One of the world's biggest financial scandals, centring on Malaysian state fund 1Malaysia Development Berhad (1MDB), marred Singa- pore's prized reputation as a trusted financial centre.
It also cast an unflattering spotlight on lapses by some banks in failing to adhere to anti-money laundering controls.
But observers say there is no suggestion of any shortcomings in the anti-money laundering laws.
They add that Singapore's regulators have responded swiftly against individuals and banks that acted as conduits for illegal fund flows from 1MDB. Of the five countries now probing the state fund's finances, Singapore is the only one so far to have secured convictions.
As much as US$4 billion (S$5.8 billion) is alleged to have been looted from 1MDB and some of the funds diverted to Malaysian Prime Minister Najib Razak's personal bank account and to that of his stepson, Mr Riza Aziz. The latter's company, Red Granite Pictures, produced the film The Wolf Of Wall Street. Both Datuk Seri Najib and Mr Aziz have strongly denied any wrongdoing.
United States prosecutors have placed elusive Malaysian businessman Low Taek Jho, better known as Jho Low, at the centre of the alleged money laundering scheme that diverted billions to luxury Manhattan condos, Beverly Hills mansions, gambling sprees in Las Vegas and US$200 million in art.
So far, the US Department of Justice has launched a civil case to seize assets linked to the probe.
Singapore's regulator has shut down two private banks - BSI and Falcon - and fined DBS Group, UBS and Standard Chartered Bank for lapses in money laundering controls. Two former BSI bankers have pleaded guilty to forgery and failing to report suspicious transactions, and have been sentenced to prison and fined.
One other former BSI banker, Yeo Jiawei, who claimed trial on charges of tampering with witnesses, was found guilty yesterday. He is expected to be sentenced today.
The scale and severity of MAS' actions over 1MDB have grabbed headlines and are unusual for Singapore. But they also reflect global enforcement trends for weaknesses in anti-money laundering (AML) controls, said Ms Joanna Pearson, regulatory investigations partner of the law firm of Simmons & Simmons JWS in Singapore.
"AML controls in Singapore reflect international standards. What was found to be lacking, in some cases, was their thorough and consistent implementation," she added.
But no anti-money laundering system is perfect given the size of the problem, said Mr Samuel Sharpe, a partner at Duane Morris & Selvam. Some US$2 trillion or 2 per cent to 5 per cent of global gross domestic product is laundered annually, according to estimates from the United Nations Office On Drugs And Crime.
"The question is whether everything was done that should have been done," he said.
"The focus of the investigation here appears to relate to bank accounts where 1MDB money may have been held or passed through, meaning the behaviour of certain banks and some individual bankers was of concern. Did they discharge their legal duties by screening their customers and were the transactions handled properly?"
So far, MAS has found that Falcon and BSI did not discharge their legal duties and "improper conduct" by senior managers of Falcon also occurred. While DBS Bank, UBS and StanChart breached AML requirements, MAS did not find pervasive control weaknesses.
As a key financial hub through which increasing amounts of money are flowing, Singapore plays a key part in fending off money laundering threats. More than three- quarters of funds managed here are from abroad, with most of the amount from the Asia-Pacific.
While Singapore has a robust framework to counter illicit fund flows, it could do better, especially as transnational money laundering grows increasingly complex, says the Financial Action Task Force, an inter-governmental body.
The 1MDB probe spotlighted the fact that some of the biggest financial institutions here were not following rules on compliance.
But actions taken by MAS have prompted organisations to review procedures, Mr Sharpe said.
"I don't see any serious harm being done to Singapore's reputation as a financial hub. There is no suggestion of any failure in the laws in place," he noted.
"If there is anything positive to come out of the 1MDB-related probe, it is there is now a greater awareness of the risks of money laundering and a renewed focus on compliance.
"We have seen this among banks and other organisations here, which are now reviewing their procedures and training programmes, in the wake of the fines issued to DBS, UBS and StanChart.
"The scandal also cast the spotlight on the adequacy of AML controls applicable to non-financial institutions.
"Given how 1MDB money was allegedly used, what obligations should real estate agents, film studios and aircraft manufacturers have to check the legitimacy of money they receive?
"Singapore is now focusing more on non-financial institutions whose business could easily facilitate money laundering. More stringent anti-money laundering requirements have been recently introduced for corporate services providers, lawyers and public accountants," he said.
MAS this year set up its own anti-money laundering department to monitor risks and supervise financial institutions.
TOMORROW
Health scares, an unexpected by-election and the elected presidency
