SINGAPORE • Singapore's central bank is scrutinising several banks, including UBS and DBS Group Holdings, to see if they broke anti-money laundering rules in handling transactions linked to scandal-hit Malaysian state fund 1MDB, three people with knowledge of the matter said.
The Monetary Authority of Singapore (MAS) is looking at several aspects of the banks' operations such as whether they were diligent enough in knowing who their customers were and what the source of their funds was, and whether they were particularly careful in screening politically exposed persons such as government officials, said banking and legal sources.
The probe could lead to fines and other penalties if lapses are found, said the sources, who declined to be identified. It is unclear which bank transactions are being examined.
Switzerland's Falcon Private Bank and Coutts International, owned by Geneva-based Union Bancaire Privee, are also among the banks under review, they said. UBS, Coutts and DBS, Singapore's top lender, declined to comment. When asked about the MAS review, a Zurich-based spokesman for Falcon said: "We have transparently shared our view and have nothing to add."
Falcon, which is owned by one of the world's leading sovereign wealth funds - Abu Dhabi's International Petroleum Investment Company - has previously said it is in contact with the MAS and cooperating with the authorities.
The MAS is in talks with several banks and will make an announcement on any punitive action against them after the review is completed, sources said. The full details are not known at this stage.
An MAS spokesman referred Reuters to its statement in March when it said that "as part of its investigations into possible money-laundering and other offences in Singapore, it has been conducting a thorough review of various transactions as well as fund flows through our banking system".
The latest probes follow the MAS' decision in May to close down the operations of Swiss private bank BSI in Singapore for serious breaches of anti-money laundering rules, the first time in 32 years it has taken such action against a bank.
The MAS said then that there had been gross misconduct by some of BSI's staff and poor management oversight of the bank's operations.
Though the MAS did not specifically say this related to 1MDB-related transactions, the Swiss Financial Market Supervisory Authority said then that BSI had committed serious breaches of money laundering regulations through business relationships and transactions linked to the scandal surrounding 1MDB.
The MAS also imposed a $13.3 million fine on the bank and, on the same day in May, the Swiss authorities said they would seize 95 million Swiss francs (S$130.2 million) of BSI's profits.
Malaysian companies and banks linked to 1MDB are at the centre of corruption and money laundering probes that have led investigators to look at transactions and financial relationships across the globe.
Probes are being conducted by the authorities in the United States, Switzerland, Luxembourg, Singapore and the United Arab Emirates.