SINGAPORE (Reuters) - Singapore’s central bank imposed penalties on the local units of U.K.-based Standard Chartered STAN.L and private bank Coutts for money laundering breaches related to Malaysia’s scandal-tainted 1MDB fund and said it was nearing the end of its probes.
The penalties - of S$5.2 million ($3.65 million) and S$2.4 million, respectively - were the latest punitive measures taken by the central bank in its crackdown on money laundering, having ordered the closure earlier this year of the local units of Swiss banks BSI and Falcon.
The Monetary Authority of Singapore (MAS) is also in the process of issuing a prohibition order against Tim Leissner, Goldman Sachs’ former Southeast Asia chairman.
“These actions send a strong signal that we will not tolerate the abuse of Singapore’s financial system for illicit purposes,” said Ravi Menon, the managing director of MAS.
“The supervisory investigations into the intricate web of international fund flows have been a learning experience for financial institutions as well as for MAS,” he said.
The inspection at Standard Chartered "revealed significant lapses in the bank's customer due diligence measures and controls for ongoing monitoring," MAS said. bit.ly/2h0ZMJQ
While the 28 breaches were “serious”, the central bank did not find “wilful misconduct.”
Standard Chartered said in a statement it is taking action to strengthen controls and surveillance systems.
“We regret that 1MDB-related transactions passed through Standard Chartered Bank Singapore accounts from 2010 to early 2013,” it said.
“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.”
Malaysia’s 1MDB, once a pet project of Prime Minister Najib Razak who chaired its advisory board, is the subject of money-laundering investigations in at least six countries, including Switzerland, Singapore and the United States.
At Coutts, the investigation revealed 24 breaches of AML requirements in relation to customer due diligence measures for politically exposed persons.
This was the result of actions or omissions of officers who have since left the bank, including Yak Yew Chee and Yvonne Seah, who had left Coutts to join BSI Bank in late 2009.
Coutts International was sold by Royal Bank of Scotland RBS.L 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,” RBS said in a statement.
UBP said the acquisition of Coutts International was an assets-only transaction and therefore UBP does not inherit Coutts’ “legal issues or liabilities.”
Banker Leissner was responsible for managing the relationship with 1MDB when Goldman Sachs was engaged by the fund to arrange three bond issues from 2012 to 2013. MAS’s investigation found he had made false statements on behalf of his bank without its knowledge or consent.
“Today’s announcement refers to a matter we discovered in January of this year and identified as a clear violation of the firm’s standards,” Goldman Sachs said in a statement.
“At that time we promptly took steps to separate Leissner from the firm and reported the matter to regulatory authorities in several jurisdictions, including Singapore. We continue to cooperate with the MAS.”
The proposed order will prohibit Leissner for a period of 10 years from performing any regulated activity under the Securities and Futures Act or taking part, directly or indirectly, in the management of any capital market services firm in Singapore.
Leissner’s lawyer Marc Harris from Scheper Kim & Harris LLP said in a statement that Leissner will accede to a request by MAS to response to the allegations.
The central bank said it was nearing the end of its 1MDB-related investigations and will provide a final update early next year.
Reporting by Anshuman Daga and Marius Zaharia; Editing by Michael Perry & Shri Navaratnam