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Singapore Strengthens AML/CFT Regulations for Cryptocurrency Exchanges
Singapore has intensified its anti-money laundering (AML) and counter-terrorism financing (CFT) regulation with regard to crypto exchangeincreasing the risk factor associated with these platforms.
This regulatory update aims to prevent criminal groups and terrorist organizations from exploiting Singapore’s open economy, recognized as an international financial, trade and transportation hub.
With this move, Singapore reinforces its commitment to maintaining a safe and reliable financial environment. Let’s see all the details below.
Securing Singapore’s Economy as an International Financial Center: What’s New for Cryptocurrency Exchanges
As expected, on July 1, the Monetary Authority of Singapore (MAS) released a update of the National Terrorist Financing Risk Assessment (NRA) and the National Strategy to Counter Terrorist Financing.
In this update, the risk level associated with cryptocurrency exchange platforms has increased from medium-low to medium-high.
The regulatory update aims to prevent terrorist groups and organisations from exploiting Singapore’s open economy, known as an international financial, trade and transport hub, to finance terrorism.
Cross-border online payments remain classified as high riskas they represent a potential channel for such illicit activities.
Implications for crypto platforms
This update represents a new challenge for the cryptocurrency platforms, just weeks after a report that had already flagged digital payment tokens as high risk.
According to Singapore’s National Anti-Money Laundering Risk Assessment (MLNRA), digital payment token (DPT) service providers pose significant anti-money laundering (AML) risks and vulnerabilities.
MAS, actively involved in the regulation of the digital assets market, has recently expanded the scope of regulated payment services to include digital token service providers.
This allows the MAS to impose more stringent requirements in terms of AML and CFTuser protection and financial stability. Thus also allowing DPTs to offer custody and transfer services for cryptocurrencies.
Singapore is considered a pro-crypto nation, with a cryptocurrency adoption rate of 11.2%significantly higher than the global average of 4.2%.
Under Singapore law, digital currencies are classified as digital payment tokens, with Bitcoin and Ether (ETH) officially recognized and has legal status in the country.
Chinese AI Startups Set Their Eyes on Singapore
Chinese AI startups increasingly choose Singapore as their home base new base of operations to expand globally, sparking concern in China.
This movement is motivated by the need to escape the growing geopolitical tensions between China and the United States, which hinder access to finance and advanced technologies.
Relocating to Singapore not only offers Chinese startups a wider range of markets, but also easier access to international funding, thanks to a more favorable regulatory environment.
A relationship Of Bloomberg indicates that this strategy allows startups to avoid excessive scrutiny from countries that oppose China.
This phenomenon, known as “Singapore-washing”, helps companies to “detach” from their original Chinese roots.
A significant example is given by Wu CunSong and Chen Binghuifounders of Tabcut. After starting their company in Hangzhou in 2022, they moved to Singapore in March 2023 to overcome the challenges of limited venture capital in China.
Since moving, Tabcut has had access to global customers and investments, as well as the latest technologies, such as Nvidia Artificial intelligence chips, currently restricted in China due to US sanctions.
It is no coincidence that strict regulations prevent developers from exploring new innovations in the field of artificial intelligence.
On the contrary, Singapore offers a more favorable environmentmaking it easier to start a business and acting as a bridge between Asian companies and global markets.
According to Adam, founder of Linklound, about 70-80% of Chinese AI and software startups are targeting a global audience. By the end of 2023, Singapore was home to over 1,100 AI startups, many of which are Chinese in origin.