Terrorism Financing National Risk Assessment and Strategy for Countering the Financing of Terrorism

Dear Regulated Dealer,

As part of Singapore’s continuing efforts to maintain the effectiveness of its anti-money laundering and countering the financing of terrorism ("AML/CFT") regime, and to keep pace with best practices as recommended by the Financial Action Task Force ("FATF"), Singapore had published its updated Terrorism Financing National Risk Assessment ("TF NRA") and National Strategy for Countering the Financing of Terrorism ("NSCFT") in July 2024.

To support this effort, ACD has prepared the following key highlights from the TF NRA and the NSCFT for regulated dealers to note and take action.

TF NRA

Singapore’s 2024 TF NRA presents an updated overview of Singapore’s TF risk environment and identifies the latest key TF threats and vulnerabilities stemming from global, regional, and domestic developments.

The TF NRA will enable supervisory authorities and the private sector to adopt a targeted and risk-focused approach when updating and implementing CFT risk mitigation measures.

TF threat of raising and moving funds for terrorists and terrorist activities overseas, including in the Middle East and Southeast Asia, and by radicalised individuals within Singapore remains pertinent in Singapore’s context.

Singapore’s status as an international financial, business, and transport hub, coupled with robust connectivity, a substantial number of transient visitors, and geographical proximity to countries harbouring active terrorist groups, heightens Singapore’s vulnerability to TF threats.

Areas at risk of being exploited for TF include:

• Money remittances (or cross border money transfer service providers) and banks

• Digital payment token ("DPT") service providers (or virtual asset service providers)

• Potential location for couriers to collect or move cash for delivery across borders

According to the 2024 TF NRA, the precious stones and precious metals dealers ("PSMD") sector is assessed as presenting medium-low TF risk. PSMDs are more vulnerable to TF risk due to the following factors:

• Precious stones and precious metals ("PSPM") generally possess high intrinsic value in a relatively compact form that tend to maintain or increase in value over time, which potentially makes them attractive to terrorist financiers.

• There remain varied levels of awareness of TF risks and AML/CFT controls and further improvements can be made.

• The challenge of tracing specific items and the global market for PSPM also make it easier for terrorist financiers to potentially exploit cross-border transactions or move PSPM across borders to obscure paper trails, which makes law enforcement investigations more challenging.

Singapore has also developed its NSCFT which focuses on three objectives:

1. Prevent: Proactively deter prospective terrorists, terrorist organisations, and sympathisers from exploiting Singapore’s open economy for TF activities;

2. Detect: Promptly identify and trace TF activities through robust monitoring and tracking of red flag indicators, especially in high-risk sectors and emerging TF typologies of concern; and

3. Disrupt: Take strong and resolute actions against terrorists, terrorist organisations, and sympathisers seeking to raise, move, and use funds for terrorism activities, both locally and abroad.

The NSCFT also highlights the measures taken to strengthen AML/CFT measures for the PSMD sector, including the requirement to conduct CDD for PSPM transactions involving payment received in DPT above SGD 20,000, and the screening module within my Precious Stones and Precious Metals Dealer’s Portal ("myPal") to aid PSMDs in screening for designated individuals and entities to comply with targeted financial sanctions against TF.

What can you do?

Regulated dealers should take reference from the TF NRA in assessing your TF risks and enhance your controls as appropriate. You are encouraged to:

1. Be alert to the potential vulnerabilities outlined in the TF NRA. PSPM tend to be good stores of value and accepted as an alternative to monies and could be used to move or raise funds for terrorism.

2. Take the appropriate risk mitigation measures which include the following:

   • Remain vigilant when conducting transactions or establishing business relationships;

   • Conduct customer due diligence which includes screening customer names against the list of designated individuals and entities;

   • Make a Suspicious Transaction Report ("STR") to the police immediately if you have information about transactions or proposed transactions related to designated terrorists; and

   • Freeze any assets or property belonging to designated terrorists within 24 hours.

3. If your customer happens to be in the terrorist designation or financial sanction list, you should take the following actions:

   • Decline to enter into any transaction with the customer;

   • Terminate any transaction entered into with the customer;

   • Make a STR to the police; and

   • At the time of making the STR/police report or immediately thereafter, submit a copy of the report to the Registrar.

Please refer to the link for the full TF NRA ↗ (opens in new tab) and NSCFT ↗ (opens in new tab) reports.