Banks' vital role in fighting financial crime

This article is more than 12 months old

Singapore's economic standing makes it a target for corruption and money laundering

The United Nations Office on Drugs and Crime estimates that between US$800 billion (S$1.09 trillion) and US$2 trillion is laundered globally each year, representing between 2 per cent and 5 per cent of the world's gross domestic product.

According to the LexisNexis True Cost of Fraud study, every dollar of fraud costs merchants (and ultimately you, the consumer) US$2.40.

Singapore's economic standing means we can never be immune to external threats of crime such as corruption, terrorism and money laundering.

In the fight against financial crime, banks play a key role and sharing information is vital.

The Government, law enforcement agencies and banks are working in concert to gather intelligence and share information. Just this past April, Singapore launched the Anti-Money Laundering and Countering the Financing of Terrorism Industry Partnership, led by the Monetary Authority of Singapore (MAS) and Commercial Affairs Department of the Singapore Police Force.

Banks exchange data with the public authorities inside strictly defined parameters designed to balance privacy and data security with the need to tackle serious problems, including human trafficking and terrorist financing. HSBC is one of eight banks in this partnership.

The MAS has said it is important for Singapore to work smarter in fighting financial crime in areas such as the banks' approach to their "Know Your Customer (KYC)" due diligence and through use of technology.

Every bank needs to perform this for all its customers; conversely, from the customers' perspective, they too have to undergo this process with each bank they have a relationship with - which can be multiple times.

To mitigate the overlap, the Government is trying out MyInfo, Singapore's national digital platform through which residents submit their personal data, to enable more efficient KYC that avoids duplication of efforts for banks and customers.

HSBC has implemented a globally consistent and improved customer due-diligence process over the past few years.

By knowing where customers live and work, the type of business they operate, the products and services they want and how these will be used, we can effectively assess any potential financial crime risk and safeguard our customers.

Traditional transaction monitoring systems generate significant amounts of false leads. By trialling artificial intelligence and machine learning, we hope to take some of the "noise" out of the system, which frees us up to focus our investigation work more effectively.

Early indicators have shown the number of investigations dropped by 20 per cent - without a fall in the number of cases referred for more scrutiny.

The writer is chief executive officer of HSBC Singapore. This article was published in The Business Times yesterday. It has been edited for length.

BANKSMonetary Authority of Singaporecrime