Given that our AML/CFT rules are in line with international standards, it is not readily apparent that we need more new rules. The problem in all the instances we have picked up has been a failure to comply with the rules and poor judgement. Second, supervision. MAS has stepped up AML/CFT supervision in recent years and FIs are devoting more resources to managing money laundering risks. Through onsite inspections, we assess if the AML/CFT policies and procedures set out by the FIs are adequate and adhered to on the ground. The frequency of MAS inspections has increased six-fold in recent years. In the three-year period from the second quarter of 2010 to the first quarter of 2013, MAS conducted a total of 108 onsite inspections of FIs; between 2013 and 2016, 608 inspections were conducted. MAS requires FIs to promptly address all deficiencies identified in the course of these inspections. But we can do better. MAS will further sharpen its supervision of AML/CFT controls in the industry. We are establishing a dedicated AML Department to consolidate existing supervisory resources and take a more targeted approach to combat money laundering and illicit financing risks, as we announced earlier. We will conduct more intrusive inspections of FIs identified as facing higher risks. We will increase our engagements with the industry to share perspectives on emerging risks and typologies, as well as best practices on how to mitigate them. Third, enforcement. In recent years, MAS has been stepping up its enforcement actions against FIs that breach our AML/CFT regulations.

The banking system in Singapore is well-placed to ride the current soft patch in economic conditions. •  First, banks in Singapore are well provisioned against potential losses. The banking system has set aside provisions to cover more than 100% of its NPLs. •  Second, the major banks in Singapore have sufficient liquid assets to meet continuous cash outflows over a 30-day period of high stress. •  Third, MAS’ annual industry-wide stress tests indicate that the banking system would remain resilient under very severe stress scenarios. Banks incorporated in Singapore have healthy capital buffers that are able to absorb the losses that are likely to occur under these severe scenarios. Banks in Singapore are also able to meet liquidity and funding needs under these extreme scenarios. 4  BIS central bankers’ speeches  The financial centre: clean and trusted The growth of our financial centre has been underpinned by Singapore’s reputation as a clean and trusted jurisdiction. Upholding high standards of integrity in the financial industry is an absolute priority for MAS. There can be no compromise on this. This means having an effective regime against financial misconduct and misdemeanours, and money laundering and terrorism financing. These threats have escalated in recent years as our financial centre grew in scale, sophistication, and connectedness with the rest of the world. Take financial misconduct. You would recall the widespread manipulation of interest rate benchmarks by errant traders across the world’s major financial centres in the aftermath of the financial crisis. And it happened here too.