Billion-dollar money laundering case: MAS slaps 9 financial institutions with S$27.45 million in penalties

CNA

12 hours ago

SINGAPORE: The Monetary Authority of Singapore (MAS) has imposed S$27.45 million (US$21.55 million) in penalties on nine financial institutions for breaches related to the 2023 money laundering case involving more than S$3 billion in assets.
Action has also been taken against 18 individuals involved in managing relationships with suspects in the case, MAS announced on Friday (Jul 4).
Credit Suisse received the highest composition penalty of S$5.8 million. The bank was acquired by fellow Swiss bank UBS in 2023.
UOB, UBS, UOB Kay Hian and Citibank received the next highest penalties.
Swiss bank Julius Baer, asset management firm Blue Ocean Invest, financial services firm Trident Trust Company and Liechtenstein's LGT Bank were also penalised.
MAS did not provide the media with a breakdown of the amount of money handled by these financial institutions related to the billion-dollar case.
CNA understands that this is the second largest cumulative penalty imposed by MAS for breaches related to anti-money laundering and countering the financing of terrorism (AML/CFT), after the 1Malaysia Development Berhad (1MDB) case.
In the 1MDB case, MAS imposed S$29.1 million in penalties on eight banks between 2016 and 2017, and also shut two of the banks.
MAS said in a press release that it identified the breaches during its supervisory examinations of the financial institutions from early 2023 to early this year.
The penalty imposed on Credit Suisse takes into account the bank's breaches of AML/CFT requirements from November 2017 to October 2023 in a separate matter.
This is related to maintaining offshore accounts in Singapore for customers to evade taxes in the United States, for which Credit Suisse reached a non-prosecution agreement with the US Department of Justice on May 5.
MAS said it observed that most of the financial institutions had established AML/CFT policies and controls.
'The breaches arose out of poor or inconsistent implementation of these policies and controls. The financial institutions have embarked on remediation of the deficiencies and MAS will monitor their progress closely,' it said.
MAS added that this marked the conclusion of its enforcement actions against financial institutions with a 'material nexus' to the money laundering case.
Investigations into the transnational case date back to 2021 and culminated in islandwide police raids in August 2023.
Ten foreign nationals were arrested. All have been convicted and were deported after serving their sentences.
The 10 criminals were reportedly part of the Fujian gang, an organised crime syndicate based in Fujian, China.
About S$2.79 billion in assets related to the case were surrendered to the state, including S$944 million in assets forfeited by the 10 criminals and S$1.85 billion in assets surrendered by 15 foreigners who fled Singapore amid the probe.
The related criminal cases of two former bank relationship managers, Liu Kai and Wang Qiming, are still before the courts.
LAPSES FOUND IN FINANCIAL INSTITUTIONS
MAS said that it found shortcomings in four areas.
First, lapses in customer risk assessment were found in Bank Julius Baer, Blue Ocean Invest, Citibank, Credit Suisse and UOB Kay Hian.
These institutions failed to implement adequate policies or processes for rating money laundering risks presented by some of their customers.
This led to mis-rating of the risks and affected the institutions' ability to address higher money laundering risks presented by several persons of interest, said MAS.
Second, all nine institutions fell short in establishing and corroborating the source of wealth of customers who posed a higher risk of money laundering.
They did not detect or adequately follow up on 'significant discrepancies or red flags' that should have cast doubt on customers' purported source of wealth, said MAS.
In some cases, there was no corroboration of significant aspects of the source of wealth, added the regulator.
Third, except for Blue Ocean Invest, there were failures in transaction monitoring in eight financial institutions, which failed to adequately review relevant transactions flagged as suspicious by their own systems.
'The relevant transactions were unusually large, inconsistent with the customers' profiles, or showed unusual patterns,' said MAS.
Fourth, UOB and UOB Kay Hian fell short in following up on suspicious transaction reports filed against their customers.
The institutions failed to take adequate and timely risk mitigation measures, such as enhanced monitoring and reviewing the customers' risk classification.
CNA has contacted the penalised financial institutions for comment.
