Singapore’s Banks Increase Customer Scrutiny After Money Laundering Scandal

Singapore’s banks are reportedly increasing customer scrutiny following a $1.8 billion money laundering scandal.

As the Financial Times (FT) reported Saturday (Sept. 23), this added oversight is being applied to customers from a number of countries — China among them — with lenders also stepping up efforts to determine the sources of wealth.

According to the FT, interviews with wealth advisers, asset managers and private bankers have revealed that banks are warning that the waiting period to open a private banking account has gone from just a few weeks to three to four months.

Sources told the FT the longer processing times aren’t an official rule change, but rather a sign of how authorities have increased diligence following last month’s money laundering arrests. Banks are focusing on customers from China, Vanuatu, Turkey, St. Kitts and Nevis, Dominica and Cyprus, the report said.

“If you have a People’s Republic of China passport, or possess a passport from any of the countries the suspects involved in the probe had, such as Cyprus, Vanuatu or Cambodia, you are getting red-flagged,” said one private banking adviser.

Last month, police in Singapore charged 10 people in a money laundering investigation, seizing nearly $2 billion in assets.

This news follows reports from earlier this year that banks, regulators and police in Singapore were working to create new standards for cryptocurrency and digital asset companies.

PYMNTS intelligence has also found that Singapore is the world’s most digitally connected country and a leading innovator in facilitating international business payments.

The report “How the World Does Digital: Different Paths to Digital Transformation” shows that Singapore is the most engaged nation in the ConnectedEconomy™ according to all the study’s metrics. In addition, the nation’s tech sector is heavily focusing on cross-border payments innovation, both singly and via partnerships, the report found.

Meanwhile, PYMNTS spoke earlier this month with Tobias Schweiger, CEO and co-founder of Hawk AI, about the way artificial intelligence (AI) can help banks prevent money laundering and other forms of fraud.

New PYMNTS Intelligence showed that more than 40% of U.S. banks reported an increase in fraud year over year, almost double what they reported last year. This increased number of fraudulent transactions represents a higher value of fraudulent losses and shows that bad actors are getting better at bypassing older, legacy lines of fraud defense.

For at least two decades, most fraud systems have been based on simple rules engines that don’t do the trick anymore, Schweiger told PYMNTS’ Karen Webster.

“Upgrading solutions and systems to also include machine learning and AI is really the only way [forward],” he explained.