Singapore's banking sector, including wealth management, poses the highest money laundering risk in the city-state, the government said in a money laundering risk assessment report published on Thursday.

Banks had higher exposure to money laundering threats and could be more easily exploited due to the sheer volume of transactions they handle and their exposure to customers from high-risk jurisdictions, the home affairs ministry, the central bank and the finance ministry said in a statement.

This is the latest national risk assessment report since the previous one was published in 2014. The findings in the updated report will guide ongoing efforts to ensure that Singapore's anti money laundering regime "keeps pace with the identified risks".

The report comes after Singapore busted a $2.24 billion money laundering ring run by foreigners, with the last of 10 offenders sentenced on June 10.

The criminals held money in bank accounts in Singapore and converted some into real estate, cars, handbags and jewellery.

Since the money laundering case emerged last year, the government has set up an inter-ministerial panel to review the anti-money laundering regime and sharpened their policing of the inflows of wealth and wealthy individuals.

In the new risk assessment report, Singapore said its key money laundering threats stemmed from fraud - particularly cyber-enabled fraud - organised crime, corruption, tax crimes and trade-based money laundering.

The report also identified new risk sectors not included in the last report. These are digital payment token services providers and precious stones and precious metal dealers.

"Singapore’s position as an international financial centre and as a trading and transit hub with a highly externally oriented economy exposes it to the risks of criminals exploiting our economic openness, financial system and business infrastructure to launder or move illicit funds and assets," the joint statement said.

Singapore has benefited from strong inflows of wealth into Asia due to its political stability, low taxes, and policies favourable towards family offices and trusts.

The Asian financial hub had assets under management of S$4.9 trillion ($3.6 trillion) in 2022. As at end 2022, 76% of Singapore’s assets under management originated from outside Singapore.

The number of family offices or one-stop firms that manage the portfolios of the wealthy in the city-state rose to around 1,400 last year from 1,100 a year ago, according to government statistics.

($1 = 1.3513 Singapore dollars)