan Lee, Citi Singapore’s Country Chief Compliance Officer says: “Citi is committed to the fight against money laundering and leading the way in Responsible Finance, through conduct that is transparent, prudent and dependable. The fight against money laundering is a constant and evolving process. Thus, we continually work to identify and understand the potential risks of money laundering and terrorist financing, and implement appropriate processes to mitigate and alleviate such risks. This is why we are a pioneering participant in the COSMIC initiative."
MAS plans to progressively extend COSMIC’s coverage to more FIs and focus areas and make some aspects of sharing mandatory.
