Singapore recently underwent a historic money laundering scandal. Authorities have responded by tightening controls but could this come at the expense of new wealth inflows?

Following Singapore’s historic S$3 billion ($2.3 billion) money laundering scandal, local authorities have been tightening controls. Measures ranged from the formation of an inter-ministerial committee to new rules that deepen oversight of corporate service providers. Banks have also been reportedly increasing scrutiny, reducing risks in areas such as exposure to clients with citizenships in certain countries.

Naturally, tighter controls could potentially slow down wealth flows. How could this balance be addressed?

Use Technology

One solution could be the adoption of tech solutions. According to Chen Mu, CEO of portfolio management software provider Canopy, there is intense pressure on regulators or bank staff who may still be relying on manual processes.

«You are auditing people's source of wealth for the last 10 years and you're still reading the PDF and papers to get through that. That's of course going take forever,» Chen said during a panel on the Hong Kong FinTech Week 2024. «My pitch is that you need to use technology. And I think that there's a lot of practical efficiency improvements that can be done to help Singapore better vet the source of wealth.»

Chen suggested the use of automation to speed up workflows such as tools that can automatically generate KYC reports for high net worth individuals.

Human Touch

On the other hand, not all clients may be comfortable with the use of tech services, especially from external providers. According to Jessica Cutrera, president of multi-family office (MFO) LEO Wealth, some high net worth families feel that outsourcing due diligence to a third party firm seems intrusive, leading to lower willingness to disclose information.

«So I think part of the solution to that challenge is helping families and new wealth find the right partners. And by that, I mean who is a good match? Who might understand their industry? Who might have familiarity with the types of assets they already have?» Cutrera said on the same panel.

«Because then, you've got a better relationship. You've got better communication. You've got, from a market integrity standpoint, an MFO or banking partner or financial advisory firm who is familiar with the client's industry [and] able to ask smart questions that may not feel quite so invasive.»