March 25, 2025

Last year the MAS considered the banking sector to be the sector most exposed to money laundering according to this article https://www.pymnts.com/aml/2024/singapore-says-banking-sector-is-top-money-laundering-risk/ which was written following the national money laundering risk assessment in Singapore https://www.mas.gov.sg/-/media/mas-media-library/publications/monographs-or-information-paper/amld/2024/money-laundering-national-risk-assessment.pdf

The article mentions that other higher money laundering risk sectors include corporate service providers, real estate, casinos, licensed trust companies, precious stones and precious metal dealers, digital payment token services providers, payment institutions and external asset managers. That’s quite a list and it raises the question ‘What sectors in the financial sector are considered safe or low risk from an AML point of view?’

Let’s look – once more – at the recent high-profile money laundering case in Singapore amounting to approximately S$2.2 billion which highlights for instance the potential role of the real estate sector in such activities due to several factors:

  1. High-Value Transactions: Real estate transactions often involve large sums of money, making them attractive for laundering illicit funds
  2. Anonymity and Complexity: The use of shell companies and offshore entities can obscure the true ownership and source of funds, complicating efforts to track transactions
  3. Price Manipulation: Real estate prices can be manipulated, allowing for the integration of illicit funds into the legitimate economy

In similar cases globally, real estate has been used to launder money by purchasing properties through shell companies, manipulating property values, and using cash transactions to avoid scrutiny. While the specific involvement of real estate in the Singapore case is not detailed, these general practices suggest how the sector could potentially be exploited for money laundering purposes.

Does that make the real estate sector stand out or can similar arguments be made for some of the other industries as well?

The Singapore government has introduced stricter regulations, including enhanced scrutiny of foreign investors and increased collaboration between public and private sectors to combat money laundering. Despite these efforts, the recent case highlights gaps in the regulatory framework, prompting further action to bolster anti-money laundering measures. The case could have significant implications for Singapore’s reputation as a financial hub, with concerns about the influx of illicit funds into the property market and other sectors. As we all know Singapore is keen to maintain its reputation as a clean and safe financial haven, investing in technologies like AI to detect suspicious transactions. Having said that: major fines to banks have not been handed out.

Having worked for and with banks on financial economic crime for most of my working life I know banks still don’t always get it right. But I do not know of any bank without an FEC compliance and operations team. Banks have AML programs, budget, training and people to prevent money laundering but I’m less sure about the awareness and the approach in most of the other sectors.

We all see the riches, affluence and wealth in the city; the million-dollar cars, jewellery, designer bags, art and wine. Apartments or entire floors in condo’s bought but not lived in or rented out, clearly just used to park money. I’m not saying this is all illegal, I’m just questioning if every dollar spent or invested has proper Source of Wealth documentation.

So which sector do you think is free of financial crime and which sector is extremely vulnerable to money laundering?

We look forward to your reactions.