All Eyes are on Singapore and its Fight Against Dirty Money

Over the past two years, Singapore has played a central role in the global response to dirty money, honoured with the privilege – and hard work – of holding the presidency of the Financial Action Task Force (FATF).

You would be forgiven for stopping reading right here. What sort of privilege is that? And what even is the FATF…?

The short answer is that the FATF is one of the most powerful organisations you have never heard of. Have you had to show ID in order to open a bank account? Or show proof of the source of your funds to a lawyer when paying for a new apartment? You have the FATF – the global watchdog for combatting financial crime – to thank for that bureaucracy. And from July 2022 to the end of June this year when hundreds of delegates visited Singapore for the last plenary meeting of the current presidency, Singapore – one of the 40 members of this club – has been at the helm.

This is not the place to explore the whys and wherefores of the FATF – my colleagues and I at the Centre for Finance and Security have written about that extensively elsewhere. But it is worth pondering the importance of the responsibility that Singapore has carried over the past two years at a time when the country has found itself uncomfortably – and unusually – in the financial crime spotlight.

From our experience, Singapore is home to some of the smartest and most advanced thinkers in the anti-financial crime community – just look at its proposed updated anti-money laundering legislation. For our research, we come to Singapore to learn from local policymakers, law enforcement officers and supervisors who are invariably at the cutting edge of best practice, and we export these innovations to other countries that are struggling with similar challenges. It therefore made complete sense for Singapore to be entrusted with the leadership of this unique global body.

The Singapore presidency’s priorities, as revealed two years ago, were also ‘on point’ – in particular the commitment to boosting the poor level of criminal asset recovery by the global community. Criminals have long profited handsomely from their ill-gotten gains as national and global authorities have struggled to confiscate the proceeds of crime, particularly when dirty money has moved across borders and is sequestered in fancy properties in desirable locations around the world.

As Singapore Prime Minister Lawrence Wong underlined in his speech to the FATF plenary in June, as an international financial centre (IFC), Singapore has not been immune to this affliction. If you are a high-rolling kleptocrat or criminal, you are unlikely to try to hide your loot in a financial backwater where it will stand out like a sore thumb; much better to wash your funds through an IFC where it may be indistinguishable from all the other legitimate, cross-border financial transactions that represent the bread-and-butter of daily financial business.

It is thus welcome to see Singapore leading by example, publishing its first-ever National Asset Recovery Strategy alongside the opening of the recent FATF plenary. But why has it taken until 2024 for this ‘first’ to occur?

The simple answer is that Singapore needs to lead by example. Having urged the rest of the world to put more effort into asset recovery over the past two years, it needs to walk its own talk. The least it could do was publish a strategy. But the government also needs to ensure that it safeguards its reputation via action. Headlines in recent years have been challenging. ‘Money laundering events in Singapore up 79% in 2023’, ‘The $2bn dirty-money case that rocked Singapore’ and ‘Billion-Dollar Money Laundering Case Embroils Some of Singapore’s Banking Giants’ are just some of the sensational stories to appear.

Trust me, writing from London (so often referred to as ‘Londongrad’ for its predilection for questionable Russian money), a reputation for welcoming dirty money is hard to shake off once it catches on.

So, what is Singapore actually doing?

The four pillars of its asset recovery strategy are a good start – ambitions that would not look out of place in any other major financial centre. The focus on a ‘whole of society’ approach is also welcome, and acknowledges that while law enforcement is central to the response to economic crime and the recovery of related ill-gotten gains, society – writ large – must be better informed and immunised against the range of economic crime threats it faces, most notably scams.

But alongside these four, there is an important fifth pillar that is less evident in the headlines of Singapore’s strategy: anticipate. What threats are out there? What is Singapore doing to stop them afflicting its hard-won reputation for financial propriety? And how is society being prepared to confront them?

There is no doubt that an enhanced asset recovery strategy is a necessary response to the abuse of Singapore as an IFC, but better still would be to research and analyse emerging trends that might threaten the integrity of the financial system and its users in Singapore and take immunisation steps in anticipation. This goes further than deterring criminals from using Singapore to hide, move or enjoy their illicit assets, and the rather vague whole of society approach that the country calls for.

If Singapore is going to truly secure itself against threats from illicit financial activity and implement a genuine strategy of deterrence, then it needs to commit to conducting significant research on these threats. For many criminal and corrupt actors in the region, Singapore is the perfect getaway car: a large financial centre through which bad actors can access the global financial system to move their dirty money wherever they like in the world – or hide it via shady property deals under the authorities’ noses in Singapore itself.

One particular emerging threat the country faces is how it is going to address the growing challenge posed by the development of Chinese underground banking networks. Undertaking research on such threats will provide a basis for it to develop – in partnership with the private sector and wider society – the necessary tools and strategies not only to react after the fact with law enforcement action, but also to ensure that those seeking to hide dirty money among the towers of the Central Business District or scam innocent Singaporean citizens are genuinely deterred by the much-referenced ‘whole of society’ response.

The proof will, of course, be in the pudding. The road to good intentions is littered with strategies that never leave the paper they are written on. In just over a year, the FATF will be back in Singapore – this time not to celebrate Singapore’s presidency, but to scrutinise and publicly opine on whether the country is practising what it preaches when it faces its next evaluation by the global watchdog. Speeches, strategies and ambitions don’t impress the assessors – actions do. If Singapore can walk its own talk and adapt to the threats it attracts as an IFC, it should have nothing to fear.

The views expressed in this Commentary are the authors’, and do not represent those of RUSI or any other institution.

Have an idea for a Commentary you’d like to write for us? Send a short pitch to commentaries@rusi.org and we’ll get back to you if it fits into our research interests. Full guidelines for contributors can be found here.