Tim Leissner, the former star dealmaker for Goldman Sachs in Southeast Asia, is set to be banned from Singapore’s securities industry for 10 years as its regulator issued the latest in a series of 1MDB-related bans and fines.
Leissner faces the ban for breaches relating to the multibillion-dollar scandal that has engulfed Malaysia’s troubled state investment fund 1MDB, with financial firms Standard Chartered and Coutts also both fined today, according to a statement issued by the Monetary Authority of Singapore (MAS).
The MAS said that it has imposed financial penalties of S$5.2m and S$2.4m respectively on Standard Chartered Bank, Singapore Branch (SCB) and Coutts & Co Ltd, Singapore Branch (Coutts) for breaches of MAS’ anti-money laundering (AML) requirements. These breaches occurred in the context of 1MDB-related fund flows through these banks.
MAS served notice of its intention to issue the prohibition order against Reissner for “making false statements on behalf of Goldman Sachs (Asia) without the latter’s knowledge or consent”. Leissner had overall responsibility for managing the relationship with 1MDB when Goldman Sachs was engaged by 1MDB to arrange three bond issuances from 2012 to 2013.
The proposed order will prohibit Mr Leissner for a period of 10 years from: (i) performing any regulated activity under the Securities and Futures Act; or (ii) taking part, directly or indirectly, in the management of any capital market services firm in Singapore.
Leissner moved to Goldman Sachs (Asia) in Hong Kong in November 2011. But he maintained his representative status with Goldman Sachs Singapore till his resignation from Goldman Sachs in February 2016, and was therefore subject to MAS’ requirements to being fit and proper to carry out regulated activities.
‘Unauthorised reference letter’
Leissner was found to have issued an unauthorised reference letter to a financial institution based in Luxembourg in June 2015, using the letterhead of Goldman Sachs (Asia). The letter stated that Goldman Sachs had conducted due diligence on Mr Low Taek Jho and his family, and had not detected any money laundering concerns with respect to Mr Low or his family. These statements were untrue and were made by Mr Leissner without Goldman Sachs’ knowledge or consent, MAS said in its statement
Low was a Malaysian businessman with Hollywood ties is alleged by US authorities to have laundered funds diverted from 1MDB and to have lived a lavish lifestyle on the proceeds. Low has previously denied wrongdoing.
Goldman Sachs is not accused of any wrongdoing by the Singapore authority, but the regulator confirmed that it was working on an examination of the bank’s role in the 1MDB bond transactions.
Marc S Harris, Los Angeles-based lawyer for Leissner, said in a statement that his client had been invited by MAS to respond to the allegations against him and looked forward to doing so.
“Prior to today, Mr Leissner had not heard of any contemplated regulatory action by the MAS and had not been contacted by the MAS or given any opportunity to respond to the MAS regarding the allegations raised,” the lawyer’s statement said.
As previously reported, various companies have been fined as Swiss authorities allege that up to US$4.8bn was diverted from companies linked to 1MDB. Malaysian prime minister Najib Razak has also been subject to claims that US$681m was transferred into his personal bank account.
Razak denies wrongdoing and has been cleared by Malaysia’s attorney-general.
MAS concluded by stating that it is nearing completion of its supervisory examinations of financial institutions in Singapore through which 1MDB-related fund flows took place, and will provide a final update in early 2017.
Ravi Menon, managing director, MAS, said: “MAS has taken tough regulatory actions against various financial institutions this year for AML control lapses. These actions send a strong signal that we will not tolerate the abuse of Singapore’s financial system for illicit purposes.
“The supervisory investigations into the intricate web of international fund flows have been a learning experience for financial institutions as well as for MAS. Our financial sector will emerge cleaner and stronger from the lessons learnt.”
SCB and Coutts
MAS said that it has completed its inspection of SCB in relation to its 1MDB-related fund flows which took place from 2010 to 2013. The inspection revealed significant lapses in the bank’s customer due diligence measures and controls for ongoing monitoring, which resulted in numerous breaches of MAS’ AML regulations, the statement said. The control lapses stemmed from inadequacies in policies and procedures, insufficient independent oversight of front office staff, and a lack of awareness of money laundering risks among some bank staff.
While the regulatory breaches were serious, MAS’ inspection did not find pervasive control weaknesses or wilful misconduct at SCB. MAS notes that the bank has proactively taken measures to address the weaknesses identified and strengthen its controls. MAS has instructed SCB’s management to take disciplinary action against those officers who failed to perform their duties effectively.
MAS has imposed on Coutts financial penalties amounting to S$2.4 million for 24 breaches of MAS Notice 1014 – Prevention of Money Laundering and Countering the Financing of Terrorism. Coutts International was sold by Royal Bank of Scotland to Union Bancaire Privee in March 2015 and is in the process of winding down its Singapore operations.