Finance

Finance, a sector of economy where speed and continuous innovation are highly sought after, being able to leverage on ICT to create new products, processes and services is becoming the prerequisite to being a sustainable premier financial centre.

In Singapore, many banks and financial institution are developing differnt products and services rapidly to further enhance its operations.

1. Overview

Today, the world is becoming more and more integrated and inter-dependent. National borders continues to open as globalisation creates a single integrated trading, financial and labour market pool with talent, capital, goods and services moving more easily and quickly from one place to another. Together with the huge technological advances, it causes products and processes to change rapidly. Hence, many developing countries are liberalising their previously closed domestic markets to foreign trades and investments. In order to stay at a competitive edge, Singapore aims to make itself the living digital hub as Infocommunication Techonology (ICT) industry is an important area that will continue to power Singapore's economic growth. [1105sgict:6]

1.1 Statistics for financial sector

The latest Nielsen Global Online Survey on Internet shopping habits shows that nearly eight in ten Singaporeans shop online. This report was release on the 11 March 2008. According to the survey, more than 85% of the world's online population has used the internet to make a purchase over the increasing market for online shopping by 40% in the past two years.

In addition, 73% of Singaporeans who make their purchase over the internet uses their credit card to make the payments. [1105sgict:5]

2.   General Laws and Policies 

Given the rapid rate of technological development and a fast moving environment, policies and regulations have to be kept in pace so as to achieve Singapore's goal of becoming a world-class financial and business hub. Below are some of the significant Acts in which Singapore had implemented to deter crimes related to ICT and financial sector. 

2.1 Electronic Transactions Act (ETA)

(See Electronic Transactions Act (ETA)) 

2.2 Public Key Infrastructure (PKI)

(See Public Key Infrastructure (PKI))

2.3 General Laws regarding commercial crimes (Finance)

(See General Laws (Finance))

2.4 Initiatives

With financial services providers gearing towards ICT to innovate and create new products, processes and services, Singapore's goal is to become a trusted gateway to the emerging Asian market and an innovative hub for financial services, powered by technology. Hence, Infocomm Development Authority (IDA) had came up with a few technology-driven programmes.[1105sgict:3] They are:

          - Corporate Financial Information Exchange Transparency: An initiative to facilitate flow of information and reports aimed to generate trust, transparency and a more efficient capital market. New electronic standards will be adopted in corporate reporting such as eXtensible Business Reporting Language (XBRL) to streamline corporate financial reporting process.

          - Next Generation Electronic Payments: An initiative to promote deployment and development of innovative solutions that provide convenient electronic payments over different channels.

          - I-Wealth Management: An initiative to encourage the financial service providers to use online collaboration and data aggregation in both front-end customer engagement and back office processing making it more efficient to manage wealth.

          - National Trust Framework: For more information, click here

3. Applications of ICT

3.1    e-Banking

  
ATM (Automated Teller Machines)

ATM are the most basic computerised device that are being adopted by banks. It provides the public an access to financial transactions in a public space without a need for human clerk or bank teller. Some of the available transactions includes cash withdrawals, balance enquiries and funds transfer. Over the years, some other more accessible applications like phone banking and internet banking were also introduced by the banks to their consumers.

Phone Banking

Phone banking is almost similar to other electronic services provided by the banks and is free of charge. However, depending on the policies of each banks, standard commission or transaction fees for certain services might be charged. It gives the consumers freedom to perform banking transactions such as balance enquiry, bill payment, funds transfer & cheque status enquiry on their accounts.

Mobile Banking

Mobile banking, like phone banking is almost similar to other electronic services provided by the banks and gives consumers the freedom to perform banking transactions such as balance enquiry, bill payment and funds transfer on their accounts 24-hours everyday. However, to use mobile banking, users must have access to technologies (depending on the banks) such as WAP (Wireless Application Protocol), GPRS (General Packet Radio Service) through their phone.

Internet Banking       

   
                                                        
( A picture of DBS iBanking starter kit. From www.dbs.com.sg )

Since internet banking was introduced by various banks, it had become increasingly popular among the consumers due to its ease of access and the availability of a wide range of transactions services. Also, Banks have also been upgrading their internet banking system so as to maintain the system to be user friendly and secure so as to let their consumers bank with confidence.

3.2    PayPal  

 (PayPal picture. From www.tradepublishing.com)

PayPal is a service in which it allows its the public to pay online in anyway they like such as paying through credit cards, bank accounts, buyer credit or account balances, without sharing any financial information.

