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Stanchart Singapore fined $5m for AML breaches

The Monetary Authority of Singapore (Mas) sends a message of zero tolerance towards money laundering as it penalises two Standard Chartered entities for suspicious transfers from Guernsey, according to industry sources.
Stanchart Singapore fined $5m for AML breaches

Singapore’s Mas fined Standard Chartered S$6.4m ($4.9m) for failure to apply anti-money laundering and counter-terrorist financing standards. A S$5.2m fine was imposed on the Singapore branch of Standard Chartered Bank (SCBS) and a S$1.2m fine against Standard Chartered Trust (Singapore) (SCTS).

“These breaches occurred when trust accounts of SCBS’s customers were transferred from Standard Chartered Trust (Guernsey) to SCTS in December 2015 and January 2016,” according to a statement by Mas.

Mas said that the transfers were initiated shortly before Guernsey’s implementation of the Common Reporting Standards (CRS) for the Automatic Exchange of Financial Account Information in Tax Matters. The timing of the transfers raised questions about whether the clients were attempting to avoid making CRS disclosures.

“The moment there is a suspicious transaction, the bank is supposed to report it,” Damayanti Shahani, managing director at Principium Consulting, told FSA.

However, SCBS and SCTS failed to file suspicious transaction reports in a timely manner, and did not adequately assess and mitigate against this risk, the regulator said in the statement, adding that risk management and controls in relation to the transfers were found to be “unsatisfactory”.

Mas’s decision to impose the penalty indicates that Singapore will show zero tolerance towards money laundering by enforcing the rules against the big banks operating in the country, Shahani said.

“Mas is going to make sure that they do not let such violations go by, especially after the 1Malaysia Development Berhad (1MDB) case,” she added.

The 1MDB was established as a state investment fund of Malaysia to promote foreign direct investment. It came under investigation as the fund has allegedly channeled large amounts of money into the country’s prime minister Najib Razak’s personal bank accounts.

Since the scandal surfaced in 2015, certain banks were closed or slapped with financial penalties. Prohibition orders were filed against individuals involved in the scandal.

The Stanchart case serves as Mas’s message to the industry that they need to be mindful of the rules and apply the guidelines fully, Shahani said.

“Mas requires financial institutions to adequately assess money laundering risks when deciding whether to accept customers,” said Ong Chong Tee, deputy managing director at Mas. “They should also have in place good systems and processes to monitor customer transactions. We expect financial institutions to remain vigilant by instilling a strong risk culture.”

In determining what action to take, the Singapore regulator took into consideration that SCBS had “pro-actively notified Mas of its internal review on the trust accounts”. It also said that both Stanchart entities have shown “strong commitment to address the deficiencies identified by Mas”.

Part of the Mark Allen Group.