On 1 April 2024, the Monetary Authority of Singapore (MAS) launched the COSMIC Central Digital Platform, which aims to facilitate the sharing of customer information among financial institutions (FIs) to combat money laundering (ML), terrorist financing (TF) and proliferation financing (PF) globally. The Financial Services and Markets (Amendment) 2023 and its subsidiary regulations, which provide the legal basis and safeguards for such sharing, also came into force on the same day. COSMIC was developed by the Monetary Authority of Singapore (MAS) and Singapore's six major commercial banks – DBS, OCBC Bank, United Overseas Bank, Citibank, HSBC and Standard Chartered. These banks will act as participating financial institutions in the initial phase of COSMIC. The birth of COSMIC has contributed to the security of the industry's finance, combated financial crimes, and contributed to Singapore's financial supervision.
COSMIC: Maintaining financial order and security,
Fight financial crime
As an innovative digital platform, COSMIC is committed to enhancing information sharing and collaboration among banks in Singapore to meet the global challenge of financial crime. In addition to tackling the misuse of legal persons, illicit trade finance and terrorist financing, COSMIC can also assist banks in the fight against other forms of financial crime, such as fraud and illicit financial flows. The launch of the platform fills an important gap in the existing financial regulatory regime, strengthens inter-bank cooperation mechanisms, and improves the overall security of the financial system. COSMIC's partners include the Monetary Authority of Singapore (MAS) and the six major banks (DBS, OCBC, UOB, Citibank, Standard Chartered and HSBC), which share the responsibility of maintaining financial order and security.
Image source: National Business Daily
In addition, the establishment of COSMIC is also an important complement to Singapore's financial regulatory system, and in order to ensure the rights and interests of legitimate customers, MAS has put in place a series of strict legal foundations and safeguards, including strict information confidentiality mechanisms and compliance review processes. These measures will not only help strengthen trust and cooperation among banks, but also provide a template for the rest of the world.
Image source: National Business Daily
When it comes to information sharing, COSMIC operates in a relatively straightforward manner. Banks can only share relevant information on the platform if there is a clear red flag warning on the customer's behavior or data. This flexible sharing mechanism not only facilitates rapid response to potential financial crimes, but also maximizes the protection of customers' privacy and avoids unnecessary information leakage. The launch of the COSMIC platform marks an important step forward in information sharing and regulation in Singapore's financial system. By integrating interbank resources and information, COSMIC is expected to effectively enhance the overall security and stability of Singapore's financial system and further strengthen Singapore's position as an international financial center. As this platform continues to develop and improve, it will play an increasingly important role in the world and make greater contributions to building a safer, more transparent and more efficient international financial system.
The giants of financial power in Asia:
Monetary Authority of Singapore
The establishment of COSMIC shows that all local banks in Singapore, including DBS, OCBC, UOB, SCB, Citibank, HSBC, are interconnected with the HKMA. As for the Monetary Authority of Singapore, it is defined as a behemoth of financial power in Asia. The MAS was formerly known as a number of government departments and agencies, which were responsible for the management of Singapore's currency, banking, insurance, securities, etc., but with Singapore's economic take-off, the international financial environment has become increasingly complex, requiring a unified and professional financial authority to formulate and implement financial policies, maintain financial stability, and promote economic development. As a result, the Monetary Authority of Singapore Act was passed by the Singapore Parliament in 1970 and the Monetary Authority of Singapore (MAS) was formally established on 1 January 1971.
From the very beginning, the Monetary Authority of Singapore (MAS) has had the dual functions of central banking and financial supervision, and is responsible for managing Singapore's monetary, banking, financial and fiscal affairs. It not only formulates and implements monetary policy, but also supervises and regulates the behavior of financial institutions and markets to protect the interests of investors and consumers;
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With the development of Singapore's financial industry, the Monetary Authority of Singapore (MAS) has continuously expanded and improved its regulatory scope and capabilities. In 1977, it took over the regulation of the insurance industry, in 1984 it took over the supervision of the securities industry, and in 2002 it merged with the Monetary Board to start issuing currency. The MAS covers all financial institutions and markets in Singapore, including: commercial banks, financial institutions that provide financial services such as corporate finance, securities underwriting, asset management, brokerage, and consulting, such as Morgan Stanley, Goldman Sachs, Credit Suisse, etc.
