SINGAPORE: In the wake of the forced closure of Swiss Bank BSI’s local unit last month, the financial industry has been shocked into realising the extent of Singapore’s exposure to illicit money.
The actions by the Monetary Authority of Singapore (MAS) in forcing BSI to close its operations, charging one official and referring six top officials of the bank to the public prosecutor for possible criminal prosecution, however, sends a strong message: don’t fool around with us.
MAS found that BSI had committed “serious breaches of anti-money laundering requirements, poor management oversight of the bank’s operations, and gross misconduct by some of the bank’s staff”, all in relation to the bank’s dealings with Malaysia’s state-owned investment firm 1Malaysia Development Bhd (1MDB).
Channel News Asia (CNA) quoted Dane Chamorro of consulting firm Control Risks as saying: “Because of the nature of private banking and the types of accounts, clients and money it tends to attract, it does come with a different risk profile than, say, if you are establishing yourself as a securities hub or fixed income hub.
“If you look at a number of the financial scandals – everything from tax in the EU to Barings and BNP – somewhere in this process, there is often a private bank involved in terms of servicing some aspect of the transaction.” However, he said, MAS had in place “robust” structures for compliance.
BSI became the first merchant bank in Singapore to lose its licence since Jardine Fleming in 1984, and on top of that it was fined S$13.3 million for 41 breaches of anti-money laundering regulations, the report said.
The city-state is ranked 6 in Deloitte’s 2015 Global Wealth Management Centre Rankings, and was the only international wealth centre other than Hong Kong to attract net new assets from 2009 to 2014.
According to a MAS survey, Singapore’s assets under management grew 30 per cent year-on-year to S$2.4 trillion in 2014.
CNA quoted Nizam Ismail, a partner in law firm RHTLaw Taylor Wessing, as saying: “Because we’ve got so much assets under management here in Singapore, it’s more likely than not that some of it could be tainted by being proceeds of crime.”
“It takes a lot of courage for a (bank) compliance officer to say ‘no’ to a big transaction. It’s like standing in front of a moving truck and trying to stop it with your hands.
“And I think the point in the BSI case was that the truck just went over the compliance officer because it was a very big truck full of goodies,” Nizam was quoted as saying.
However, Nizam said, regulatory changes introduced by MAS last year had “significantly increased the level of scrutiny”.
He said MAS’s action in charging an official of BSI, former wealth planner Yeo Jiawei, had also sent a strong message to everyone. It was the first time that a banker had been charged for money laundering offences in Singapore.