The Monetary Authority of Singapore (MAS) has imposed penalties of S$5.2 million (US$3.94 million) on Standard Chartered Bank, Singapore Branch (SCBS) and S$1.2 million (US$910,550) on Standard Chartered Trust (Singapore) Ltd (SCTS) for breaking its anti-money-laundering and terrorist financing rules.

The MAS has found SCBS guilty of 21 contraventions of MAS Notice 626, on the prevention of money laundering and terrorist finance at banks, and SCTS guilty of 12 contraventions of MAS Notice TCA-N03, whose title is "Prevention of Money Laundering and Countering the Financing of Terrorism (Trust Companies)." These transgressions occurred when the trust accounts of SCBS’ customers were transferred from Standard Chartered Trust (Guernsey) to SCTS between December 2015 and January 2016.

The MAS found the two firms' risk management and controls in relation to the transfers to be unsatisfactory. The transfers occurred shortly before Guernsey’s implementation of the Organisation for Economic Co-operation and Development's Common Reporting Standards (CRS) for the Automatic Exchange of Financial Account Information in Tax Matters. The timing of the transfers raised the question of whether the clients were trying to avoid their CRS reporting obligations. The two firms did not assess and/or deal with this risk factor well enough and also failed to send suspicious transaction reports off to the financial intelligence unit in time.   

The regulator has treated the two firms with some mercy because SCBS notified it about its internal review of the trust accounts without being asked to do so and the management of both firms rose to the challenge of remediating the organisaional deficiencies it had uncovered. The two main issues that the regulator wanted the firms to address were transaction monitoring and the assessment of money laundering risks during the 'onboarding' process. More detailed information has not been released.

To date, more than 100 jurisdictions, including Singapore, have promised to implement the CRS. Singapore will commence the automatic exchange of information (AEOI) this year.

Singapore's primary laws that oblige firms to combat terrorist finance are the Terrorism (Suppression of Financing) Act (Cap 325) and the United Nations (Anti-terrorism Measures) Regulations.

A trust company’s board of directors and senior managers are responsible for governing it strongly and managing its ML/TF risks and controls well. They can delegate certain responsibilities to senior AML/TF employees, but the final responsibility rests with them. The MAS is keen for every trust to have a strong compliance culture throughout, with the board of directors and senior managers setting the right tone, working out the trust's appetite for risk clearly and evolving a compliance culture in which financial crime is not acceptable.