Authorities in the city-state are continuing their efforts to stamp out financial crime.

Several Singapore banks have collaborated with each other and the city-state's financial watchdog to develop a joint utility for know-your-customer processes, a figurehead from the Monetary Authority of Singapore has said.

“On onboarding, a number of banks in Singapore have come together to build a joint utility for KYC processes,” said Chua Kim Leng, assistant managing director at the MAS, Singapore's central bank and regulator. He did not specify, however, which banks are part of the initiative. 

The formation of the working group comes at a time when Singapore is still feeling the burn of two major money laundering affairs, which saw private banks Falcon and BSI kicked out of the city-state over transactions related to the scandal-hit 1Malaysia Development Berhad fund. Several former bankers who had affiliations with the fund have been handed indictments, fines and jail sentences by Singapore, demonstrating how authorities there are hot on the heels of those trying to cheat its financial system. 

“The utility can be a platform for raising the waterline for KYC processes across participating banks, and strengthen the adoption of best practices for screening and onboarding,” Chua Kim Leng continued. He was speaking at the Association of Banks in Singapore's financial crime seminar. 

The MAS hopes the utility will free up resources and allow banks to focus on the more complex aspects of due diligence and monitoring, Chua Kim Leng said. He added that a “well-designed and well-executed” system could also reduce the strain on clients as they would not need to provide the same information to multiple institutions. 

Aside from discussing challenges relating to onboarding, Chua Kim Leng said “there is also room for improvement” in the area of transactions monitoring.

“Current systems largely flag out transactions based on pre-set rules, thresholds and scenarios,” he said. “Though these are calibrated periodically, there is still a high rate of false positives.”

He explained that these alerts require “extensive human effort to review”, and stressed that “throwing more 'warm bodies' at the problem is not a sustainable solution”. 

He suggested instead that technology should play a more vital role.

“The next generation of surveillance systems utilise sophisticated techniques, such as machine learning, which can help identify unusual patterns of transactions across a network of entities and across time,” Chua Kim Leng said. “These systems show promises and could succeed in picking out suspicious activities that are impossible for the human eye today.”

WealthBriefing Asia will continue to track the development of this working group and will update coverage accordingly.