FINANCIAL INTELLIGENCE COOPERATION BETTER, ALBEIT

C O N F I D E N T I A L SECTION 01 OF 03 SINGAPORE 000933

SIPDIS

SIPDIS

STATE PASS FINCEN FOR RMILLER
TREASURY FOR PDERGARABEDIAN

E.O. 12958: DECL: 05/07/2017
TAGS: ETTC KTFN KCRM EFIN PTER SNAR ECON EINV SN
SUBJECT: FINANCIAL INTELLIGENCE COOPERATION BETTER, ALBEIT
FROM LOW BASE

REF: A. SINGAPORE 703


B. 05 SINGAPORE 2155

Classified By: Econ/Pol Chief Ike Reed; reasons 1.4(b) and (d)


1. (C) Summary: GOS officials told Financial Crimes
Enforcement Network (FinCEN) Regional Specialist Rena Miller
April 18 that they expected to process 4,000 to 5,000
Suspicious Transaction Reports (STRs) in 2007, up from about
1,760 in 2004. Miller noted that information sharing had
improved since FinCEN and its Financial Intelligence Unit
(FIU) counterpart -- the Suspicious Transactions Reporting
Office or STRO -- signed a Memorandum of Understanding (MOU)
in December 2004, but that STRO's usefulness to U.S. law
enforcement continued to be constrained by the small size of
its STR database. GOS officials asserted that Singapore was
well prepared to deal with any financial crime-related issues
that might arise after its first casinos open in 2009. Among
the enhancements made or being considered to strengthen its
Anti-Money Laundering and Countering the Financing of
Terrorism (AML/CFT) regime, the GOS would "most likely"
implement a Currency Transaction Report (CTR) requirement for
casinos -- but not banks. Additionally, consensus was
building for a U.S.-style declaration system for cash courier
reporting. Banking representatives told Miller that
Singapore's stringent bank secrecy laws prevented adequate
communication between financial institutions about suspicious
transactions, but noted that STRO had begun to share some
information with them. They advocated more and better
government enforcement of AML/CFT regulations. End summary.


2. (U) Rena Miller, FinCEN Regional Specialist (East Asia),
met collectively with GOS interagency representatives
responsible for regulating and enforcing Singapore's AML/CFT
regime on April 18, including STRO and the Commercial Affairs
Division (CAD),the Monetary Authority of Singapore (MAS),
and the Ministry of Community Development, Youth and Sports
(which regulates charities). She also met separately with
STRO to discuss bilateral cooperation under the MOU signed in
December 2004. (Note: Both STRO and CAD are part of the
Singapore Police Force and report to the Ministry of Home
Affairs (MHA). End note.) Additionally, Miller met with
Singapore and Singapore-based international banks, including
DBS, UOB, HSBC, and Citibank.

Incrementally Better FIU Cooperation
--------------


3. (C) In her meeting with STRO, Miller noted that FinCEN
had sent only 13 requests for information to STRO since
January 2005, and that FinCEN needed to conduct additional
outreach about the benefits of this investigative channel in
order to increase usage by U.S. law enforcement. By
contrast, STRO had sent 26 requests for information to FinCEN
during the same period. Miller thanked STRO for submitting
six unsolicited "spontaneous disclosure" reports to FinCEN --
a new effort STRO had initiated since she last met with them
in June 2005 to discuss ways to improve STRO's "hit rate" on
suspects, a particular challenge given the small size of its
STR database; one of these spontaneous disclosures resulted
in an FBI investigation. (Note: With a "spontaneous
disclosure," STRO takes the initiative to search its database
for material that might be of interest to U.S. law
enforcement and forwards it to FinCEN. End note.)


4. (C) STRO Head LEONG Kok Cheong told Miller that STRO had
processed 3,290 Suspicious Transaction Reports (STRs) in

2006. It expected to process between 4,000 and 5,000 STRs in
2007, as the financial sector improved its scrutiny of
transactions and reporting requirements for more businesses
such as money remitters came into effect. STRO's database
currently contained more than 10,000 STRs and a higher number
of individual names. Leong said that STRO was migrating
towards an electronic filing system and deployment of
analytical software to help it manage the increased workload.

Using Predicate Offenses to Nab "Money Mules"
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5. (C) Leong commented that about one-third of the STRs
required follow-up investigations (e.g., requests for bank
records, etc.). Out of these, approximately five percent
yielded useful intelligence for investigations. These STRs
revealed an increase in the number of "money mules" from
third countries involved in international wire fraud and
other illicit operations. WONG Kwok Onn Ian, CAD Assistant
Director, said that CAD had been using Singapore's expanded
list of predicate offenses (i.e., those offenses that, by
law, can serve as the basis for money laundering or terrorist
finance charges) to good effect. For example, it had
recently prosecuted approximately fifty Singaporean money
mules based in Australia, he said.

