SINGAPORE - There is "no doubt" that Singapore has suffered a dent in its reputation as a clean and trusted financial centre, due to breaches of anti-money laundering rules here related to the 1MDB scandal, said Monetary Authority of Singapore (MAS) managing director Ravi Menon on Monday (July 25).
From here on, the financial industry can expect the MAS to take an even bolder stance against lapses, by conducting more "intrusive" inspections and taking tougher actions against errant institutions.
Mr Menon made these strong remarks at a media conference on the MAS' annual report. He added that the ongoing probe into financial transactions related to the Malaysian state fund is a stark reminder that the local financial sector is particularly vulnerable to the risks of money laundering and illicit financing.
Last week, the MAS reprimanded DBS Bank and the Singapore branches of UBS and Standard Chartered Bank for control lapses in these areas, with weaknesses in the processes for accepting clients and monitoring transactions in some cases.
"MAS is disappointed with the lapses in AML/CFT (anti-money laundering/countering financing of terrorism) controls and breaches of AML/CFT regulations that we have have picked up in our financial institutions," Mr Menon said on Monday.
He acknowledged that money laundering is growing more sophisticated and is carefully designed to avoid detection.
He also noted that such incidents happen in every financial centre and the large and rising frequency in which fines are imposed in other jurisdictions show that Singapore is not alone in facing this challenge.
Furthermore, the rules and practices here are already very strict and on a par with global standards, he added.
Still, he had strong words for the financial institutions caught up in the scandal.
"This may all be true but they cannot be an excuse for what has taken place. What happened is simply unacceptable. We may not be any worse than other jurisdictions. But that is no consolation. We have not met the high standards we have set for ourselves," he said.
Mr Menon also noted that the statements that the MAS issued last week, naming and shaming the banks that had been found to have committed lapses in anti-money laundering controls, were "unprecedented".
"We have already said a lot more publicly than we usually do when investigations and reviews have not been completed yet."
To move on from this, Mr Menon said the MAS does not see the need for more rules and regulations.
However, the MAS plans to further sharpen its supervision of AML/CFT controls in the financial industry, even as it has stepped up inspections six-fold in recent years.
From now on, the MAS "will conduct more intrusive inspections if financial institutions identified as facing higher risks", Mr Menon said.
The MAS will also further strengthen its enforcement capability to conduct rigorous investigations and to take swift and decisive actions against errant financial institutions.
"We will take stronger regulatory actions against those financial institutions whose AML/CFT practices fall short of the expected standards. And we will make public our sanctions against persistently or egregiously errant financial institutions."