SINGAPORE - The Monetary Authority of Singapore (MAS) announced on Tuesday (May 30) that it has imposed financial penalties on United Overseas Bank (UOB) and Credit Suisse as it completed its two-year review of banks involved in 1MDB-related transactions known to-date.
MAS said it has also issued prohibition orders (POs) against three individuals and served notice of its intention to impose the same regulatory action on three others.
The latest inspections of UOB and Swiss bank Credit Suisse revealed several breaches of anti-money laundering (AML) requirements and control lapses. These include weaknesses in conducting due diligence on customers and inadequate scrutiny of customers' transactions and activities. MAS said it did not however detect pervasive control weaknesses within these banks.
MAS has slapped UOB and Credit Suisse with fines of S$900,000 and S$700,000 respectively for breaches of MAS Notice 626 - Prevention of Money Laundering and Countering the Financing of Terrorism. It has directed the banks to appoint independent parties to assess and confirm to MAS that rectification measures have been effectively implemented.
MAS has also instructed the management of UOB and Credit Suisse to take disciplinary measures, where appropriate, against errant staff. The banks are currently taking measures to address the weaknesses identified and strengthen their anti-money laundering (AML) controls.
MAS issued lifetime POs against Jens Fred Sturzenegger and Yak Yew Chee, as well as a 15-year PO against Yvonne Seah Mei Ying with effect from May 29, 2017.
Sturzenegger was the branch manager of Falcon Private Bank, Singapore branch, while Yak and Seah were employees of BSI Bank. Sturzenegger has been convicted of financial crimes including providing false information to the authorities in an attempt to cover up his knowledge of Falcon Bank's relationship with Low Taek Jho, also known as Jho Low.
Malaysian financier Low, 35, was an adviser to 1MDB when it was established in 2009. With friends including heads of state, Wall Street bankers and celebrities, he also emerged as a key figure in the fund's global deal making. US prosecutors have, however, contended that Low directed funds from 1MDB to connected individuals and for the "personal gratification" of himself and his associates. The US Department of Justice, which said that Low misappropriated more than US$3.5 billion from 1MDB which were used to buy penthouses and luxury houses in the US and London, a Bombardier jet and artworks, and to finance the movie The Wolf Of Wall Street, among other things. The DOJ said it is trying to recover some US$1 billion of these assets through civil lawsuits. Low has denied any wrongdoing.
Yak and Seah were convicted of multiple counts of failing to report suspicious transactions and of forging reference letters at BSI Bank on behalf of Low.
All three individuals are prohibited from providing any capital markets and financial advisory services; and taking part in the management of, acting as a director of, or becoming a substantial shareholder of any capital markets services or financial advisory firm in Singapore.
MAS also served notice of its intention to issue a PO against Kelvin Ang Wee Keng, a former representative of Maybank Kim Eng Securities (MKES). MAS also served notice of its intention to issue POs against the chief executive officer of NRA Capital (NRA), Mr Kevin Scully, and its former head of research, Mr Lee Chee Waiy.
Through Ang's introduction, NRA was appointed to perform the valuation of PetroSaudi Oil Services. On May 24, 2017, Ang was convicted of an offence under the Prevention of Corruption Act for bribing Mr Lee with S$3,000 to expedite the preparation of the valuation report on PetroSaudi.
Mr Lee had been the primary person in NRA working on the valuation. Apart from accepting the bribe, he was also found to have applied inappropriate methodology and assumptions in the valuation of PSOSL. As CEO of NRA, Scully had failed to ensure that his analyst, Mr Lee, had exercised sufficient care, judgment and objectivity in the valuation of PSOSL.
The proposed POs will prohibit Ang, for a period of six years, from providing any capital markets and financial advisory services and taking part in the management of, acting as a director of, or becoming a substantial shareholder of any capital market services and financial advisory firm in Singapore. Lee and Scully will also be prohibited for a period of six and three years respectively, from providing any financial advisory services; and taking part in the management of, acting as a director of, or becoming a substantial shareholder of any financial advisory firm in Singapore.
Most extensive review
MAS said its review of financial institutions (FIs) involved in 1MDB-related flows is the most extensive it has ever taken. The review included detailed onsite inspections, offsite examination and analysis of information obtained from the FIs and foreign regulators, and close co-ordination with the Attorney-General Chambers and the Commercial Affairs Department.
The review uncovered a complex web of transactions involving numerous shell companies and individuals operating in multiple jurisdictions, including the United States, Switzerland, Hong Kong, Luxembourg and Malaysia.
MAS also said that Singapore agencies responded expeditiously to requests for information or assistance from overseas law enforcement and regulatory authorities. In turn, Singapore submitted similar requests to, and received vital information from, many countries.
It added that investigations are still on-going in many jurisdictions and Singapore will continue to render its assistance where needed.
Summing up its actions to date from its 1MDB-related probe, MAS said it has shut down two merchant banks, BSI Bank and Falcon Bank, due to egregious failures of AML controls and improper conduct by senior management. Financial penalties of S$29.1 million in aggregate have been imposed on eight banks - BSI Bank, Falcon Bank, DBS, UBS AG, Standard Chartered Bank, Coutts, Credit Suisse and UOB - for various breaches of AML requirements.
POs, ranging from 10 years to lifetime, have been issued against four former employees of financial institutions implicated in these transactions. MAS has notified another three current and former employees of its intention to issue POs against them, ranging from three to six years.
Said Mr Ravi Menon, MAS managing director: "The two-year long 1MDB-related review holds key lessons for both MAS and financial institutions in Singapore. MAS has enhanced its AML surveillance and taken unprecedented enforcement actions against errant institutions and individuals.
"Financial institutions have increased their risk awareness and strengthened their AML controls. Our financial industry is in a better position today than it was when the abuses stemming from the 1MDB-related flows took place. The price for keeping our financial centre clean as it grows in size and inter-connectedness is unstinting vigilance."