Singapore to act against 4 key banks over 1MDB scandal

Added 21st July 2016

Singapore has announced plans to take action against four major banks, including a Swiss private bank, over their involvement with the scandal-ridden Malaysian sovereign wealth fund 1Malaysia Development Bhd (1MDB).

Singapore to act against 4 key banks over 1MDB scandal

The Monetary Authority of Singapore (MAS) said a preliminary investigation of actions by DBS Bank (DBS), and the Singapore branches of Standard Chartered Bank (SCB) and UBS AG (UBS), had found "lapses and weaknesses in anti-money laundering controls".

“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," the MAS said in a statement on Thursday.

However, the MAS added that its inspections did not reveal pervasive control weaknesses or staff misconduct within these three banks.

Second Swiss private bank named

A fourth bank, the Singapore branch of Swiss-headquartered Falcon Private Bank, was found to have had substantial breaches of anti-money laundering (AML) regulations, including a failure to adequately assess irregularities in activities pertaining to customers’ accounts and to file suspicious transaction reports.

The MAS said its supervisory examination of Falcon bank was 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,” the central bank said. 

The action against Falcon Bank follows the abrupt decision by the MAS in May to shut down the local operations of another Swiss-headquartered private bank, BSI Bank, for breaches of AML requirements, poor management oversight and gross misconduct by some of its staff, all again with regard to the same investigation into the 1MDB scandal.

Global scandal

The Malaysian fund 1MDB is currently at the centre of a global corruption investigation.

The US government filed a series of lawsuits on Wednesday to seize assets that it said were the result of $3.5bn (£2.7bn, €3.2bn) that was misappropriated from 1MDB, a fund set up by prime minister Najib Razak in 2009 to boost the Malaysian economy.

Najib and 1MDB have consistently denied any wrongdoing.

The US civil lawsuits are seeking to seize $1bn of the allegedly embezzled assets that were transferred into the US using shell companies.

The US lawsuits refer to a "Malaysian Official 1" who is described as a high-ranking government official who received some of the misappropriated funds, including $681m in March 2013.

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Richard Hubbard

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Richard Hubbard is the group editor at Last Word. He is responsible for the editorial content of International Adviser, Portfolio Adviser, Expert Investor and Fund Selector Asia. Richard previously worked for Thomson Reuters and has covered the financial services industry and investment themes from its offices in London, Singapore, Hong Kong and New York. Richard started his career at the Australian Financial Review in Sydney.

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