Currency Transaction Reports: Casinos Maybe, Banks No
-------------- --------------


6. (C) Wong expressed confidence that Singapore was well
prepared to handle any AML/CFT issues associated with
Singapore's first multibillion dollar casinos, which will
open in 2009 and 2010. In particular, it was focused on
mitigating the risk of "Macao-like scenarios" involving money
laundering by Mainland Chinese citizens and entities. He
cited as evidence new originator reporting requirements
issued by MAS for wire transfers that will come into effect
in July 2007, and restrictions under the 2006 Casino Control
Act prohibiting individuals from holding chips in excess of
the equivalent of S$10,000 (US$6,600). Both STRO and the
Singapore Police's Criminal Investigations Division (CID)
planned to establish casino-specific task forces to focus on
AML activities, Wong said. He conceded, however, that CID,
STRO, and MAS still needed to finalize how to implement
Singapore's system for casino supervision and enforcement.
He noted, for example, that no decision had been reached on
whether unannounced checks would be performed at the casinos
and if so, which agency would perform them.


7. (C) In order to further strengthen its enforcement
capabilities, Wong said that MHA would "most likely"
implement a Currency Transaction Report (CTR) requirement for
casinos in accordance with Financial Action Task Force (FATF)
recommendations. CAD estimated that Singapore's casinos
would generate more than 8,000 CTRs annually based on an
informal survey it had conducted using Sydney, Australia's
casinos as a benchmark. In contrast, MAS officials claimed
that their "strong" STR and CDD requirements obviated the
need for CTR requirements for banks and other financial
institutions. A CTR threshold would in fact be
counterproductive by encouraging banks to "blindly" report
everything above a specified amount, they argued.

A U.S.-Style Reporting System for Cash Couriers?
-------------- ---


8. (C) Wong said that while no decision had been reached
about which of FATF's recommended options (declaration or
disclosure) Singapore would adopt to implement cross-border
currency reporting to identify and confiscate funds related
to AML/CFT, many of his CAD colleagues had expressed a
preference for a declaration system. (Note: MAS told
Treasury Under Secretary Levey on May 9 that MHA was close to
concluding a policy proposal expected to recommend a
declaration system for inbound travelers carrying currency in
excess of S$10,000 (US$6,600) and a disclosure system --
i.e., "tell only if asked" -- for outbound travelers, a
system similar to that used in the United States. End note.)

Banks Frustrated with Inability to Share Information
-------------- --------------


9. (C) Several bank compliance heads told Miller in separate
meetings that Singapore's stringent bank secrecy laws
prevented adequate communication between financial
institutions about suspicious transactions. Bank secrecy
provisions also restricted their ability to share STRs
between their Singapore and overseas branches. Additionally,
they expressed a desire for STRO to respond more frequently

SINGAPORE 00000933 003 OF 003


to STRs (beyond acknowledgement of receipt),in part to
increase the banks' understanding of how STRO viewed the
information provided. (Note: STRO told Miller that it
responds to each STR within one month; banks said it could
take as much as two months or longer. End note.) One bank
said that STRO had begun providing some feedback in an effort
to improve its relationship with financial institutions.


10. (C) Another bank called for increased cooperation
between CAD and financial institutions. It observed that CAD
performed "okay" in handling domestic cases, but was largely
ineffective with regional ones, except in Hong Kong, due to
the lack of adequate cooperation with its counterparts in
places like Burma and Indonesia. This same bank claimed that
CAD was hobbled by an inability to retain staff --with many
leaving for the private sector. It noted that many working
level CAD counterparts had no more than three-years'
experience on the job, and that their supervisors, while
generally well-educated civil servants, lacked hands-on
exposure to the issues. It also advocated the need for more
and better enforcement, including imposition of fines on
banks by MAS. (Note: MAS told Miller that it had not fined
any banks for lapses in the application of AML/CFT
regulations or taken any other enforcement actions beyond the
use reprimand letters, only a "very small percentage" of
which involved serious offenses. MAS said that it was
conducting an internal review of its penalty framework. End
note.)

Comment
--------------


11. (C) Singapore's efforts to improve FIU cooperation, in
particular STRO's use of undisclosed "spontaneous disclosure"
reports, are encouraging. However, much work remains to be
done to enhance the level of information sharing between our
respective law enforcement agencies. We will continue to
encourage Singapore to close the gaps in its AML/CFT regime
-- such as the lack of reporting requirements for cash
couriers -- especially before its casinos begin operations.
FATF's upcoming peer review of Singapore's AML/CFT regulatory
and enforcement infrastructure, including its on-site
assessment in September 2007, offers a terrific opportunity
to move our agenda forward.


12. (U) FinCEN,s Rena Miller cleared this message.
FERGIN