The birth of COSMIC
The new secured digital platform, titled 'Collaborate Sharing of ML/TF Information & Cases' (“COSMIC”), is a welcome addition to the financial sector. It provides quicker detection of financial crimes and provides greater security to legitimate customers and FIs respectively.
With the COSMIC platform, FIs will be able to collaborate effectively with each other during the customer due diligence process and better identify potentially suspicious activities which involve their customers. This is a departure from previous practice, whereby FIs were not allowed to forewarn and tip-off each other about questionable transactions.
COSMIC is intended to fill the information gap between FIs and restrict financial criminals from taking advantage of this lacuna to enter into illicit transactions. Additionally, it will result in the enhanced quality of suspicious transaction assessments conducted by FIs.
The COSMIC platform will allow FIs to share information when detecting key ML,TF or PF risks in three different modes. The three different modes are by alerting, requesting and providing information. To illustrate, FIs will alert, provide and request from other FIs if they detect that their customers are involved in the misuse of legal persons (such as the setting up of shell companies to launder illicit proceeds and disguise the origins), trade-based ML and PF. FIs should ensure that information is not shared injudiciously such that it will raise concern about the confidentiality, security and privacy of customers.
With the mass migration of information, MAS intends to introduce a legislative framework to govern the sharing of risk information on COSMIC. This will prevent the misuse of information obtained from COSMIC. FIs, including the major banks in Singapore will be required to put in place robust measures to prevent the unauthorised use and disclosure of COSMIC information. MAS will step in to ensure that FIs comply with these requirements and, if necessary, take action against errant FIs. It will be imperative that compliance with new legislative requirements under the COSMIC platform is adhered to by FIs.
Lessons from the Pandora Papers
The recent Pandora Papers leak highlights the importance of the need to consistently refine Singapore’s rigorous anti-money laundering and countering the financing of terrorism (“AML/CFT”).
The Pandora Papers have revealed the secret wealth and hidden dealings of international entities, political individuals and corporations globally, and their involvement in potentially shady and unsavoury dealings. With the implementation of COSMIC, the information gap will be diminished, and corporate entities will find it more difficult to mask any wrongdoings from MAS and FIs by taking advantage of the loopholes in the law to manage trusts and shell companies for their clients.
With MAS pioneering the COSMIC platform and FIs assuming key roles in detecting suspicious activities, we can expect positive changes in the AML/CFT space through timely intervention to stop financial crimes.
The consultation period for COSMIC closes on 1 November 2021.
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Authored by Nick Williams, Nicole Lim and Audrey Koh.