In line with its objective of improving the state of its financial industry, Singapore has confirmed plans to leverage artificial intelligence (AI) tools to increase its monitoring of the sector and stifle the activities of bad actors.
Ravi Menon, head of the Monetary Authority of Singapore (MAS), disclosed in an interview with Channel News Asia (CNA) that the banking regulator is keen on using AI to crack down on money laundering in the country. Menon unveiled the plans ahead of the Singapore Fintech Festival, billed to showcase the myriad utilities of AI in financial markets.
The MAS has previously embarked on a crusade against money launderers, but despite the wins, Menon says an integration with AI will open more options for financial regulators in Singapore. He cites the possibilities of “big-picture surveillance” using AI since money launderers operate across several financial jurisdictions.
Menon remarked that MAS and other regulators can leverage AI’s ability to process large data sets in seconds to foil the activities of money launderers. For real-world applications, Menon pointed to AI’s integration with the Collaborative Sharing of Money Laundering/Terrorism Financing Information and Cases (COSMIC), a platform for financial institutions to share information on shady transactions and details of clients.
Set to debut in 2024, Menon remarks that integrating AI tools into COSMIC will offer “additional insights” and will allow law enforcement to identify red flags and other anomalies in financial transactions.
Menon, scheduled to leave his role in early 2024 as head of the MAS, warned that while AI offers immense benefits, regulators are expected to employ a balanced approach toward a proposed integration.
“Like all technologies, AI brings great promise and great peril,” said Menon. “We need to be realistic in appreciating both sides. How can we harness the benefits, and not get too scared about the risks? At the same time, we can’t be too wide-eyed about it and ignore some of the risks.”
Critics have since pointed to the privacy and data collection concerns associated with AI tools, with several large technology and finance companies banning employees from using generative AI tools. Other challenges militating against AI use are the potential for model error, copyright infringements by AI developers, and the specter of monopolies by large AI developers.
Dabbling with emerging technologies
Apart from the proposed integration with AI, Singapore’s financial regulators have a streak of experimenting with emerging technologies to improve processing in the payments ecosystem. MAS has been dabbling with blockchain, conducting a series of pilots in search of novel use cases, including tokenization of financial instruments.
Buoyed by a series of successes, MAS entered a partnership with financial regulators in the U.K., Japan, and Switzerland designed to quicken the pace of its tokenization experiments.
“Through this partnership, we hope to promote the development of common standards and regulatory frameworks that can better support cross-border interoperability, as well as sustainable growth of the digital asset ecosystem,” said Leong Sing Chiong, MAS’ Deputy Managing Director (Markets and Development).
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