Monetary Authority of Singapore Fines DBS, OCBC, Citi, Swiss Life for Breaching Money-Laundering Rule

Monetary Authority of Singapore Fines DBS, OCBC, Citi, Swiss Life for Breaching Money-Laundering Rule

The Monetary Authority of Singapore (MAS) has imposed composition penalties amounting to Singapore $3.8 million on DBS, OCBC, Citibank and insurer Swiss Life (Singapore) for breaching its anti-money laundering and countering the financing of terrorism (AML/CFT) requirements.

According to MAS, the breaches were identified during its examinations following news of irregularities in German payments provider Wirecard’s financial statements, and the alleged involvement of Singapore-based individuals and entities in the matter.

Out of the four financial institutions, DBS was imposed the highest composition penalty – amounting to S$2.6 million – for breaches between July 2015 and February 2020, in relation to the accounts of 11 corporate customers.

MAS was of the view that, DBS had failed to maintain relevant and up-to-date due diligence information on the customers’ beneficial ownerships, and to update their risk ratings for money laundering and terrorism financing.

It was found that the bank had failed to adequately establish the source of wealth of higher-risk customers and their beneficial owners. Further, it was held that the bank was deficient in inquiring into the background and purpose of unusually large transactions that were not consistent with its knowledge of the customers, or had no apparent economic purpose.

It also failed to probe into the customer’s ownership and control structure when its declared beneficial owner was not named in its corporate registration documents.

As a result of the breaches that occurred between September 2019 and June 2020, Citi was handed a composition penalty of Singapore $400,000 for breaching accounts of two corporate customers between those dates. It had failed to adequately understand the customers’ control structure and correctly identify their beneficial owners, despite having information that suggested incorrect declarations.

It was also observed that the bank had failed to inquire into unusually large transactions that had significantly exceeded one customer’s past transaction amounts and that had no apparent economic purpose, including an outflow to a party allegedly involved in fraud.

Swiss Life (Singapore) was handed a composition penalty of S$200,000 in May 2017 in relation to an investment-linked life insurance policy it underwrote.

The insurer had failed to sufficiently understand the reasons behind the higher-risk customer’s complex ownership and control structure. It also failed to adequately corroborate the source of wealth of the customer’s beneficial owner.

Additionally, MAS said it would take no further action against Citadelle Corporate Services, after it found that Citadelle did not breach the Trust Companies Act for carrying on a trust business without a licence.

The highest fines that MAS has meted out to financial institutions for AML/CFT breaches include S$13.3 million to BSI Bank, and S$5.2 million to Standard Chartered Bank.

While the breaches were serious, MAS said it did not find wilful misconduct by any staff of these financial institutions. As a result of the penalties imposed, all of the institutions involved have accepted the penalties and have taken immediate remedial actions in order to rectify the deficiencies identified.

MAS deputy managing director (financial supervision) Ho Hern Shin commented, “As Singapore grows in importance as an international financial centre, MAS expects our financial institutions to step up their controls against facilitating illicit financial flows.”

An MAS spokesperson noted that the regulator’s checks were focused on assessing the adequacy of the financial institutions’ AML/CFT policies and controls in relation to their dealings with entities and individuals linked to the Wirecard scandal.

In the meantime, investigations into possible money laundering are under the purview of the Singapore Police Force’s Commercial Affairs Department.