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Singaporean parliamentarians have probed the Monetary Authority of Singapore (MAS) about how effective it is at tackling money laundering and terrorist financing in light of the Pandora Papers.
The Pandora Papers have become a bad headache for the world’s most prestigious financial services regulators, as evidenced by Singapore’s political class probing its financial authority, viewed as a global leader among financial regulators.
On Wednesday, four members of Singapore’s parliament submitted questions to Tharman Shanmugaratnam, the finance minister with responsibility for the MAS, regarding the Singaporean companies implicated in the leaked document.
The Pandora Papers scandal came to light in late September after the Washington-based International Consortium of Investigative Journalists (ICIJ) released a cache of leaked documents that showed how offshore countries have maintained their role as a hub for suspect financial behaviour.
Murali Pillai, a member of the centre-right People’s Action Party in Singapore, asked: “What steps will MAS take to satisfy itself that Singapore-based professionals, trust companies and financial institutions charged with the responsibility of conducting the requisite due diligence checks under Singapore’s frameworks to prevent money laundering, terrorist financing and tax evasion are discharging their duties as required so as to preserve Singapore’s good reputation as a trusted and responsible financial hub?”
The MAS responded defensively, noting that the Pandora Papers have not raised significant concerns over the anti-money laundering and counter-terrorism financing (AML/CTF) controls of the city-state’s financial institutions.
“Nevertheless, MAS is engaging the relevant FIs [financial institutions] to assess if the tightening of controls is warranted,” said Lawrence Wong, MAS’ deputy chairperson.
The MAS also supervises financial institutions to ensure that their boards and management have implemented robust controls against money laundering and terrorism financing, Wong continued. “Where there are breaches of AML/CTF requirements, MAS has taken strong enforcement action.”
Two companies based in Singapore were mentioned in the Pandora Papers, with Wong stating that one of them, the Asiaciti Trust, paid a composition penalty of S$1.1m imposed by the MAS in July last year for its failure to implement adequate AML/CTF policies and procedures.
Meanwhile, the other company, Trident Trust Company, was directed by the MAS in September 2020 to remediate weaknesses detected in its risk assessment controls following the central bank's supervisory surveillance.
He also said that both companies were under intensified scrutiny by the MAS before they were mentioned in the Pandora Papers.
“Let me assure this House that Singapore takes the integrity of our financial sector very seriously. As a major international financial centre, Singapore will always face the risk of illicit financial flows. What is important is that we supervise our FIs well, and take strong enforcement actions where necessary to reduce this risk as much as possible,” he said, stating that the authority has been doing this and will continue to do so.
European Response
The South-East Asian city-state is not the only place where questions are being asked.
In October, members of the European Parliament adopted a new resolution calling for investigations to be launched into any wrongdoing that has been exposed by the Pandora Papers.
It urged national EU authorities to launch investigations into any negative actions revealed in the Pandora Papers involving their jurisdictions, including audits on all individuals mentioned.
Parliamentarians also used the resolution, which passed with 578 out of 705 votes, to put pressure on the European Commission to probe member states on why they are delayed in their implementation of existing rules to counteract financial crimes such as money laundering and tax avoidance.
The commission asked MEPs to review the revelations to analyse whether further legislation should be proposed and establish if legal action against some member states is warranted.
MEPs stated they wanted the commission to issue proposals regulating golden citizenship and residency schemes, and to assess the effectiveness of the identification of politically exposed persons and the application of enhanced due diligence.
