This is how Singapore is supporting blockchain technology development u s anti money laundering laws

What is blockchain?

Blockchain is a technology that enables fast and secure transfer of digital goods such as money and intellectual property online. The technology consists of an algorithm and distributed data structure, for managing electronic transfer without the need of a central administrator.

Blockchain is threatening to change the way digital transactions are conducted online. Contrary to perception, blockchain and bitcoin are two different things.

Bitcoin is a form of virtual currency commonly referred to as cryptocurrency. Blockchain, on the other hand, is the underlying technology that supports and verifies transactions carried out with cryptocurrencies.

How blockchain works

Blockchain can be envisioned as a public ledger of cryptocurrency transactions carried out all over the world.

The blocks which form the basis of the technology constantly change with the completion of each cryptocurrency transaction.U s anti money laundering laws

A block is the current part of blockchain on which all the recent transactions unique to a person are recorded. Once a block is completed, it goes into the blockchain and a new block is generated. Blockchain blocks align themselves in a linear chronological order, each representing a completed transaction.

The ever-growing size of blockchain blocks is already creating big problem when it comes to storage and synchronization. The problem threatens to get out of hand, as cryptocurrencies become popular around the world.

Blockchain contains complete information about different user addresses as well as their balances right from the first block to the most recent. Transactions entered into a blockchain are irreversible and cannot be deleted. While the data can be distributed, it cannot be copied or counterfeited.

Uses of blockchain technology

Blockchain framework and underlying code can be useful in a variety of applications because of its ability to provide digital alternatives to banking processes.U s anti money laundering laws while attention so far has been on the use of the underlying technology to support transactions, the technology is slowly finding its ways into other industries.

Digital cash transactions could soon be a small part, of blockchain overall footprint.

Smart contracts

Blockchain technology is leading a digital revolution in the legal industry. The legal profession is synonymous with tons of paperwork. With the help of blockchain technology, law firms have started to digitize the process of keeping track of paper trail. Some law firms are using blockchain to record everything on a shared ledger, which becomes irrefutable digital proof that a legal event happened between two parties.

Lowering clearing and settlement costs

The financial industry incurs clearing and settlement costs of up to $20 billion a year. The use of blockchain technology could offer consumers lower fees for transacting thinks like wire transfers and clearing fees

u s anti money laundering laws

Voting applications

Blockchain technology has also found its way into the voting industry. The technology has the potential to serve as a medium for casting, tracking and counting of votes given its ability to curtail incidences of voter fraud or hacking.

The use blockchain would make it possible for voters to agree on the final count because of the blockchain audit trail, which is verifiable and cannot be changed or removed.

Secure healthcare data

The health industry has come under scrutiny amidst a string of data breaches that has left patients data exposed. Healthcare institutions also suffer from the inability to guarantee secure transfer and sharing of crucial data. With the use of bitcoin technology that could be a thing of the past.

Insurance contracts

Blockchain technology is currently being used to develop and host smart contracts that provide transparency and irrefutable record in the insurance sector.U s anti money laundering laws fraud and duplicate claims in the sector could soon be a thing of the past with the streamlining of the claims process.

Singapore’s push for blockchain technology © shutterstock

The monetary authority of singapore (MAS), has taken note of the kind of impact blockchain technology could have on the financial and tech industry. The regulator is taking a more proactive approach compared to other central banks in encouraging the use of technology.

MAS is currently working with the association of banks in singapore as part of an effort that seeks to leverage the use of blockchain for record keeping purposes. The consortium has already developed software prototypes for decentralized inter-bank payment and settlement, leveraging blockchain.

The three software models developed are the first in the world, designed to preserve transactional privacy. The models under ‘project ubin’ should achieve a superior combination of decentralization and privacy

u s anti money laundering laws

The prototypes were developed with a view of replacing existing programs that rely on a single payment queue, visible to the operator. The use of blockchain technology is expected to enhance the speed at which interbank transactions are settled. According to MAS, cross-border payment and security payment should be instant with the use of DLT systems.

“A key outcome of the consortium’s effort is the ability to perform netting while protecting the privacy of transactions. This helps to open up the opportunity for a wider adoption of DLT-based settlement systems. We are sharing our learnings and knowledge from project ubin to encourage greater experimentation amongst central banks and financial institutions,” said sopnendu mohanty, chief fintech officer, and MAS.

Enhancing secure cross-border transactions

According to mohanty, the release of the three software models should spark further research developments on the use of blockchain technology in various sectors.U s anti money laundering laws by tokenizing global currencies and protecting the privacy of each transaction using blockchain, smart contracts should come into being. The result should be an increase in both the speed and privacy of international transactions.

A proposed plan to streamline cross-border trade between singapore and hong kong as part of a joint venture spearheaded by MAS is on course. The regulator expects up to 20 global banks to join the global trade connectivity network initiative, in a bid to develop a blockchain based network for facilitating trade between the two countries.

Hong kong is not the only country that singapore is looking to collaborate with when it comes to blockchain technology and solutions. The country’s central bank has held discussion with the central bank of the philippines with a view to exploring how blockchain can be used to facilitate international payments between the two countries.U s anti money laundering laws

Reports indicate that MAS is inclined at creating a digital singaporean dollar on a blockchain, as part of its collaboration with the philippines central bank.