Key Insights from MAS’ 2024 Proliferation Financial (PF) National Risk Assessment (NRA) and Counter-PF Strategy

The Monetary Authority of Singapore (“MAS”) released its 2024 Proliferation Financing (“PF”) National Risk Assessment (“NRA”) and Counter-PF Strategy on 30 October 2024. This provides an in-depth analysis of Singapore’s exposure to PF risks and outlines a comprehensive framework to mitigate them. As PF threats grow more complex, the MAS emphasises the importance of financial institutions (“FIs”) enhancing their compliance measures to align them with regulatory expectations and evolving risks. 

The assessment identifies several key threats to Singapore’s financial system. A major concern is the misuse of legal entities to obscure the origins and movement of funds, as proliferators often rely on complex corporate structures to conceal illicit financial flows. Additionally, ship-to-ship transfers present another challenge, facilitating the evasion of sanctions and export controls. The trade in dual-use goods—items with both civilian and military applications—poses a heightened risk, as these goods may be diverted for unauthorized purposes. Moreover, luxury goods exports are increasingly exploited as part of PF networks, while virtual assets pose anonymity risks that make them vulnerable to misuse by sanctioned entities. 

The report further highlights that both financial and non-financial sectors are exposed to PF risks. The financial sector, including banks, digital payment token service providers, remittance agents, and maritime insurers, faces heightened risks due to the nature of its operations, which involve international transactions and potential exposure to illicit actors. Similarly, the sector of designated non-financial professions and businesses (“DNFPBs”), including corporate service providers, dealers in precious metals and stones, and legal professionals, is identified as being at risk due to its role in facilitating business transactions, managing client funds, and establishing corporate structures that could be misused for PF purposes. 

In response to these risks, the MAS has developed a counter-PF strategy focused on strengthening Singapore’s defences. The strategy emphasizes raising awareness and building capabilities by engaging financial institutions and businesses to ensure a deeper understanding of PF risks and regulatory expectations. Enhanced compliance measures, including stricter due diligence, improved transaction monitoring, and more effective screening processes to detect and prevent PF-related activities, are essential components of this strategy. The regulatory framework will also have to undergo continuous risk assessments and adaptations to remain responsive to emerging threats in the global financial landscape. 

The implications of this assessment and strategy for financial institutions are significant. FIs must enhance their risk assessment frameworks by integrating the MAS’ findings into their internal risk models. Strengthening due diligence measures, particularly for high-risk sectors and jurisdictions, is critical to mitigating PF exposure. Institutions may also invest in advanced transaction monitoring systems capable of detecting unusual activities, such as transactions involving dual-use goods or entities with opaque ownership structures. Compliance with sanctions regimes remains a critical priority, requiring regular updates to sanctions lists to prevent dealings with designated persons or entities. Furthermore, targeted training programs should be implemented to equip financial sector employees with the knowledge necessary to identify and report suspicious activities effectively. 

The 2024 assessment introduces several key updates and enhancements to Singapore’s approach to countering PF. The scope of PF threats has expanded to include the misuse of virtual assets and the exploitation of luxury goods exports, reflecting the evolving tactics of proliferators. Additionally, emerging high-risk sectors, such as digital payment token providers and maritime insurers, have been identified as areas requiring greater compliance scrutiny. The refined counter-PF strategy places a renewed focus on awareness, control measures, and continuous monitoring to ensure Singapore’s financial system remains resilient against PF threats. 

These developments underscore the MAS’ proactive approach to addressing the dynamic challenges posed by PF. By continually refining regulatory frameworks and strengthening institutional defences, Singapore reinforces its commitment to maintaining a robust and secure financial ecosystem, ensuring it remains well-equipped to combat both existing and emerging risks associated with PF activities. 

How We Can Help 

We at Ingenia Consultants Pte. Ltd. support our clients in navigating their anti-money laundering requirements, including proliferation finance. We specialize in helping our clients comply with these regulatory obligations, by developing appropriate policies and procedures. For any further information, please contact: 

Phoebe Mok

Senior Manager 

Ingenia Consultants Pte. Ltd. 

phoebe.mok@ingenia-consultants.com