Singapore widened a crackdown on alleged money laundering in a probe tied to scandal-hit Malaysian state fund 1MDB, seizing assets and announcing it will take action against some of the biggest banks based in the city-state
Singapore authorities said in a statement on Thursday that they had seized S$240 million ($177 million) of assets in an investigation of 1MDB-related fund flows for possible money laundering.
They also said they found problems at three major banks, top local lender DBS Group Holdings Ltd, the world’s largest private bank UBS AG, and UK-based bank Standard Chartered.
“The preliminary findings are that there were instances of control failings in all three banks and, in some cases, weaknesses in the processes for accepting clients and monitoring transactions. There was also undue delay in detecting and reporting suspicious transactions,” the Monetary Authority of Singapore (MAS) aid in a statement.
An onsite inspection of another Swiss bank, Falcon PBS, owned by one of the world’s leading sovereign wealth funds – Abu Dhabi’s International Petroleum Investment Company (IPIC), in April 2016 found “substantial breaches” of anti-money laundering regulations, MAS said.
It was the first time 1MDB, or 1Malaysia Development Bhd, has been mentioned by the Singapore authorities in official statements about the money laundering investigation. In May, they said they were closing down the operations of Swiss private bank BSI AG in Singapore for serious breaches of anti-money laundering rules, the first such action in 32 years. They didn’t identify 1MDB in that announcement, though Swiss authorities did in a related move against BSI.
Thursday’s joint statement by MAS, the Attorney-General’s Chambers and the Commercial Affairs Department (CAD) came the day after U.S. prosecutors filed civil lawsuits to seize more than $1 billion in assets they said were tied to money stolen from the Malaysian state development fund.
Of the asset seizure announced on Thursday, about half belonged to Malaysian financier Low Taek Jho, known as Jho Low, and his immediate family, according to the statement.
Authorities did not detail the potential action they might take against the banks. Under Singapore law, the banks could face fines or other penalties, and individuals directly involved could face prosecution.
“The criminal investigations by CAD are targeted at individuals suspected of committing offences in Singapore related to these flows, while MAS has been examining the financial institutions through which the funds flowed for possible regulatory breaches and control lapses,” the statement said. (bit.ly/29OG3qd)
“EGREGIOUS FINANCIAL CRIME”
1MDB, which was founded by Malaysian Prime Minister Najib Razak in 2009 shortly after he came to office, is being investigated for money-laundering in several countries.
Both 1MDB and Najib have repeatedly denied any wrongdoing.
Ties between Singapore and Malaysia have improved in recent years. Singapore was part of Malaysia after the end of British colonial rule but they separated acrimoniously in 1965, clouding diplomatic and economic dealings for decades.
The MAS said it has carried inspections at DBS, and the local units of both Asia-focused Standard Chartered and UBS.
“The MAS’ inspections did not reveal pervasive control weaknesses or staff misconduct within these banks, unlike in the case of BSI Bank,” the statement said.
DBS, Standard Chartered said they will fully cooperate with the authorities.
“Egregious financial crime is highly sophisticated and intentionally designed to evade systems and controls. DBS has previously identified certain questionable activities and voluntarily reported these to the relevant authorities,” DBS said.
Standard Chartered said it had also reported suspicious transactions whenever it discovered them, adding that it had strengthened its anti-money laundering controls and processes.
UBS said it “self-reported the suspicious transactions” and is working closely with regulators.
“Combating sophisticated international financial crime is complex and UBS is constantly enhancing its comprehensive AML (anti money laundering) processes,” it said in a statement.
Falcon’s inadequacies included “failure to adequately assess irregularities in activities pertaining to customers’ accounts and to file suspicious transaction reports,” MAS said.
It said that Falcon’s management of key client relationships were done out of the bank’s head office in Switzerland and that the examination was still ongoing.
Falcon said it is in “full cooperation” with authorities and will comment further when investigations are complete.
The statement from Singapore authorities also mentioned Singapore-based Raffles Money Change, a money changer and remittance agent, which was found to have inadequate risk management and oversight.
The 1MDB-related investigations, which began in March 2015, are ongoing and Singapore has requested information from other countries as part of its probe.
“Appropriate actions will be brought against those who have broken Singapore’s laws,” the statement said.