StanChart fined $5.2m, Coutts $2.4m for anti-money laundering breaches
The Monetary Authority of Singapore (MAS) has imposed multi-million dollar fines on the Singapore branches of Standard Chartered bank and Coutts & Co for breaching anti-money laundering regulations in relation to 1MDB-related fund flows through these banks, MAS said in a release on Friday (Dec 2).
StanChart was fined S$5.2 million and Coutts was fined S$2.4 million.
MAS said it also intends to issue a 10-year prohibition order against former Goldman Sachs director Tim Leissner for making false statements on behalf of the bank without its knowledge or consent.
Mr Leissner had overall responsibility for managing the relationship with state-owned 1 Malaysia Development Berhad (1MDB) when Goldman Sachs was engaged by 1MDB to arrange three bond issuances from 2012 to 2013.
The MAS order will prohibit him from performing any regulated activity under the Securities Future Act, or taking part, directly or indirectly, in the management of any capital market services firm in Singapore.
Reacting to the news reports, Mr Leissner’s counsel issued a statement saying that no order or sanctions have been imposed by the MAS or any other regulatory agency.
“Prior to today, Mr Leissner had not heard of any contemplated regulatory action by the MAS,” the statement said. “He has not been interviewed by the MAS. He has been invited by the MAS to respond to the allegations raised in the Notice, and he looks forward to doing so.”
In the release, MAS said it has completed the inspection of StanChart in relation to 1MDB-related fund flows which took place from 2010 to 2013.
It said: “The inspection revealed significant lapses in the bank’s customer due diligence measures and controls for ongoing monitoring, which resulted in numerous breaches of MAS anti-money laundering regulations.”
The control lapses stemmed from inadequacies in policies and procedures, insufficient independent oversight of front office staff, and a lack of awareness of money laundering risks among some bank staff.
However, MAS said it did not find wilful misconduct or a pervasive control weaknesses. It noted that the bank has taken measures to address the weaknesses identified and strengthen its controls.
MAS has instructed StanChart to take disciplinary action against the officers who failed to perform their duties, and directed the bank to appoint an independent party to confirm that rectification measures have been implemented and to report its findings to MAS.
In a statement on Friday, StanChart said it regretted that 1MDB-related transactions passed through their Singapore accounts, and said the bank continues to take remedial and disciplinary action where warranted.
“We will continue to strengthen our controls, processes, and surveillance systems. Most importantly, we have raised staff awareness of the vital role we play in our fight against financial crime,” according to the statement.
Coutts breaches were in relation tofailure to exercise due diligence on the customer accounts of politically exposed persons that were established between 2003 and 2009.
It said: “The failure was the result of actions or omissions of certain officers who have since left the bank. These officers include Mr Yak Yew Chee and Ms Yvonne Seah, who had left Coutts to join BSI Bank Limited in late 2009,” it said.
Mr Leissner was found to have issued an unauthorised reference letter to a financial institution based in Luxembourg in June 2015, using the letterhead of Goldman Sachs, which stated that the bank had conducted due diligence on Malaysian financier Low Taek Jho and his family, and had not detected any money laundering concerns with respect to Mr Low or his family.
“These statements were untrue and were made by Mr Leissner without Goldman Sachs’ knowledge or consent,” MAS said.
Mr Low, also known has Jho Low, has been identified as a person of interest in the 1MDB-related probe. US prosecutors have alleged that he diverted US$3.5 billion from 1MDB and spent it on luxury real estate, a US$35.4 million private jet and US$200 million in art. Some of the money was used to finance the Hollywood movie The Wolf of Wall Street.The movie was produced by a film studio that is run by Mr Riza Aziz, the stepson of Malaysian Prime Minister Najib Razak.
Goldman Sachs said it had taken steps when the violations were discovered in January and reported the matter to regulatory authorities in several jurisdictions, including Singapore. “We continue to cooperate with the MAS,” it said.
MAS said it will continue to work with foreign regulatory authorities in examining Goldman Sachs’ role in the 1MDB bond transactions.
MAS managing director Mr Ravi Menon said in the statement: “MAS has taken tough regulatory actions against various financial institutions this year for anti-money laundering control lapses. These actions send a strong signal that we will not tolerate the abuse of Singapore’s financial system for illicit purposes.”
MAS said it is nearing completion of its supervisory examinations of financial institutions in Singapore through which 1MDB-related fund flows took place, and will provide a final update early next year.