Singapore’s AML/CFT Industry Partnership (ACIP) has published a comprehensive best practice guide aimed at helping financial institutions (FIs) and crypto businesses manage money laundering, terrorism financing, and sanctions risks associated with customer relationships involving digital assets. The guide, which encompasses risk considerations, recommended measures, and practical case studies, offers valuable insights into risk management objectives and processes for digital asset players.
The ACIP guide focuses on three key types of customer relationships. The first category includes Digital Payment Token Service Providers (DPTSPs) and FIs involved in digital asset services. The second category covers other legal entities with digital asset-related business models. The third category pertains to natural persons with digital assets serving as a significant source of wealth.
Within the guide, specific risk considerations and recommended measures are provided for each type of customer relationship. The practical case studies explore scenarios such as DPTSP onboarding, source of wealth tracing, and on-chain screening, offering real-world examples to illustrate effective risk management approaches.
Notably, the guide emphasizes the importance of blockchain analytics as a valuable tool to enhance due diligence and surveillance capabilities. It suggests that FIs should assess the capabilities provided by different blockchain analytics tools, as they can vary significantly. By leveraging these tools, FIs can strengthen their ability to identify potential illicit activities and comply with Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) requirements.
The development of the industry guide involved collaboration between banks, regulators, law enforcement agencies, and DPTSPs. While the guide is primarily addressed to FIs, it offers digital asset players a deeper understanding of risk management objectives and processes employed by banks. This knowledge exchange may help foster stable banking relationships that are crucial for the growth and sustainability of Singapore’s digital asset ecosystem.
The ACIP, established as a public-private partnership in April 2017, serves as a platform for the financial sector, regulators, law enforcement agencies, and other government entities to collectively identify, assess, and mitigate money laundering and terrorism financing risks in Singapore. The partnership is co-chaired by the Commercial Affairs Department of the Singapore Police Force and the Monetary Authority of Singapore (MAS), while the ACIP’s Steering Group comprises the Association of Banks Singapore (ABS) and eight banks. Expert working groups, comprising both members from the Steering Group and external experts, are established to study specific areas of interest, ensuring a diverse range of perspectives and expertise.
As a key step toward enhancing investor protection and market integrity within the cryptocurrency industry, the Monetary Authority of Singapore recently released a number of new measures to improve the safety of consumer assets handled by crypto service providers. These rules, which were put in place after a thorough public consultation, aim to lessen the risk of asset loss or misuse while fostering openness and recovery processes.
The release of the ACIP’s best practice guide marks a significant milestone in strengthening risk management practices within Singapore’s digital asset industry. By providing comprehensive insights, practical case studies, and endorsing the use of blockchain analytics, the guide equips FIs and crypto businesses with the tools and knowledge necessary to mitigate money laundering, terrorism financing, and sanctions risks associated with digital assets. This, in turn, contributes to fostering a safer, more compliant, and stable digital asset ecosystem in Singapore.