SINGAPORE: Standard Chartered Bank, Singapore Branch (SCBS) has been fined S$5.2 million and Standard Chartered Trust (Singapore) Limited (SCTS) has been fined S$1.2 million for breaches of the Monetary Authority of Singapore's (MAS) anti-money laundering and countering the financing of terrorism requirements.
These breaches occurred when trust accounts of SCBS’ customers were transferred from Standard Chartered Trust (Guernsey) to SCTS from December 2015 to January 2016, MAS said on Monday (Mar 19).
MAS found SCBS’ and SCTS’ risk management and controls in relation to the transfers to be unsatisfactory, the authority said.
The transfers occurred shortly before Guernsey’s implementation of the Common Reporting Standards (CRS) for the Automatic Exchange of Financial Account Information in Tax Matters, according to MAS.
"The timing of the transfers raised questions of whether the clients were attempting to avoid their CRS reporting obligations," said MAS. "However, SCBS and SCTS did not adequately assess and mitigate against this risk factor, and also failed to file suspicious transaction reports in a timely manner."
In determining the regulatory action, MAS said it had taken into consideration "mitigating factors".
"SCBS had proactively notified MAS of its internal review on the trust accounts, and SCBS and SCTS management showed strong commitment to address the deficiencies identified by MAS," it said.
Both institutions have taken prompt and substantive remedial measures to strengthen their controls, MAS added.
SCBS was penalised for 21 breaches of MAS Notice 626 - Prevention of Money Laundering and Countering the Financing of Terrorism (Banks), while SCTS was fined for 12 breaches of MAS Notice TCA-N03 - Prevention of Money Laundering and Countering the Financing of Terrorism (Trust Companies).
MAS deputy managing director Ong Chong Tee said: “MAS requires financial institutions to adequately assess money laundering risks when deciding whether to accept customers. They should also have in place good systems and processes to monitor customer transactions. We expect financial institutions to remain vigilant by instilling a strong risk culture.”
In response to MAS' actions, the bank said it took the matter "very seriously" and had conducted a "thorough review".
“We regret that we fell short of our own standards in adequately mitigating the risks involving some clients who might have attempted to avoid reporting obligations under the Common Reporting Standard by transferring their trusteeships between December 2015 and January 2016," said a spokesperson.
Adding that the bank had "proactively" reported the matter to authorities, the spokesperson said that it had also conducted a "thorough review" of relevant trust structures and made structural and procedural changes to ensure employees were better equipped to identify, assess and mitigate potential risks.
"Reinforcing the importance of a robust risk management culture, we have set the tone from the top and continue to cultivate a strong sense of risk awareness across the bank."
The spokesperson added the bank was taking "rigorous action" to strengthen its controls and culture, including enhancing relevant training programmes.
"We will continue to monitor, review and strengthen these measures to bolster our overall defence against potential financial crime risks.”