SINGAPORE: The Monetary Authority of Singapore (MAS) on Thursday (Jul 21) said that the preliminary findings of its probe related to Malaysian state fund 1Malaysia Development Bhd (1MDB) showed lapses and weakness in anti-money laundering (AML) controls in some Singapore-based financial institutions.
It said that its supervisory examinations of FIs with 1MDB-related fund flows have revealed a "complex international web of transactions involving multiple entities and individuals operating in several jurisdictions".
It added that these examinations, which began in March 2015, detected lapses and weaknesses in BSI Bank, DBS Bank, Standard Chartered Bank's Singapore branch, UBS' Singapore branch, Falcon Private Bank's local branch and Raffles Money Change.
For BSI, MAS said it completed its examination in May and decided to withdraw its status as a merchant bank in view of serious AML breaches.
As for DBS, SCB and UBS, MAS said it is now finalising its assessments, but preliminary findings showed 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 regulatory body said.
"The deficiencies observed in DBS, SCB and UBS related to lapses in specific processes and by individual officers. The lapses were serious in their own right, and will be met by firm regulatory actions against the banks," it said.
"However, the MAS’ inspections did not reveal pervasive control weaknesses or staff misconduct within these banks, unlike in the case of BSI Bank."
In response to a query from Channel NewsAsia, a spokesperson from Standard Chartered said the bank "takes financial crime compliance very seriously."
"When we discovered the suspicious transactions, we reported them and have been fully cooperating with the relevant authorities. We have strengthened our anti-money laundering controls and processes and will continue to play an active role in the fight against financial crime,” the emailed reply said.
Similarly, a DBS spokesman said the bank has "previously identified certain questionable activities" and has "voluntarily reported these to the relevant authorities".
The emailed response added: “Egregious financial crime is highly sophisticated and intentionally designed to evade systems and controls... We take our anti-money laundering obligations seriously and will continue to extend our fullest cooperation to regulators and law enforcement.”
UBS did not immediately reply to an emailed request for comment from Channel NewsAsia.
The central bank also said it completed its onsite inspection of Falcon in April this year, and found "substantial breaches of AML regulations", including failure to adequately assess irregularities in activities pertaining to customers' accounts and to file suspicious transaction reports.
It added that supervisory examination of the bank is still ongoing as the oversight and management of certain key client relationships were done out of its Switzerland head office.
Falcon Private Bank said it is "in full cooperation with the authorities" and added that it will comment further when investigations are complete.
As for Raffles Money Change, MAS said its findings included weak management oversight, inadequate risk management practices and internal controls, and it is finalising regulatory actions against the licensed money changer and remittance agent.
It said that examination of certain other financial institutions are ongoing, and more details will be provided when they are completed.
Raffles Money Change declined to comment.