Singapore's latest Money Laundering National Risk Assessment (MLNRA) has flagged digital payment token (DPT) service providers as significant risks in the anti-money laundering (AML) landscape. The comprehensive 126-page report identifies new sectors, including DPT providers and dealers of precious stones and metals, as particularly vulnerable.

The banking sector, especially wealth management, is still seen as the highest risk for money laundering. Banks are prime targets for criminal activities due to their handling of large transactions and high-risk clients. However, DPT service providers, also known as virtual asset service providers, have emerged as a high-risk category within the financial sector. The report notes a rise in money laundering cases involving DPTs, using various exploitation methods.

Although Singapore's share of global DPT activities is relatively small, the authorities are vigilant about the risks. Other high-risk financial sectors include payment institutions offering cross-border transfers and external asset managers.

The report outlines Singapore's key money laundering threats, which stem from cyber-enabled fraud, organized crime, corruption, tax crimes, and trade-based money laundering. Common methods include hiding illegal funds in local bank accounts, using fake companies, and investing in valuable assets like real estate or precious metals.

Combining insights from supervisory and law enforcement agencies, the Financial Intelligence Unit, and feedback from private sector entities and foreign authorities, the MLNRA provides a detailed risk assessment. The report underscores Singapore's vulnerability due to its status as an international financial hub and its economic openness. Criminals exploit the nation's financial and business infrastructure to launder or transfer illicit funds, often converting them into assets like real estate, digital payment tokens, or precious metals.

In response, the Monetary Authority of Singapore announced in April that it would amend the Payment Services Act to broaden the scope of regulated services related to DPT service providers.