Banks in Singapore begin sharing data to combat financial crime

April 1, 2024 TH Author

The Monetary Authority of Singapore (MAS) and six banks have launched COSMIC, a common data platform to let financial institutions exchange insights on possible financial crime activities. DBS, UOB, Standard Chartered, Citibank, and HSBC have begun sharing customer information carrying “red flags” so they can warn each other of potential financial crime, such as money laundering and terrorism financing, MAS said.

The six banks will only share data if the customer’s profile or behavior exhibits “certain objectively-defined indicators of suspicion,” the central bank said in a statement on Monday. COSMIC is supposed to plug gaps where financial institutions are unable to alert each other about unusual activities involving their customers due to confidentiality requirements.

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In May 2023, Singapore proposed amendments to its Financial Services and Markets Bill to facilitate the sharing of data and establish the legal framework to do so via the data platform. These amendments have kicked in with the launch of COSMIC, according to MAS. The bill sets out policies and operational guidelines to which participants must adhere to safeguard the confidentiality of the shared data.

“This will allow participant financial institutions to share information on potential criminal behavior, while safeguarding the interests of the vast majority of customers who are legitimate,” MAS said. “Customers are encouraged to continue to provide timely responses if requested by financial institutions to provide clarifications on their risk profiles or transactions, so that financial institutions can make informed risk assessments.”

The six banks will share information on a voluntary basis, focusing on three commercial banking crime risks: the misuse of legal persons, trade finance for illicit purposes, and proliferation financing, which encompasses the moving or raising of funds and assets to support the proliferation of weapons of mass destruction.

Last year, MAS said COSMIC would be operational in H2 2024, after the six banks had started sharing data. This additional time is designated for finetuning features and resolving operational issues before the platform is fully operational. MAS also plans to expand data platform access to more financial institutions and add more risk areas, making data sharing mandatory in higher-risk situations.