If Singapore does not clean up illegal Web3, the June FATF assessment may be downgraded, which may damage its position as a financial center

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Author:Crypto Fearless

Let’s talk about the conclusion first:

1. Singapore MAS implements virtual assets regulations in preparation for the upcoming Financial Action Task Force (FATF) mutual assessment to be launched in June 2025. FATF has virtual assets related to the South in 2021. Singapore is not giving an expiration date, but it is precisely blocking time.
2. Singapore has been warned by the FATF for two consecutive years that there are problems in anti-money laundering, anti-terrorism financing, etc. If there is any problem with the assessment this year, it may be downgraded, affecting the real big money in and out of the world's financial center.
3. Since last year, the Singapore government has begun to intensively issue policies and self-evaluation reports, repeatedly emphasizing that it is facing challenges and achievements in anti-money laundering, among which virtual assets and digital payment channels are the largest new threats.
4. The process of FATF evaluation must be held separately with the virtual asset service provider (government department personnel cannot be present). This is also Singapore’s “elimination” of virtual asset service providers that have not been issued before June 30. Ensure that only compliants participate and reduce the risk of accused regulatory vulnerabilities.
5. Hong Kong, China, is abiding by the FATF's anti-money laundering guidelines, just like Singapore. Singapore is regulated by MAS, and Hong Kong is regulated by SFC. It is difficult to count on Hong Kong to be more groundbreaking in Web3 policies, and it is also difficult to catch Singapore's wave.

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The FATF is an intergovernmental organization responsible for formulating and evaluating international standards for global anti-money laundering (AML), anti-terrorist financing (CFT), and anti-proliferation financing (CPF). By reviewing the compliance and effectiveness of member states, maintaining the "grey list" and "blacklist", putting pressure on non-compliant countries and responding to emerging threats such as virtual assets.

If downgraded by FATF, you may face risks such as restricted cross-border transactions, reduced foreign capital outflows and investment, volatility in financial markets, damaged international reputation, and increased regulatory and compliance costs.

Singapore's last FATF mutual assessment was in 2016. In its first national risk assessment report , TF activities from foreign sources were rated as moderate risk. In the non-financial sector, the report identifies high ML/TF risks for telecom service providers, casino industries and pawn shop industries.

In 2024, Singapore released a national risk assessment report evaluating the risk of money laundering related to virtual assets as medium and high , and analyzed in detail the risks of virtual assets in cybercrime, investment fraud, illegal transactions and terrorist financing, such as the cross-border remittance between cryptocurrency trading platforms, the anonymity of DeFi activities such as currency mixing.

The report also mentioned that in the past five years, Singapore has found that it has laundered 6 billion yuan of black money. These assets include bank account deposits, real estate, and cryptocurrencies. In the negative reports of some media, Singapore has become a global "money laundering center" without knowing it.

According to sources in Singapore's crypto compliance, Singapore has actually been warned by the FATF for two consecutive years that there are problems in anti-money laundering, anti-terrorism financing, etc. If there is any problem with the assessment this year, it may be downgraded, affecting the real in and out of big money and the image of the international financial center.

Therefore, during the same period, the Singapore government has also begun to intensively introduce relevant policies, compliance guidance for major industry associations, and media publicity to prepare for the FATF mutual assessment in June 2025.

Singapore Prime Minister Wong Xuncai emphasized in his speech at the FATF plenary meeting last year that virtual assets and digital payment channels are the largest new threat.

In terms of implementation effectiveness, Singapore’s mutual assessment calculation of FATF this year needs to comply with the “Guidelines for Updated Risk-Based Virtual Assets and Virtual Asset Service Providers (VASPs) Methods issued by FATF in 2021, covering six key areas: definition of VASPs, stablecoins, P2P transactions, licensing registration, travel rules and regulatory cooperation, and provide detailed AML/CFT implementation guidance.

According to MAS's new regulations on DTSP, a digital token service provider, which will be implemented on June 30, it is basically in order to comply with the effectiveness of the implementation of FATF's guidelines. In other words, Singapore has been giving the virtual asset industry enough to have an exaggeration period in the past few years, and this year it really tightened at the last moment of DDL.

The Singapore government is known for its efficiency. This FATF assessment has been prepared for a long time. It is technically unlikely to be caught by the FATF, and it is unlikely that it will be demoted or disqualified from membership.

For example, foreign FATF mutual assessments require separate talks with the private sector (including VASPs) and government personnel are not allowed to be present. For this reason, Singapore requires VASPs that have not obtained MAS licenses to cease operations before June 30, 2025, aiming to ensure that only compliant VASPs are involved during the assessment and reduce the risk of accused regulatory vulnerability. The list and classification of licensed and exempted companies can be sorted out by referring to the media.

In addition, Hong Kong, China, like Singapore, complies with the FATF anti-money laundering guidelines. Singapore is regulated by MAS, and Hong Kong is regulated by SFC. It is expected that Hong Kong will be more pioneering in its Web3 policy, and it is difficult to catch Singapore's wave. The breakthrough of Hong Kong Web3 still lies in the policies and standards of the mainland.