MAS’ two year 1MDB review concludes as penalties hit US$21m

The Monetary Authority of Singapore (MAS) has completed on its two-year long review of banks from across the globe, involved in transactions related to the 1Malaysia Development Berhad case (1MDB), with Credit Suisse and United Overseas Bank (UOB) the latest to be fined.

In what has been dubbed Singapore’s most extensive anti-money laundering review to-date, MAS said that it has uncovered “a complex web of transactions”, involving numerous shell companies and individuals operating in multiple jurisdictions, including the United States, Switzerland, Hong Kong, Luxembourg and Malaysia.

In its latest regulatory actions, MAS said in a statement announcing the update, that it has imposed fresh financial penalties on Credit Suisse and United Overseas Bank (UOB), amounting to S$0.7m (US$0.5m) and S$0.9 million (US$0.65m) respectively for breaches of MAS Notice 626 – Prevention of Money Laundering and Countering the Financing of Terrorism.

It has also issued Prohibition Orders (POs) against three individuals and served notice of its intention to impose the same regulatory action on three others.

As a result of the investigations,  MAS has already shut down two merchant banks, BSI Bank and Falcon Bank, imposed financial penalties of $S29.1m (US$21m) in total on eight banks (BSI Bank, Falcon Bank, DBS, UBS AG, Standard Chartered Bank, Coutts, Credit Suisse and UOB) for various breaches of anti-money laundering (AML) requirements.

Credit Suisse and UOB

MAS said that Credit Suisse and UOB had revealed “several breaches” of AML requirements and control lapses. “These include weaknesses in conducting due diligence on customers and inadequate scrutiny of customers’ transactions and activities,” the statement read. “MAS did not however detect pervasive control weaknesses within these banks.”

MAS added that it has directed the banks to appoint independent parties to assess and confirm to MAS that rectification measures have been effectively implemented. MAS has also instructed the management of Credit Suisse and UOB to take disciplinary measures, where appropriate, against errant staff.

The banks are currently taking measures to address the weaknesses identified and strengthen their AML controls.

Ravi Menon, managing director, MAS, pictured left, said the two-year long 1MDB-related review holds “key lessons” for both MAS and financial institutions in Singapore.

As a result, MAS has enhanced its AML surveillance and taken unprecedented enforcement actions against “errant institutions and individuals” and financial institutions have increased their risk awareness and strengthened their AML controls.

“Our financial industry is in a better position today than it was when the abuses stemming from the 1MDB-related flows took place,” said Menon. “The price for keeping our financial centre clean as it grows in size and inter-connectedness is unstinting vigilance.”

Prohibition orders

Menon confirmed that MAS has also issued prohibition orders against four persons and notified three other individuals of similar actions. POs, ranging from 10 years to lifetime, have been issued against four former employees of financial institutions implicated in these transactions. MAS has notifed another three current and former employees of its intention to issue POs against them, ranging from 3 to 6 years.

Further to its announcement on 13 March, MAS said that has issued lifetime POs against Jens Fred Sturzenegger and Yak Yew Chee, as well as a 15-year PO against Ms Seah Mei Yingwith effect from 29 May.

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Gary Robinson
Head of Video and Ezines at Open Door Media Publishing. Deputy Editor, International Investment. An experienced journalist and filmmaker with more than 20 years' financial services experience, both as journalist and originally as a fully qualified IFA, Gary works across both International Investment and InvestmentEurope titles. Previous video production credits include projects on BBC, C4 and SKY.

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