Responding to US action overnight in its probe of corruption at Malaysian state fund 1MDB, Singapore authorities said they have found lapses in anti-money laundering (AML) controls in several financial institutions (FIs) here including DBS and the Singapore branches of Standard Chartered Bank and UBS and will be taking action against them.
They also added that bank accounts belonging to various individuals have been seized and dealings in properties belonging to some of these individuals have been curtailed. The assets amount in total to S$240 million (US$176 million). Of these bank accounts and properties, about S$120 million belong to Low Taek Jho – Malaysian financier and confidant of Malaysian premier Najib Razak – and his immediate family.
In a joint statement on Thursday, the Attorney-General’s Chambers, Commercial Affairs Department (CAD) and Monetary Authority of Singapore (MAS) said they are continuing their investigations of various 1MDB-related fund flows through Singapore for possible money laundering, securities fraud, cheating, and other offences committed here.
“We note the statement by the US Attorney General on 20 July 2016, seeking the forfeiture and recovery of more than US$1 billion in assets associated with an international conspiracy to launder funds related to 1MDB. Singapore’s investigations began in March 2015 and are still in progress.”
The US Justice Department on Wednesday moved to seize more than US$1 billion in assets allegedly tied to corruption at 1MDB.
None of the civil lawsuits that were filed in California name Malaysian Prime Minister Najib Razak, who oversaw the state-owned investment fund, but they contain details that appear to directly implicate him.
They include allegations that US$681 million from a 2013 bond sale by 1MDB was transferred to the account of “Malaysian Official 1”, who is described in the lawsuits as a high-ranking official in the Malaysian Government who also held a position of authority with 1MDB.
The Singapore authorities disclosed a new name in their probe – Raffles Money Change, a licensed money changer and remittance agent. MAS said examination revealed weak management oversight, inadequate risk management practices and internal controls. Its specific findings include failure to identify beneficial owners, verify authenticity of remittance instructions, and assess if a customer’s remittance activities are consistent with the profile of the customer.
MAS said it is finalizing regulatory actions against RMC. It said their probe of certain other FIs are ongoing. It will take decisive regulatory actions against any FI that has breached regulations or failed to meet the expected AML standards, said MAS.
The three Singapore agencies said fund flows being investigated include those connected with Good Star Limited (Seychelles), Aabar Investments PJS Limited (BVI), Aabar Investments PJS Limited (Seychelles), and Tanore Finance Corp. (BVI). The criminal investigations by CAD are targeted at individuals suspected of committing offences in Singapore related to these flows, while MAS has been examining the financial institutions through which the funds flowed for possible regulatory breaches and control lapses.
MAS also said it has completed its inspections of DBS and the Singapore branches of Standard Chartered Bank and UBS and is now finalizing its assessments.
“The preliminary findings are that there were instances of control failings in all three banks and, in some cases, weaknesses in the processes for accepting clients and monitoring transactions. There was also undue delay in detecting and reporting suspicious transactions,” it said.
The deficiencies observed in DBS, SCB and UBS related to lapses in specific processes and by individual officers. The lapses were serious in their own right, and will be met by firm regulatory actions against the banks. However, the MAS’ inspections did not reveal pervasive control weaknesses or staff misconduct within these banks, unlike in the case of BSI Bank.
MAS also said it completed its onsite inspection of Falcon Private Bank Singapore in April 2016, and found substantial breaches of anti-money laundering regulations, including failure to adequately assess irregularities in activities pertaining to customers’ accounts and to file suspicious transaction reports.
However, the supervisory examination of Falcon PBS is still ongoing as the oversight and management of certain key client relationships were done out of the bank’s head office in Switzerland. MAS is examining information obtained from Falcon PBS’ head office and has asked for further details.