The Association of Banks in Singapore (ABS) has launched a best practice paper to enhance anti-money laundering and countering the financing of terrorism (AML/CFT) audits in banks on Oct 21.
The paper, the first industry-led one, was developed in partnership with the Anti-Money Laundering Audit Peer Group (AAPG) since October 2022, and seeks to boost AML/CFT auditing standards within Singapore’s financial sector. The paper provides internal auditors within Singapore’s banks and external auditors who work with banks with a common framework to formulate and execute audits pertaining to AML/CFT.
In the paper, the AAPG sets out baseline standards and best practices for auditors to consider when conducting audits for AML/CFT in banks. The standards and best practices are derived from contributions by banks and audit firms when they took part in the AAPG’s benchmarking survey in 2023. The baseline standards cover minimum audit standards and practices that internal and external auditors should adopt while the best practices refer to existing good practices which auditors are encouraged to adopt in line with the risk profiles of their bank or clients.
In addition to the focus areas, the AAPG noted “good outcomes” from banks that adopted data analytics as part of their AML/CFT audits. Using data analytics has helped to identify higher risk customers/segments for closer audit scrutiny more sharply, says ABS in its release. Case studies have also been included on how financial institutions could deploy analytics to enhance their AML/CFT audit processes within the paper.
Ong-Ang Ai Boon, director of ABS said the association welcomed the AAPG’s initiative to develop the paper while Loo Siew Yee, assistant managing director, policy payments & financial crime at the Monetary Authority of Singapore (MAS), adds that a “strong and capable audit function undergirds the effectiveness of financial institutions’ controls against money laundering and terrorism financing”.
“The auditing community plays a key role in ensuring that financial institutions continue to stay ahead in the dynamic AML/CFT risk landscape and maintaining Singapore’s position as a trusted financial hub,” says Derrick Goh, group head of audit at DBS and co-chair of the AAPG. “This inaugural best practice paper is an important milestone since the AAPG’s formation two years ago, to guide the financial industry towards strengthening AML/CFT audit practices.”
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Harry Lim, group head of audit, OCBC, and co-chair of the AAPG, adds: “Thorough and robust AML/CFT audits are important in the detection and prevention of increasingly sophisticated financial crimes.”
“As a financial hub, Singapore is regarded as a safe haven to do business, and the regulatory and legal environment here make it an ideal springboard for many foreign companies into Asean. We hope that this best practice paper will be a valuable resource to financial institutions in giving them guidance for AML/CFT audits and mapping out a framework to assess their controls to mitigate the risks of money laundering and terrorism financing,” he continues.
