Singapore Flags Higher Terrorism Financing Risk for Digital Payment Token Services
Singapore has raised the risk level for digital payment token (DPT) service providers potentially facilitating terrorism financing (TF) from “medium-low” to “medium-high” in its latest update to the terrorism financing national risk assessment.
The Ministry of Home Affairs, Ministry of Finance, and Monetary Authority of Singapore jointly announced on Monday that the latest risk assessment, last conducted in 2020, identified comparable areas of terrorism financing risk.
However, the report also admitted a lack of clear evidence for widespread use of digital payment tokens in Southeast Asia. This might be due to limited technology in areas hit by terrorism, lacking both financial infrastructure and good internet.
DPT service providers include companies that deal in digital currencies.
Even though traditional currencies are still the main way terrorists finance their activities, experts around the world are increasingly worried about virtual currencies like Bitcoin being used for this purpose. This concern has grown especially since the COVID-19 pandemic. The authorities in Singapore are closely watching this situation as virtual currencies become more popular.
“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 report said.
There are several reasons terrorism financing is a concern for DPTs. First, these transactions are often anonymous, fast, and can happen across borders, making it difficult to track. Second, there’s a risk that even licensed companies in Singapore might do business with unlicensed ones overseas, which could be more vulnerable to misuse.
Finally, not all countries have implemented the
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