As a pioneer in electronic payments, it is one of the latest financial institutions out of the 600 leading financial institutions operating in Singapore, making Singapore the world's largest foreign exchange trading centre. The opening of its headquarters in Singapore in November 2007 creates Singapore as a pro-business environment, strong technological capability, excellent ICT infrastructure, robust intellectual property protection and skilled talent base. [1105sgict:4]

5.   Crimes

In the world of ICT, computers can benefit us or bring harm to us. This is because crimes can results from ICT which will in turn leads to negative consequences such as the breach to the confidentiality of information and integrity of data and systems and the availability of resources and facilities could also be undermined. This, to a certain extent, can cause conflicts to the interests of individuals, organisations and the society. Some of the crimes that can occur in the financial field includes digital forgery, electronic embezzlement, information theft, and phishing.

For more information, click here

5.1 Financial Investigation Division

As Singapore aims to become a world-class financial and business hub, besides efficiency, there needs to be relatively safe environment to earn the trust of investors and companies. In Singapore, the Financial Investigation Division is set up as a "watchdog" organisation for the sector. 

Working closely with local financial institutions, government agencies and its foreign counterparts, Financial Investigation Division combats money laundering in Singapore. This is to ensure that Singapore will have a strong anti-money laundering and counter financing of terrorism (AML/CFT) regime. There are a total of 3 branches in this division namely the Suspicious Transaction Reporting Office (STRO), Financial Investigation Branch (FIB), and the Proceeds of Crime Unit (PCU). [1105sgict:1]

5.1.1  Suspicious Transaction Reporting Office (STRO)

As mentioned above under CDSA, a person who knows or has reason to suspect that any property may be connected to a criminal activity, is madatory for him to lodge a STR to STRO. Hence, STRO receives and analyse STR providing financial inteeligence information to detect any money laundering, terrorism financing and other criminal offences. It is also part of Singapore's Financial Intelligence Unit (FIU).

STRs has always been very useful in combating crime. Its information has directly or indirectly led to the seizure of $110 million of proceeds of crime since 2000. STRO also conducts a variety of outreach programmes to various industry sectors to raise anti-money laundering and counter financing terrorism (AML/CFT)awareness and to encourage the increase in the quantity and quality of STRs.

STRO also represents SIngapore at international forums and regional bodies in global  AML/CFT efforts. [1105sgict:1]

5.1.2   Financial Investigation Branch

This branch investigates money laundering and other ciminal activites under CDSA and TSOFA.

In addition, FIB investigates into possible cases of terrorism financing under the Terrorism (Suppression of Financing) Act (TSOFA). FIB also works closely with relevant government agencies in investigating into possible terrorism financing activities. [1105sgict:1]

5.1.3   Proceeds of Crime Unit (PCU)

This unit would indentify and seize the proceeds of crime and managed these assets til they are restituted or confiscated under CDSA.[1105sgict:1]

Traditionally, the primary focus of most investigation units is the collection of evidence to determine if criminal offence had been committed. The criminal offending the crime may be prosecuted and upon conviction, sentenced to a fine or imprisonment or both. Normally such sentences are enough to act as a deterrent for most crimes. However, in cases of financial crime, the criminal is potentially able to profit substantially from his offence. [1105sgict:1]
Therefore, a strong action is needed to remove a criminal's financial incentive to commit financial or economic crime. This is to be achieved through determined efforts to identify, seize, confiscate proceeds of crime and/or return stolen property back to the victims. A financial criminal would thus be unable to enjoy any benefit of crime after release from prison.[1105sgict:1]

The process of asset recovery, which often involved funds tracing and concealed income analysis of the suspect, may even uncover more predicate offences than initially reported. [1105sgict:1]

5.2   Financial Action Task Force (FATF)

(The logo of FATF. From http://www.fatf-gafi.org)

Financial Action Task Force (FATF), inter-governmental body, was set up in 1989, to developed and promote national and international policies to deter money laundering and terrorist financing. Right now, they have published 40 recommendations and 9 special recommendations. Singapore has been one of the members since 1992 out of 32 countries and territories and 2 regional organisation which made up FATF. Singapore will also take up the cochair position of the APG (Asia/Pacific Group on Money Laundering) which is part of the FATF associate members from 2008 to 2010. [1105sgict:2]

6. External Links 

 1) Asia/Pacific Group on Money Laundering - http://www.apgml.org/

2) Financial Action Task Force - http://www.fatf-gafi.org

7.   References

1) Commercial Affairs Department. (n.d.). Retrieved from http://www.cad.gov.sg/topNav/hom/

2) Financial Action Task Force. (n.d.). Retrieved from http://www.fatf-gafi.org/pages/0,2987,en_32250379_32235720_1_1_1_1_1,00.html

3) Infocomm Development Agency (IDA). (n.d.). Retrieved from http://www.ida.gov.sg/home/index.aspx

4) Infocomm Singapore Portal. (n.d.). Retrieved from http://www.infocommsingapore.sg/isg/

5) Nielsen Global Online Survey. (n.d.). Retrieved from http://www.acnielsen.com.sg/site/20080311.htm

6) Ministry of Finance. (n.d.). Retrieved from http://www.mof.gov.sg/publications/pdf/MOFbook_chapter1.pdf