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Standard Chartered Bank, Coutts fined by MAS over 1MDB fund breaches

SINGAPORE — After 21 months, the Republic’s probe into transactions related to scandal-hit Malaysian state investment fund 1MDB are almost complete. On Friday (Dec 2), the Monetary Authority of Singapore (MAS) said a final update will be provided early next year, as it announced multi-million-dollar fines against the Singapore branches of Standard Chartered Bank and private bank Coutts in its latest sanctions arising from the probe.

Passersby walk in front of the main branch of Standard Chartered in Hong Kong, Jan 8, 2015. Photo: Reuters

Passersby walk in front of the main branch of Standard Chartered in Hong Kong, Jan 8, 2015. Photo: Reuters

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SINGAPORE — After 21 months, the Republic’s probe into transactions related to scandal-hit Malaysian state investment fund 1MDB are almost complete. On Friday (Dec 2), the Monetary Authority of Singapore (MAS) said a final update will be provided early next year, as it announced multi-million-dollar fines against the Singapore branches of Standard Chartered Bank and private bank Coutts in its latest sanctions arising from the probe. 

A prominent banker, formerly a director of Goldman Sachs, was also sanctioned, with MAS seeking to ban him from conducting activities under the Securities and Futures Act or managing any capital market services firm in Singapore for 10 years. 

The investigations began in March last year. Since the start of this year, MAS has ordered two Swiss-based private banks — BSI and Falcon — to shut down. BSI and Falcon were also fined S$13.3 million and S$4.3 million respectively. To date, four individuals have been hauled to court, with former BSI managing director Yak Yew Chee the first to be sentenced last month. Yak was jailed for 18 weeks and fined S$24,000. Swiss-based UBS and Singapore bank DBS have also been fined S$1.3 million and S$1 million respectively. 

MAS managing director Ravi Menon said: “These actions send a strong signal that we will not tolerate the abuse of Singapore’s financial system for illicit purposes.” 

StanChart and Coutts were fined S$5.2 million and S$2.4 million respectively. MAS found 28 breaches by StanChart between 2010 and 2013, which include insufficient independent oversight of front-office staff, and a lack of awareness of money-laundering risks among some bank staff. 

Coutts, which was owned by the Royal Bank of Scotland (RBS) before its international operations were sold in April to Swiss bank Union Bancaire Privee, was fined for 24 breaches between 2003 and 2009 relating to customer due-diligence measures for politically exposed persons.

StanChart and RBS said they regretted the lapses. StanChart said it will be donating profits relating to these transactions to charitable causes, while RBS will use the money to support an industry-wide AML programme run by an independent educational body.

MAS is also taking action against Tim Leissner, who would be among the most high-profile individuals to be banned from the Singapore markets. 

Mr Leissner, who resigned from Goldman Sachs in February, managed the client relationship with 1MDB for all of its three bond issues from 2012 to 2013. He was found to have issued an unauthorised reference letter last year without Goldman Sachs’ knowledge or consent to certify that the bank had conducted due diligence on Mr Low Taek Jho and his family, and had not detected any money laundering concerns. The Malaysian tycoon, also known as Jho Low, has been named a “key person of interest”.  

A Goldman Sachs spokesperson said the firm discovered in January a “clear violation of the firm’s standards”, and “promptly took steps to separate Mr Leissner from the firm and reported the matter to regulatory authorities in several jurisdictions, including Singapore”. 

Industry observers said MAS’ quick actions underscore the strong resolve it has in maintaining confidence in the banking sector here. “The string of penalties issued over the past few months is a reflection of the strong grip that the MAS has over the market, particularly in the banking sector,” said Ms Pan Jingyi, market strategist at IG. “Notably, a timeline has also been provided ... that could see concerns over this matter blow over in early 2017.”

 

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