Standard Chartered is today reported to be under investigation over $1.4bn of private bank client assets transferred from Singapore to Guernsey ahead of a deadline introducing new tax transparency rules.
The private bank is alleged to have failed to carry out proper vetting of the sources of the funds in question.
Following claims by bank employees, the bank conducted an enquiry, reports Bloomberg, and notified regulators of its concerns.
The assets were moved to the bank’s Guernsey trust unit and are said to involved mainly Indonesian clients, some of whom had links to the military.
The timing of the transfers has raised suspicion as they took place at the end of 2015, just ahead of Guernsey adopting the Common Reporting Standard, a global framework for the exchange of tax data, at the start of 2016, sources told Bloomberg.
The news service reported that the UK regulator, the Financial Conduct Authority (FCA) is “aware of the transfers” but that it is not “currently reviewing them”.
The regulator is not believed to have suggested any collusion between bank employees and clients, says Bloomberg.
A focus of the bank’s internal investigation was whether Standard Chartered had adequately scrutinised the source of the customers’ funds and performed the appropriate “know your client” due diligence, Bloomberg reported.
Employees of the trust in Guernsey and relationship bankers in Singapore referred the $1.4bn of asset transfers when they were proposed in 2015, “noting a sudden flurry of requests in what was previously a static series of accounts”, sources said. The transfers were approved by Standard Chartered’s financial crime compliance team after a review, they added.
‘Huge disparity between earnings and assets’
At the heart of concerns for the Guernsey employees was the enormous gap between the stated earnings of some clients and the balances in their accounts.
In some extreme cases, clients had claimed an annual income of tens of thousands of dollars yet held tens of millions in their accounts, the sources said.
Those with links to the military were considered “politically exposed persons” and as such should have been subject to a higher level of scrutiny, said the same sources.
Regulators from Guernsey have travelled to the mainland to interview some of those involved in executing and approving the transfers, the sources have claimed.
When contacted by International Investment, the FCA declined to comment.