2024 Singapore Terrorism Financing National Risk Assessment

The 2024 Terrorism Financing (TF) National Risk Assessment (NRA) offers an updated evaluation of Singapore’s TF landscape since the TF NR published in 2020. It reflects learnings and insights, particularly considering the digital economy’s accelerated growth in Asia due to the COVID-19 pandemic. This enables law enforcement, financial intelligence, regulatory, policy-making, and private sector entities to implement targeted, risk-focused CFT strategies and mitigation measures.

Singapore’s key TF threats stem from (i) terrorist groups such as the Islamic State of Iraq and Syria (“ISIS”), Al-Qaeda, and Jemaah Islamiyah, potential spillovers from the ongoing Israel-Hamas conflict and tensions in the Middle East, and (ii) radicalised individuals who are sympathetic towards the cause of these terrorist groups, particularly ISIS.

• ISIS: Following its retreat in 2018, ISIS is believed to have smuggled approximately USD 400 million out of Iraq and Syria. Known means of transfers involve cash couriers, money remittances, bank transfers, virtual currencies, and online transactions.
• Al-Qaeda and Jemaah Islamiyah: There are indications that Al-Qaeda and Jemaah Islamiyah have been rebuilding through their “long game” strategy and may resume planning large-scale attacks, necessitating the movement and raising of funds.
• Radicalised individuals: Singapore continues to detect radicalised individuals from both the local and foreign worker populations. In recent years, the majority of self-radicalised individuals detected in Singapore have been supporters of ISIS.

The main TF modalities observed from known cases include self-funding from legitimate or existing sources, namely individuals’ salaries or savings, and transfers via licensed money remittances. The amounts involved in these TF cases are generally small. Although there have been no instances of individuals leveraging newer forms of cross-border fast payment systems for TF purposes, there is an increased risk that terrorists, terrorist organisations, and their supporters may exploit the convenience of these new online transaction channels or virtual currencies/assets to further their terrorist causes.

The 2024 TF NRA identifies the following sectors as being at risk of being exploited for TF:

• Money remittances, including unlicensed and cross-border online payments: The money remittance sector, particularly unlicensed and cross-border online payments, is identified as posing a high risk for TF. The demographic profile of users and the established transaction corridors involving countries in the region that are more exposed to terrorism/TF risks heighten Singapore’s vulnerability. The disparities in TF detection capabilities across the sector, with smaller-scale remittance agents potentially lacking the resources to employ advanced tools, further contribute to the vulnerability.
• Banks, including new cross-border fast payment systems: The banking sector, including new cross-border fast payment systems, is assessed as having a medium-high risk for TF. Singapore’s status as an international financial centre, coupled with its geographical proximity to countries with active terrorist activities or terrorist groups, makes it vulnerable to being used as a conduit for TF purposes. The challenges in detecting TF due to small transaction amounts and their similarity to legitimate transactions further complicate the issue.
• Digital payment token (“DPT”) service providers: The TF risks associated with DPT service providers have been elevated from medium-low to medium-high, reflecting the growing risk of exploited virtual assets to facilitate TF activities. The anonymity, speed, and cross-border transactions facilitated by DPT service providers contribute to their vulnerability. The lack of consistency in AML/CFT controls and TF risk understanding due to the industry’s nascent and fast-changing nature, both globally and locally, poses additional challenges.
• Non-profit organizations (“NPOs”), including online fundraising: The NPO sector, including online fundraising, is assessed to have a medium-low risk for TF. The varied levels of awareness of emerging TF risks among charities and the evidential challenges in proving the intent of TF donors contribute to the vulnerability. The growth of online fundraising activities in recent years, driven by the rapid expansion of the digital economy in Asia, has significantly expanded the global reach of these activities, increasing the risk of terrorist financiers exploiting online fundraising for TF purposes.
• Cross-border cash movement: Cross-border cash movement is also assessed as having a medium-low risk for TF. The anonymity accorded to small amounts of money brought across borders poses a risk, particularly concerning funding terrorist activities abroad.
• Precious stones and precious metals dealers: The sector’s vulnerability stems from the high intrinsic value and relative compactness of precious metals, stones, and products, making them attractive for storing and transferring value, potentially for terrorism financing purposes. The emergence of asset-backed tokens, backed by precious metals, stones, or products, introduces additional complexity and potential vulnerability to TF. The overall TF risk for the PS/PM/PP sector remains medium-low.

Ingenia Consultants Pte. Ltd. is supporting financial institutions in their compliance, including anti-money laundering (“AML”) and countering the financing of terrorism (“CFT”). Moreover, our internal audit services provide the board of directors and senior management with assurance regarding these obligations. Reach out to us to learn more about our regulatory support.
For any further information, please contact:
Adib Fajar
Associate
Ingenia Consultants Pte. Ltd.
adib.fajar@ingenia-consultants.com