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There are several main differences between the Monetary Authority of Singapore and China's financial regulatory system: the Monetary Authority of Singapore is a centralized and unified financial regulatory authority, while China is a financial regulatory system with separate supervision, and the central bank, the China Banking Regulatory Commission, the China Securities Regulatory Commission, the Insurance Regulatory Commission and other institutions are responsible for different financial fields; Reserve Requirement Ratio, The Monetary Authority of Singapore (MAS) exercises strict control over the market entry and exit of financial institutions, while China implements a relatively relaxed policy on the market entry and exit of financial institutions, encouraging competition and innovation among financial institutions; the MAS has clearly defined the business scope of financial institutions, while China has greater flexibility in the business scope of financial institutions, allowing financial institutions to operate across industries and mixed operations; the MAS adopts a comprehensive supervision model for the supervision of financial institutions, while China adopts a separate supervision model for the supervision of financial institutions, which are responsible for different areas of finance by different regulators.
In conclusion, the Monetary Authority of Singapore (MAS) is a powerful behemoth that imposes strict regulation and supervision on Singapore's financial institutions and markets in order to maintain Singapore's financial stability and credibility, while also promoting Singapore as a vibrant international financial centre.
Connecting link
The learning path of China's financial regulation
Whether it is the establishment and implementation of the Monetary Authority of Singapore or the establishment of COSMIC, it reflects Singapore's demeanor as a financial leader and has a strong reference significance for China's financial industry. Singapore's financial supervision is not aimed at eliminating risks, but on the basis of allowing financial institutions to bear their own risks, to prevent and reduce the possibility of risks, and to prevent the operational problems of some financial institutions from affecting the stability of the entire financial system, which is of great reference significance to the mainland. The mainland's financial supervision and control should also maintain a certain degree of tolerance for the operational risks of financial institutions and mitigate them through the establishment of deposit insurance and other systems. In addition, under the overall goal of stabilizing the financial system, sub-objectives such as the stability of micro-financial institutions, the transparency and effectiveness of financial markets, the stable operation of financial infrastructure, and the effective protection of financial consumers should be established, and the realization of these goals should be ensured through active regulatory measures.
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Singapore has placed financial consumer protection at the forefront, which is clearly enumerated in its regulatory objectives and principles. Therefore, it is suggested that the mainland should strengthen the top-level design of the protection of the rights and interests of financial consumers, clarify the importance of financial consumer protection at the institutional level, and focus on strengthening financial consumer education and supervising the information disclosure obligations of financial institutions. In addition, laws and regulations dedicated to the protection of financial consumers should be promulgated as soon as possible, and financial consumer protection institutions should be given the necessary means of protection.
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After the Asian financial crisis, Singapore implemented financial reforms, transferring the financial supervision responsibilities that were originally under the Ministry of Finance, the Banking Supervision Commission, the Insurance Supervision Commission, the Securities Regulatory Commission, and the Monetary Bureau to the Monetary Authority, achieving comprehensive supervision. In addition, MAS has a strong focus on consultation and collaboration with other stakeholders who are concerned about the safety and soundness of financial institutions to facilitate information sharing and reduce barriers to regulatory implementation. Unlike Singapore, the central bank of the mainland bears the responsibility of maintaining the stability of the entire financial system, but due to the implementation of the financial supervision system, the regulatory information is scattered in the CBRC, the China Insurance Regulatory Commission, the China Securities Regulatory Commission and other financial regulatory departments, which is not conducive to the realization of comprehensive and effective supervision of the entire financial system, so it is recommended that the central bank take the lead in establishing a financial regulatory information database to realize the sharing and comprehensive utilization of financial regulatory information.
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Due to the implementation of the system of separate supervision and control, the mainland's financial supervision and control is achieved through the direct coordination of the State Council on the one hand, and the joint conference system of financial supervision led by the central bank on the other. In the long run, it is suggested that the experience of MAS should be used to establish a financial supervision bureau to achieve comprehensive supervision of the banking, securities and insurance industries, and reduce the cost of regulatory coordination and the resistance to the implementation of the system. However, the establishment of the Financial Supervision Authority cannot be accomplished overnight, so it is advisable to take the system of the Joint Conference on Financial Supervision led by the central bank as a transitional arrangement, establish a clear decision-making mechanism, rules of procedure, decision-making authority, etc., and give full play to the function of consultation and coordination, so as to become a real macro-prudential regulatory framework. In addition, MAS attaches great importance to listening to the opinions of market participants and the public before the introduction of financial regulatory rules, and the financial regulatory authorities in mainland China should also fully assess whether the system is in line with the actual market before the introduction of the regulatory system, solicit the opinions of market participants and the public, and strive for maximum support and understanding, and reduce the resistance to implementation.
Sources: Financial Breakfast, China-Singapore Legal News, Overseas Notes, etc
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