In a globalised economy where Money Laundering (ML) and Terrorist Financing (TF) activities are becoming more sophisticated and challenging to detect, Singapore’s status as a major global financial hub makes us vulnerable as a transit point for ML and TF. While Singapore has steadily and systematically built up our Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) regime over the years to prevent money laundering and terrorist financing, the charity sector is not immune to these crimes.
Charities are vulnerable to these crimes due to a broad range of factors - the high level of public trust; extensive networks and locations in which some charities conduct their activities; and poor infrastructural support in less developed areas which may result in charities transferring funds through unregulated financial channels. In particular, charities face higher risk of abuse if they have weak internal controls and financial administration practices.
ML or TF involving charities would also have serious implications on the charity sector. Such erosion of trust could dissuade new and existing donors as scepticism clouds the reputation of the charity sector, hindering legitimate fund-raising efforts. The impact of ML and TF may have far-reaching effects, especially on charities who might be misused or exploited by unscrupulous parties. All charities must understand ML and TF risks and have proper governance practices and strong internal controls to safeguard their charities.
