|
Getting your Trinity Audio player ready...
|
The Monetary Authority of Singapore (MAS) has unveiled COSMIC, the first centralised digital platform created to foster the exchange of customer information among financial institutions (FIs) globally. Aimed at combating the pervasive issues of money laundering (ML), terrorism financing (TF), and proliferation financing (PF), COSMIC represents a significant step forward in fortifying the defences of the financial system against illicit activities.
Introduced under the Financial Services and Markets (Amendment) Act 2023, along with accompanying subsidiary legislation, COSMIC provides a robust legal framework and stringent safeguards for the secure sharing of customer information. This legislative foundation ensures that participating FIs can exchange vital data while upholding strict confidentiality standards and safeguarding the interests of legitimate customers.
Following amendments to the Financial Services and Markets Act 2022 (FSMA) in May 2023, COSMIC operates on the principle of sharing customer information based on objectively-defined indicators of suspicion, or “red flags.” This approach enables FIs to identify and report potentially illicit activities promptly, facilitating more informed risk assessments and proactive measures to combat financial crime.
Ms Loo Siew Yee, Assistant Managing Director (Policy, Payments & Financial Crime) at MAS, emphasised the importance of COSMIC in enhancing collaboration between FIs and law enforcement authorities to combat financial crime effectively. She highlighted that COSMIC will enable FIs to warn each other about suspicious activities promptly, thereby bolstering Singapore’s reputation as a well-regulated and trusted financial centre.
COSMIC was co-developed by MAS and six major commercial banks in Singapore, including DBS, OCBC, UOB, Citibank, HSBC, and Standard Chartered Bank. These leading institutions will serve as participant FIs during the initial phase of COSMIC’s implementation. Although information sharing on the platform is currently voluntary, COSMIC focuses on addressing three critical financial crime risks in commercial banking: the misuse of legal persons, misuse of trade finance for illicit purposes, and proliferation financing.
The platform’s collaborative approach underscores the industry’s commitment to leveraging technology and innovation to combat financial crime effectively. By facilitating seamless information sharing and analysis, COSMIC empowers FIs to identify and mitigate emerging risks promptly. This proactive stance not only protects the integrity of the financial system but also enhances trust and confidence among stakeholders.
As COSMIC enters its operational phase, MAS and participating FIs will continue to refine and enhance the platform’s capabilities. Ongoing collaboration and feedback mechanisms will ensure that COSMIC remains at the forefront of efforts to combat financial crime effectively. Furthermore, MAS remains committed to supporting the government’s broader initiatives aimed at promoting transparency, integrity, and resilience in the financial sector.
COSMIC gives particular attention is given to addressing three significant financial crime risks prevalent in commercial banking:
Misuse of Legal Persons: This aspect of COSMIC’s focus aims to tackle instances where legal entities are exploited for illicit purposes, such as concealing the true ownership or beneficial interests behind transactions.
Misuse of Trade Finance for Illicit Purposes: Another critical area of concern targeted by COSMIC is the misuse of trade finance mechanisms for facilitating illicit activities.
Proliferation Financing: COSMIC also addresses the risk of proliferation financing, which involves the provision of funds or financial services to support the proliferation of weapons of mass destruction (WMD) or their delivery systems.
The launch of COSMIC represents a significant milestone in Singapore’s ongoing efforts to combat financial crime and uphold the integrity of its financial system. By harnessing the power of technology and collaboration, COSMIC strengthens the defences of the financial industry against illicit activities, reinforcing Singapore’s position as a global financial hub built on trust, transparency, and innovation.
