Daily Management Review

Amid 1MDB-Linked Probe, Money Laundering Controls to be Boosted by Singapore


Amid 1MDB-Linked Probe, Money Laundering Controls to be Boosted by  Singapore
Following the damaging findings that financial institutions in the city-state handled money flows linked to Malaysian state fund 1MDB, Singapore's central bank said it will enhance controls against money laundering and take swift action against banks that get engaged in such activities.
"There is no doubt that the recent findings have made a dent in our reputation as a clean and trusted financial centre. MAS is determined to fix the problem, working together with the industry," Ravi Menon, managing director of the Monetary Authority of Singapore, said at its annual news conference on Monday.
Conducting rigorous investigations, bolstering its enforcement process of regulations and taking swift action against errant financial institutions would be the renewed focus of the central bank, said Menon.
Last week the central authorities in Singapore announced that in an investigation of 1MDB-related fund flows for possible money laundering, they had seized S$240 million ($177 million) of assets that were allegedly bought with money siphoned off from the Malaysian fund. The comments from the Singapore’s central bank executive came while that investigation is still fresh.
UK-based bank Standard Chartered, the world's largest private bank UBS AG and top local lender DBS Group Holdings Ltd were the three major banks that were found to have some problems linked to the fund scandal, the investigations found out.
The MAS said that they had found "substantial breaches" of anti-money laundering regulations during a surprise onsite inspection of another Swiss bank, Falcon PBS, in April 2016. This Swiss bank is owned by one of the world's leading sovereign wealth funds - Abu Dhabi's International Petroleum Investment Company (IPIC).
Based on allegations of serious breaches of anti-money laundering rules, the Singapore operations of the Swiss private bank BSI AG were closed down in May this year. This was the first such action by the central bank in 32 years. Since May, this is the second time that Singapore authorities have acted tough against banks operating there and under the scanner for suspicious activities.
The announcement according to Menon shows that the financial sector is particularly vulnerable to money laundering and illicit financing risks even though he said the central bank would not go into the details of its ongoing investigations into banks and other financial institutions.
Deviating from its past practice of conducting investigations on other offences in private, Menon said, that the MAS will also take a different tack when it comes to money laundering offences and would potentially name and shame banks for larger breaches.
To identify manipulative trading behaviors in capital markets or to detect money laundering transactions, the central bank is exploring the use of machine learning algorithms, Menon said.
"It is neither realistic nor desirable to expect the MAS to police every single transaction or activity in our financial markets. The responsibility lies with every FI (financial institution) to instil high standards of risk management and proper conduct at all levels," he said.
Noting a six-fold increase from 2010 to 2013, he said that the MAS conducted 608 inspections of financial institutions between 2013 and 2016.

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