Terrorism Financing and CFT measures in Singapore
What is terrorism financing or terrorist financing?
Terrorism Financing refers to illicit money being laundered and used to finance terrorist activities. Terrorism is a global issue, and money laundering facilitates the funding of terrorist organizations. Terrorist uses this laundered money to purchase arms and ammunition, provide training and propagate terrorism.
To cease the funding of terrorist activities, various governments have adopted strict measures primarily aimed at preventing money laundering that would further prevent the financing of terrorist activities. Thus, regulations for anti-money laundering and combating terrorism financing go hand-in-hand. With AML rules and regulations, governments make efforts to stop the financial aid offered to terrorists by identifying money laundering activities.
Interestingly, money used for financing terrorist activities may not always come from illegitimate sources. Criminals also get financial assistance from legitimate/legally earned money such as salaries, profits, and business revenues. Money launderers use shell companies and charitable organizations to route legitimate money into terrorist groups. Such money from legal and financial institutions is run through various channels and later used for funding terrorist activities.
Why is it necessary to counter or combat Terrorism Financing?
Terrorism is a massive danger to society, countries, and the world. The aftermath of terrorist attacks impacts generations to come. Not only does it cause loss of life and limb, but it also destroys the economic fabric of the country where the attacks take place.
It creates unrest in the public and political trouble that poses a danger to the safety and security of the nation. So, the government should prevent terrorist activities and seize funds that go into the finance of such crimes.
Terrorism originates and expands its base with a regular supply of funds. It is used in large amounts to plan and execute terrorist attacks worldwide. If the terrorists cannot source funds, it will be difficult to materialize their anti-social ideas and, thus, curb this heinous crime.
Terrorist activities require massive funding, but if the government and the relevant agencies can identify and prevent money laundering activities, the same will directly impact the prevention of terrorism.
The Singapore government has taken several measures to combat money laundering and prevent the financing of terrorism.
Measures adopted by Singapore to counter financing of terrorism
Singapore is committed to combating money laundering and terrorism financing.
In 2020, Singapore conducted the Terrorism Financing National Risk Assessment (TF NRA) 2020. Basis the findings and observations of this assessment, the Singapore authorities have formulated the National Strategy for Countering the Financing of Terrorism (CFT). The National CFT Strategy shall drive Singapore’s national methodology to fight the TF risks and help deploy the measures necessary to detect, investigate, and prevent terrorism financing.
With this National CFT Strategy, Singapore authorities strive to improve the collaboration among different enforcement agencies working towards fighting terrorist financing.
The Singapore authorities have enacted the following regulations targeted at combating financial crimes in the country:
- CDSA (“Corruption, Drug Trafficking, and other Serious Crimes (Confiscation of Benefits) Act”)
- Terrorism (Suppression of Financing) Act,
- Precious Stones and Precious Metals (Prevention of Money Laundering and Terrorism Financing) Act.
Further, the Monetary Authority of Singapore (MAS) and the Commercial Affairs Department are working closely toward identifying, investigating, and preventing money laundering and terrorism funding cases.
Singapore’s AML/CFT measures aim to prevent criminals from gaining access to the proceeds of crimes generated in Singapore or introduced in Singapore through any other country.
The AML/CFT regulations obligate the designated entities to deploy strict AML/CFT policies and controls in their organization proportionate to their business risk assessment. Such AML/CFT framework shall be implemented to detect, deter and prevent money laundering and terrorism financing. This policy shall include effective measures to identify the customers and clients and report suspicious activities at the earliest.
How can AML Singapore help?
AML Singapore is one of the most trusted AML service providers helping several businesses with its end-to-end AML/CFT consultancy services. Our offerings include documentation of AML/CFT policy, controls, and procedures, imparting AML Training, AML software for sanctions compliance, managed KYC and customer due diligence measures, assistance in regulatory reporting, etc. Let us partner together in your AML/CFT journey.
About the Author
Pathik Shah
FCA, CAMS, CISA, CS, DISA (ICAI), FAFP (ICAI)
Pathik is a Chartered Accountant with more than 25 years of experience in compliance management, Anti-Money Laundering, tax consultancy, risk management, accounting, system audits, IT consultancy, and digital marketing.
He has extensive knowledge of local and international Anti-Money Laundering rules and regulations. He helps companies with end-to-end AML compliance services, from understanding the AML business-specific risk to implementing the robust AML Compliance framework.