AML Regulatory Compliance Breach Fines: Singapore Central Bank Penalizes 4 Banks
On Wednesday, the 21st of June, 2023, Singapore’s central bank announced that it had imposed fines, amounting to a collective total of S$3.8 million (RM13.1 million) on financial institutions DBS and OCBC, CitiBank, and Insurer Swiss Life. This is due to a breach in laid down requirements on anti-money laundering and counter terrorism financing.
The fines are related to the recent collapse of payment firm, Wirecard, which filed for insolvency after revealing that €1.9 billion was "missing". The Monetary Authority of Singapore (MAS) revealed that it discovered inadequate controls in place when probing the alleged involvement of Singapore-based individuals in the fraud case.
In 2020, Wildcard disclosed a €1.9 billion hole in its accounts that its auditor said was the result of a sophisticated global fraud.
MAS imposed penalties of S$2.6 million for DBS, S$600,000 for OCBC, or Oversea-Chinese Banking Corp, S$400,000 for Citibank and S$200,000 for Swiss Life. The DBS fine is one of the largest issued by MAS for such breaches.
MAS said in a statement: "Although the breaches were serious, MAS did not find wilful misconduct by any staff of these FIs (financial institutions),", adding that the institutions took "prompt remedial actions."
When asked if illicit activities had taken place involving the institutions, MAS said its checks focused on compliance with its requirements. "Whether the funds that flowed into/through the FIs were illicit monies, are under the purview of the Singapore police," the spokesperson said.
OCBC said one of its customers had been implicated in the Wirecard case and it took such issues very seriously. "We have devoted significant resources to a strategic uplift of our anti-money laundering and combating the financing of terrorism standards and capabilities," an OCBC spokesperson said.
MAS also added that Citibank had failed to understand the control structure in two of its corporate accounts, or correctly know who the beneficial owner was. Citibank has since "taken steps to strengthen our 'know your customer' process," a spokesperson said.
MAS found breaches by DBS related to 11 corporate accounts and said it failed to update customers' risk ratings and adequately establish the source of wealth of some higher-risk customers. DBS failed to adequately inquire into the background and purpose of "unusually large transactions", it said.
DBS said its lapses related to a network of customers ultimately traceable to Wirecard and it was now in a better position to respond faster and more robustly. "These transactions were part of an elaborately orchestrated scheme," the spokesperson said. "We were unable to unravel the scheme in its entirety. We acknowledge that we could have done better."
A Swiss Life spokesperson said it had terminated a client relationship in 2020 after being approached by authorities about a contract. "Since then, and in close cooperation with the authorities, additional measures have been implemented within Swiss Life (Singapore) to detect client misconduct more effectively."
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