Financial Services and Markets (Amendment) Act 2023 establishing platform to facilitate sharing customer information among FIs to combat money laundering and terrorism financing in force

2 May 2024

On 1 April 2024, the Financial Services and Markets (Amendment) Act 2023 (“FSMAA”), which provides the legal framework for financial institutions (“FIs”) to share information on customers through a secure digital platform called COSMIC (short for “Collaborative Sharing of ML/TF Information & Cases”) for the purposes of mitigating money laundering, terrorism financing, and proliferation financing, came into force. The FSMAA sets out when and how such sharing of risk information relating to a customer may take place. It also sets out robust legal and operational safeguards to protect the confidentiality of the information being shared, and the interests of legitimate customers.

Overview of COSMIC

COSMIC was co-developed by the Monetary Authority of Singapore (“MAS”) and six major commercial banks in Singapore. These banks will be the participant FIs on COSMIC during its initial phase. Information sharing is currently voluntary and focused on three key financial crime risks in commercial banking, namely, (1) misuse of legal persons, (2) misuse of trade finance for illicit purposes, and (3) proliferation financing.

Objective thresholds for sharing information

COSMIC allows prescribed FIs to securely share with one another risk information on customers who exhibit multiple red flags that may indicate potential financial crime concerns, where the stipulated thresholds are met. To prevent circumvention by criminals, MAS will issue the red flags and threshold criteria to all prescribed FIs privately.

Modes of sharing information

Under the FSMAA, there are three modes in which information may be shared via COSMIC. They relate to (1) a participant FI requesting information from another participant FI, (2) a participant FI proactively providing information to another, and (3) a participant FI placing the customer on a watchlist to alert other participant FIs.

Safeguards to protect legitimate customers

To protect legitimate customers, participant FIs should:

  • assess whether a customer’s profile or behaviour warrants concern before sharing the information;
  • consider other information sources and not rely solely on COSMIC information;
  • allow customers an opportunity to explain the behaviours observed; and
  • ensure the accuracy and completeness of the information shared.

Safeguarding use of and access to COSMIC information

As the owner of the COSMIC platform, MAS will ensure that COSMIC information is exchanged and stored securely. The platform will have robust controls, including cybersecurity measures, which will be subject to periodic audits to ensure their efficacy.

When information is passed to participant FIs, participant FIs will not be allowed to disclose information obtained from COSMIC to a third party, except in tightly circumscribed and specific circumstances, such as for compliance with court orders or requests from police to facilitate investigations.

Apart from participant FIs, MAS will have access to all information shared on the platform. This is necessary for MAS to monitor if participant FIs are using COSMIC appropriately, and will also support MAS’ broader supervisory and surveillance role to ensure that FIs have robust defences against financial crime. The Suspicious Transactions Reporting Office, which analyses and disseminates financial intelligence to law enforcement and regulatory agencies, will also be able to view and use COSMIC information to support the prevention and detection of financial crime.

Related subsidiary legislation and notices

The commencement of the FSMAA is accompanied by the new Financial Services and Markets (Information Sharing Scheme for Prescribed Financial Institutions) Regulations 2024 (“COSMIC Regulations”) and MAS Notice FSM-N02 on Prevention of Money Laundering and Countering the Financing of Terrorism - Financial Institutions’ Information Sharing Platform (“COSMIC Notice”), as well as amendments to MAS Notice 626 on Prevention of Money Laundering and Countering the Financing of Terrorism - Banks (“Notice 626”) and the Guidelines to Notice 626.

Background

MAS sought feedback on the establishment of the COSMIC platform and related legislative amendments in a consultation paper published on 1 October 2021. Following the conclusion of the consultation, the Financial Services and Markets (Amendment) Bill was introduced on 20 March 2023 and passed in Parliament on 9 May 2023. In November and December 2023, MAS published two consultation papers seeking comments on proposed amendments to MAS Notice 626 and draft versions of the COSMIC Regulations and COSMIC Notice. On 28 March 2024, MAS published its response to feedback received from the November and December 2023 consultations.

Reference materials

The following materials are available on Singapore Statutes Online sso.agc.gov.sg:

The following materials are available on the MAS website www.mas.gov.sg: