SINGAPORE (Sept 21): Despite having one of the strongest anti-money laundering (AML) ecosystems in the region, Singapore continues to struggle with its exposure to money laundering risks.

PricewaterhouseCooper’s 2016 Global Economic Crime Survey finds it to be the city state’s fourth most common financial crime, representing 26% of the country’s economic crimes combined.

Another study, the 2016 Singapore Mutual Evaluation Report of Singapore from Asia/Pacific Group on Money Laundering (APG), reveals that 66% and 27% of money laundering offences and convictions, respectively, were committed overseas over the period 2008-2014.

“The regulatory landscape in Singapore is changing rapidly as MAS increases its activity to fight money laundering, but there are still gaps that need to be addressed. There needs to be a new era of collaboration between the financial services industry, law enforcement, regulators, technology partners and compliance specialists,” says Divya Khangarot, head of sales South East Asia at BAE Systems, in a press release on Thursday.

“Helping business to understand the motivations and modus operandi of the people behind money laundering is a critical first step to helping organisations successfully protect themselves against this threat,” she adds.

According to BAE Systems, the impacts of money laundering activities include spikes in property prices, increased taxes and insurance premiums, and the illicit funding of activities such as the drug trade and international terrorism.

To aide businesses in recognising these threats, the defence and security organisation has identified six types of criminals most typically involved in money laundering via its publication, The Invisible Network.

The first and most prominent of these six characters is what BAE Systems calls The Source, which refers to white collar fraudsters and organised crime gangs who obtain illegal profits directly from their crimes.

As a result of operating outside of the law, these people need their money to be laundered before it can be used – and this is process is made possible by The Shark, who enables crime by helping to move illicit funds through the banking system and The Shop Front, meaning legitimate-looking businesses that exist to launder money for criminals.

Similarly, authoritative figures who typically strip their countries of wealth to line their own pockets have been classified under The Leader, whose outcast status lead them to use subterfuge and spending money on the things that keep them in power. Such a category is closely linked to The Watched – people on international watch lists, who are either corrupted or facilitate corruption for a price.

Lastly, BAE Systems also considers The Bystander another participant of the process of money laundering. Although these people do not facilitate the crime directly, but they are characteristically happy to turn a blind eye while their “mysterious client” lines their pockets.

“In today’s digital world, criminals are constantly exploring new ways to find and exploit loopholes in legitimate channels to make the proceeds of crime look like legal tender. But the real issue isn’t simply the illicit money, it’s the wider impact of these criminal acts,” says Khangarot.

“Money laundering keeps hospitals, schools and libraries from being built as the proceeds of crime contribute nothing to the public purse. The profits of money laundering enable organised crime across the world, from drug trafficking and gun smuggling, to fraud and modern slavery.”