Coinspeaker Singapore Raises Alarm on Terrorism Financing Risks in Digital Payments
In the latest release by the Singaporean authorities on national terrorism financing risk, they have been able to spot several vulnerabilities that terrorist groups could exploit through digital payment systems. The assessment, which was carried out by the Ministry of Home Affairs, Ministry of Finance, and Monetary Authority of Singapore, revealed that the risk level for digital payment tokens (DPT) has increased from medium-low to medium-high.
Digital Payment Tokens: A New Frontier for Terrorist Financiers
The report revealed that DPTs have become the new tool for terrorist financiers (TF) to transfer funds across borders. The bad actors use services provided by digital payment service providers (DPTSPs) to collect digital payment tokens, and once these tokens have been received, they are then transferred through multiple transactions in a short period. However, it was noted that there had not been any known cases of terrorism financing using DPT, yet the growing use of the service is a worry.
The features of digital payment tokens make them a concern to the Singaporean authorities, as it is also an attractive option for people financing terrorism. These features include the anonymity they offer, as well as the speed and cross-border nature of transactions facilitated by the service providers. They stated:
“While there are no known domestic TF cases involving DPTs, Singapore is cognisant of the higher TF risks originating from the increasing presence of DPT service providers. The higher TF risks are driven by the anonymity, speed, and cross-border nature of transactions facilitated by DPTSPs.”
Singapore’s Five-Pronged Strategy to Combat Terrorism Financing
To combat the activity of those funding terrorism, the Singapore authorities will be executing a five-pronged national strategy for CFT, which includes:
Carefully understanding the risk involved.
Having strong laws and sanction systems in place.
Establishing strict regulations that are closely followed.
Taking firm action to enforce the laws and regulations.
Working closely with other countries around the world.
They stated:
“Singapore will continue to partner with industry players to implement strategies and measures to tackle TF threats. We will also closely collaborate with foreign counterparts, international organizations, and standard-setting bodies, such as the Financial Action Task Force.”
These new ways of moving money quickly across borders and raising money online have become a concern. The growth of the digital economy during the pandemic has made these new ways of moving and collecting money a bigger risk based on the authorities report.
The assessment is a broader approach by the Singapore authorities to reduce emerging risks in its finance ecosystem; before now, it has also broadened its crypto regulation to impose protection on users using digital payment service providers. Thus, the continued scrutiny by the financial authority is to safeguard the nation against the threat of terrorism funding.
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Singapore Raises Alarm on Terrorism Financing Risks in Digital Payments