SINGAPORE: Standard Chartered Singapore and Coutts & Co were on Friday (Dec 2) fined S$5.2 million and S$2.4 million respectively by the Monetary Authority of Singapore (MAS) for breaches of anti-money laundering (AML) requirements that occurred in the context of 1MDB-related fund flows.
MAS also served notice of its intention to issue a Prohibition Order against Tim Leissner, a former director of Goldman Sachs (Singapore) for making false statements on behalf of Goldman Sachs without the latter's knowledge or consent.
Mr 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 regulator said in its press release.
On Standard Chartered Bank, MAS said it has completed its investigations that revealed "significant lapses" in the bank's customer due diligence measures and controls for ongoing monitoring, which resulted in numerous breaches of its AML regulations.
"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," MAS said.
However, while the breaches were serious, MAS did not find "pervasive control weaknesses or wilful misconduct" at the bank, and noted that the bank has proactively taken measures to address the weaknesses identified and strengthen its controls.
The regulator has instructed the bank to take disciplinary action against those officers who failed to perform their duties effectively, the press release said.
In addition to fining the bank S$5.2 million for 28 breaches, MAS also directed the bank to appoint an independent party to confirm that rectification measures have been effectively implemented and to report its findings to the central bank.
STANCHART "REGRETS" BREACHES: SPOKESPERSON
In response to the decision, a Standard Chartered Bank spokesperson said that the bank "regrets" the breaches in transactions that occurred from 2010 to early 2013.
"We reported the suspicious transactions, both before and at the time we exited the accounts in early 2013, and have been fully cooperating with the authorities investigating this matter. Standard Chartered has taken, and continues to take, remedial and disciplinary action where warranted and will continue to strengthen our controls, processes, and surveillance systems," the spokesperson said in an emailed statement.
The spokesperson added that it has raised staff awareness of their role to fight against financial crime, and said beyond the fine, it will be donating all profits relating to these transactions to "charitable causes in line with its community efforts in Singapore".
With regard to Coutts, MAS found breaches of AML requirements in relation to customer due diligence measures for politically exposed persons (PEPs), and fined it S$2.4 million for 24 breaches.
"The failure to exercise the necessary enhanced due diligence on these accounts was the result of actions or omissions of certain officers who have since left the bank. These officers include Mr Yak Yew Chee and Ms Yvonne Seah, who had left Coutts to join BSI Bank Limited in late 2009," MAS said.
Yak was given 18 weeks' jail and S$24,000 fine after pleading guilty to four charges, including forging reference letters vouching for Malaysian tycoon Jho Low's family and for failing to report suspicious transactions involving tens of millions of dollars coursing through BSI bank in Singapore.
MAS said Coutts International was sold by Royal Bank of Scotland (RBS) to Union Bancaire Privee in March 2015, and is in the process of winding down its Singapore operations.
"We regret any failings in our AML processes and the length of time it has taken to detect and resolve this issue." an RBS spokesman said in a statement. “We will donate all profits from these accounts to an industry-wide AML program run by an independent educational body to help combat financial crime to ensure Singapore remains a financial center which adheres to the highest standards."
RBS added that Coutts & Co has progressively and substantially strengthened the policies and controls that it used to prevent its services from being used by clients to aid financial crime.
The regulator added 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.