First Reading of the Financial Services and Markets (Amendment) Bill 2023

On 20 March 2023, the Financial Services and Markets (Amendment) Bill 2023 (“FSM(A)B") was moved for first reading in the Singapore Parliament. Accompanying the first reading of the FSM(A)B, the Monetary Authority of Singapore (“MAS”) released an explanatory brief, on 20 March 2023, outlining the reasons for and the features of the proposed amendments.

Collaborative Sharing of ML/TF Information & Cases (“COSMIC”)

COSMIC was previously announced on 1 October 2021 as a digital platform, operated by the MAS, to facilitate the sharing of relevant information on customers and transactions between financial institutions (“FIs”) to prevent money laundering (“ML”), terrorism financing (“TF”) and proliferation financing (“PF”).

Key Aspects of the FSM(A)B

At the heart of the proposed amendments is the provisions setting out the initial phase for COSMIC which will be on a voluntary basis.

Enabling regulatory framework for sharing of information for the mitigation of ML, TF and PF risks: The FSM(A)B will permit the sharing of information solely for the purposes of mitigating ML, TF and PF risks with such information having exhibited pre-determined red flags that cross stipulated thresholds. Such sharing may be done despite any restrictions that may be imposed by any written law or contract.

Tight controls to safeguard information security and confidentiality: FIs will be prohibited from disclosing the information obtained from COSMIC except in specified circumstances. Accordingly, FIs will need to establish systems and implement processes to keep the information obtained from COSMIC confidential and guard against unauthorised use and disclosure of information (e.g. cybersecurity measures and need-to-know basis access controls).

Statutory protection against civil liabilities 

FIs will be provided with statutory protection from civil liability in respect of their disclosure of risk information onto COSMIC, provided that the disclosure was made with reasonable care and in good faith, and in accordance with the disclosure thresholds.

Access and use of COSMIC information by the MAS and Suspicious Transaction Reporting Office (“STRO”)

COSMIC information will be integrated into MAS’ overall surveillance framework to target higher risk activities in the financial system for supervisory intervention. The STRO, will have direct access and be able to use COSMIC information as an additional data source for its own analysis.

Next Steps

In preparation for the rolling out of COSMIC, financial institutions should begin taking preparatory steps to identify the processes, systems and controls which may need to be adjusted in light of the COSMIC requirements. Financial institutions should also keep an eye out for further details on the information-sharing framework before making the requisite adjustments.