Singapore to stop issuing 10,000-dollar notes to combat financial crime

MAS deputy managing director for financial supervision Ong Chong Tee said the development of more advanced and secure electronic payment systems had reduced the need for large value cash-based transactions.

Ong told the annual financial crime seminar of the Association of Banks of Singapore on 2 July that MAS will discontinue issuing the banknote from 1 October 2014. Existing SGD 10,000 banknotes in circulation will remain legal tender, including all notes under a ‘Currency Inter-changeability Agreement’ with Brunei, he said. “However, we expect the stock of such notes to dwindle over time, as worn notes are returned to us and not replaced.”

Ong said a money laundering and terrorist financing national risk assessment (NRA) report (94-page / 992 KB PDF) published last January, based on a “comprehensive assessment” by more than 15 government agencies of the adequacy of measures relating to anti-money laundering and terrorist financing, highlighted “risks inherent in cash-intensive industries and large value cash transactions”.

The report’s results “largely validated the prevailing instinctive sense that high-risk sectors are primarily the cash intensive and internationally oriented ones, such as casinos and remittance agents”, Ong said. The NRA also revealed “emerging risk areas” such as virtual currencies and large-value precious stones and metals dealings, and the potential risks associated with these sectors are also being considered.

Ong said: “Put simply, the NRA has been a useful ‘health-check’ of the money laundering and terrorist financing risks facing Singapore, by highlighting areas that warrant more resources and attention.” He said the risk review would be updated every two to three years to ensure Singapore’s understanding of risks remained “current and accurate”.  

In addition, Ong said Singapore’s Accounting and Corporate Regulatory Authority will implement an “enhanced regulatory framework for corporate service providers, to minimise the risks of shell companies being set up for illicit purposes”. This is expected to take effect from the last quarter of 2014. 

Last March MAS, which is also Singapore’s central bank, announced that it would regulate virtual currency intermediaries for anti-money laundering and counter-terrorism financing purposes. Ong said details will be announced “in due course”. Meanwhile, MAS has also stepped up its supervision and inspection of remittance agents and money-changers.

Ong said: “Financial crime is a serious global threat. According to some UN estimates, the amount of money laundered globally is between 2% and 5% of global gross domestic product annually, or to put this in US dollar terms, between $800 billion and $2 trillion a year. Rapid advancements in information, communication and payment technologies have led to great conveniences around speed, ease, and often anonymity; so these developments also open up more potential loopholes and avenues for perpetrators to escape detection. Hence the momentum (to guard against financial crime) must be maintained.”

Protecting Singapore’s reputation “as a well-regulated and clean financial centre is not negotiable”, Ong said. “This is a fundamental tenet upon which our financial centre has developed, and the continued confidence in the integrity of our financial system is a necessary condition for sustaining growth of the sector.”

Earlier this year, a review of global economic crime trends by PwC found that financial services firms are more likely than non-financial companies to have been the victim of economic crimes such as fraud or theft.