UOB and Credit Suisse have been fined by the MAS for breaches of controls related to transactions around Malaysia's 1MDB.

Singapore's financial regulator has fined Credit Suisse and United Overseas Bank S$700,000 ($504,391) and S$900,000 respectively for breaches of money laundering and terror financing regulations linked to transactions around Malaysia's state-run 1MDB fund. It also announced bans on a number of employees at banks involved in the matter.

The fines were announced by the Monetary Authority of Singapore after it completed its two-year review of banks involved in 1MDB-related transactions known to-date. It described the probe as its biggest-ever investigation of illicit money flows. Already, Falcon Private Bank and the Singapore arm of BSI have been ordered to cease operations in the Asia city-state. Financial penalties of S$29.1 million in aggregate have been imposed on eight banks (BSI Bank, Falcon Bank, DBS, UBS, Standard Chartered Bank, Coutts, Credit Suisse and UOB) for various breaches of AML requirements. (To see all such matters as well as a list of miscreants in global wealth management, click here.)

"In its latest regulatory actions, MAS has imposed financial penalties on Credit Suisse and United Overseas Bank (UOB), as well as issued Prohibition Orders against three individuals and served notice of its intention to impose the same regulatory action on three others," MAS said in a statement today.

Credit Suisse said in a statement: "Notwithstanding that the Monetary Authority of Singapore (MAS) review findings show there are no pervasive anti-money laundering control weaknesses, we acknowledge the outcome of the review and regret that we have fallen short of the MAS’ and our own high standards.  In recognition of the foregoing, Credit Suisse will donate all profits from the transactions in question to a worthy cause in support of our local community."

UOB, meanwhile, said: “UOB takes the importance of rigour in customer due diligence seriously and accepts the findings by the MAS. We have instituted measures to address the areas of concern, including enhancing our training programme to raise risk and control awareness among our staff. While the MAS found that the control weaknesses were not pervasive, UOB will continue to build upon our anti-money laundering policies, processes and practices to strengthen the Bank’s ability to combat the threats posed by those seeking to abuse the banking system."

MAS statement               
"The latest inspections of Credit Suisse and UOB revealed several breaches of anti-money laundering requirements and control lapses.  These include weaknesses in conducting due diligence on customers and inadequate scrutiny of customers’ transactions and activities.  MAS did not however detect pervasive control weaknesses within these banks," MAS continued.  

In addition to the fines, the regulator said it has ordered the banks to appoint independent parties to assess and confirm to MAS that measures to put matters right have been carried out. MAS said it has also instructed the firms to take disciplinary measures, where appropriate, against errant staff.  

Prohibition orders against convicted bank employees
MAS also, updating an announcement made on 13 March, said it had issued a lifetime prohibition order against Jens Fred Sturzenegger and Yak Yew Chee, as well as a 15-year PO against Seah Mei Ying with effect from 29 May 2017.  Sturzenegger was the branch manager of Falcon Private Bank Ltd, Singapore branch (Falcon Bank), while Yak and Seah were employees of BSI Bank Limited (BSI Bank).

"Mr Sturzenegger has been convicted of financial crimes including providing false information to authorities in an attempt to cover up his knowledge of Falcon Bank’s relationship with Mr Low Taek Jho.  Mr Yak and Ms Seah were convicted of multiple counts of failing to report suspicious transactions and of forging reference letters at BSI Bank on behalf of Mr Low," MAS said.

All three individuals are prohibited from (i) providing any capital markets and financial advisory services; and (ii) taking part in the management of, acting as a director of, or becoming a substantial shareholder of any capital markets services or financial advisory firm in Singapore, it said.

Separately, MAS said it intends to issue a prohibition order against Ang Wee Keng Kelvin, a former representative of Maybank Kim Eng Securities Pte Ltd (MKES). MAS also served notice of its intention to issue POs against the chief executive of NRA Capital Pte Ltd (NRA), Kevin Scully, and its former head of research, Lee Chee Waiy.

"Through Mr Ang’s introduction, NRA was appointed to perform the valuation of PetroSaudi Oil Services Limited (PSOSL)4.  On 24 May 2017, Mr Ang was convicted of an offence under the Prevention of Corruption Act for bribing Mr Lee with S$3,000 to expedite the preparation of the valuation report on PSOSL.~

Mr Lee had been the primary person in NRA working on the valuation. Apart from accepting the bribe, he was also found to have applied inappropriate methodology and assumptions in the valuation of PSOSL. As CEO of NRA, Mr Scully had failed to ensure that his analyst, Mr Lee, had exercised sufficient care, judgment and objectivity in the valuation of PSOSL.

The proposed bans will limit Ang, for a period of six years, from (i) providing any capital markets and financial advisory services; and (ii) taking part in the management of, acting as a director of, or becoming a substantial shareholder of any capital market services and financial advisory firm in Singapore. They will also limit  Mr Lee and Mr Scully, for a period of six and three years respectively, from (i) providing any financial advisory services; and (ii) taking part in the management of, acting as a director of, or becoming a substantial shareholder of any financial advisory firm in Singapore.

MAS said its investigations have uncovered a complex web of transactions involving numerous shell companies and individuals operating in multiple jurisdictions, including the US, Switzerland, Hong Kong, Luxembourg and Malaysia.

Arising from its extensive review, MAS has shut down two merchant banks, BSI Bank and Falcon Bank, due to egregious failures of AML controls and improper conduct by senior management.  Financial penalties of S$29.1 million in aggregate have been imposed on eight banks (BSI Bank, Falcon Bank, DBS, UBS, Standard Chartered Bank, Coutts, Credit Suisse and UOB) for various breaches of AML requirements.  POs [prohibition orders], ranging from 10  years to lifetime, have been issued against four former employees of financial institutions implicated in these transactions. MAS has notifed another three current and former employees of its intention to issue POs against them, ranging from three to six years.

“The two-year long 1MDB-related review holds key lessons for both MAS and financial institutions in Singapore.  MAS has enhanced its AML surveillance and taken unprecedented enforcement actions against errant institutions and individuals.  Financial institutions have increased their risk awareness and strengthened their AML controls.  Our financial industry is in a better position today than it was when the abuses stemming from the 1MDB-related flows took place.  The price for keeping our financial centre clean as it grows in size and inter-connectedness is unstinting vigilance," Ravi Menon, managing director, MAS, said.