A UBS spokesperson said: "We acknowledge MAS' findings. We have cooperated fully with the authorities to resolve this issue and will continue to work together closely to safeguard Singapore's financial industry."
The spokesperson was responding to queries on both Credit Suisse and UBS.
A UOB spokesperson said the bank accepted MAS' findings and has stepped up its transaction monitoring and customer due diligence processes over the past two years, after a comprehensive internal review.
UOB said it also made significant investments in technology and other resources to enhance internal risk management standards and capabilities, and continued to enhance employee training.
'We have conducted a thorough assessment of the facts and circumstances surrounding the issues and staff involved, and taken appropriate actions to address accountability and discipline,' said the spokesperson.
Julius Baer said it had taken concrete steps to strengthen its processes and anti-money laundering framework, and remained "firmly committed to upholding the high standards of the Singapore financial centre".
Blue Ocean Invest said it acknowledged MAS' findings, has fully cooperated with authorities during the investigation, and has implemented measures to enhance internal policies and procedures.
A Trident Trust spokesperson said it cooperated fully with MAS throughout the inspection and has implemented a detailed remediation plan to address the breaches.
A spokesperson for LGT Bank acknowledged MAS' findings and said the bank remained strongly committed to the fight against money laundering and safeguarding the integrity of Singapore's financial system.
ACTIONS AGAINST INDIVIDUALS
MAS also issued prohibition orders against four individuals from Blue Ocean Invest:
Mr Tsao Chung-yi, CEO and executive director, received a six-year prohibition order with effect from Aug 1
Ms Wong Xuan Ling, COO, received a five-year prohibition order with effect from Aug 1
Mr Hsia Lun Wei @ Henry Hsia, executive director and relationship manager, received a three-year prohibition order with effect from Jun 30
Ms Deng Xixi, former relationship manager, received a three-year prohibition order with effect from Jun 30
They are forbidden from providing regulated financial services or taking part in the management of financial institutions for the duration of the orders.
MAS said that Mr Tsao and Ms Wong failed to ensure Blue Ocean Invest's AML/CFT controls kept pace with the significant growth in its business in the three years since the firm was set up.
These included gaps in source of wealth corroboration and customer due diligence.
All four individuals also failed to raise red flags when they had information that should raise suspicion, and failed to perform enhanced customer due diligence for multiple persons of interest.
MAS further reprimanded five individuals from Trident Trust and UOB:
Mr Sean Andrew Coughlan, managing director, executive director and resident manager, Trident Trust
Mr Tan Ho Kiat, COO, executive director and head of compliance, Trident Trust
Ms Kek Yen Leng, executive director, head of trust administration and resident manager, Trident Trust
Mr Ang Sze Hee Alvin, former team head of group retail privilege banking, UOB
Mr Tan Sheng Rong Leonard, former team head of group retail privilege banking, UOB
Mr Coughlan and Mr Tan failed to ensure Trident Trust's policies provided sufficient practical guidance on how to establish customers' source of wealth, said MAS.
All three Trident Trust executives also failed to detect or adequately assess multiple deficiencies in customers' source of wealth corroboration.
Mr Ang and Mr Tan failed to conduct or ensure proper due diligence or follow-up on suspicious transaction reports for several persons of interest at UOB, said MAS.
The regulator also privately reprimanded another nine relationship managers and relationship management supervisors for more limited lapses. MAS did not provide their names to the media.
MAS said it reviewed the conduct of a larger number of employees of the financial institutions involved, but did not find evidence of significant lapses by most of them.
However, it may take action against 'a few remaining individuals' after ongoing court proceedings or investigations conclude.
'Like other major international financial centres, Singapore is exposed to money laundering risks. The vigilance of our financial institutions and their employees is critical in mitigating such risks,' said MAS' deputy managing director for financial supervision Ms Ho Hern Shin.
'MAS will work closely with financial institutions to promote more consistent implementation of AML/CFT measures. Where there are serious failings by financial institutions and their employees, MAS will not hesitate to take firm action.'