Singapore Expresses Concerns Over Digital Payment Token Service Providers in Newly Released Report
Singapore’s updated Money Laundering National Risk Assessment (NRA) has raised alarms about the growing vulnerabilities associated with digital payment token (DPT) service providers. The comprehensive 126-page report, which covers new risk sectors not addressed in the previous 2014 report, also identifies DPT service providers and precious stone and metal dealers as areas of concern.
The banking industry, including wealth management, is flagged as posing the highest risks of money laundering among these sectors. Banks are particularly susceptible to criminal exploitation due to their involvement in facilitating large transaction volumes and serving high-risk customers.
Crypto Asset Service Providers Identified as High Risk
Within the financial sector, DPT service providers, also known as virtual asset service providers, are highlighted as a high-risk group. The NRA report reveals an increase in reported cases involving DPTs and various methods of exploitation. Although Singapore has a relatively small share of global DPT activities, authorities closely monitor the associated risks.
Other high-risk sectors in the financial industry include payment institutions offering cross-border money transfer services and external asset managers.
The NRA report, a collaborative effort involving Singapore’s supervisory and law enforcement agencies, the Financial Intelligence Unit, and input from private sector entities and foreign authorities, unveils the key money laundering threats in Singapore, which stem from fraud (especially cyber-enabled fraud), organized crime, corruption, tax crimes, and trade-based money laundering.
Typical money laundering methods involve hiding illegal funds in Singaporean bank accounts, using fictitious companies, and investing in valuable assets such as real estate or precious metals.
Due to Singapore’s status as an international financial hub and its economic openness, it is susceptible to money laundering risks. Criminals exploit the country’s financial and business infrastructure to launder or transfer illicit funds. Additionally, converting illicit funds into assets like real estate, digital payment tokens, or precious metals poses significant threats.
To address these concerns, the Monetary Authority of Singapore (MAS) announced in April that it would implement amendments to the country’s Payment Services Act (PS Act) to broaden the range of regulated services related to digital payment token service providers.
Spot Bitcoin ETFs Drive Crypto Adoption in Singapore
Thanks to the recent approval of spot Bitcoin exchange-traded funds (ETFs) in the United States, Singaporeans are increasingly embracing Bitcoin. According to a report from digital currency exchange Independent Reserve, 39% of Singaporeans now hold a more positive view of Bitcoin following the approval of spot Bitcoin ETFs.
The study also reveals that Singaporean cryptocurrency investors are gaining more experience. Over half (52%) have been in the market for over three years, and their portfolios are becoming more diverse, with 16% now holding six or more different cryptocurrencies.
This year, 64% of crypto owners reported making profits, a significant increase from previous years, while only 10% experienced losses.
Similarly, a separate report by Seedly and Coinbase, conducted in the fourth quarter of 2023 and involving over 2,000 adults, found that 57% of respondents currently hold digital assets.
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