Credit Suisse and UOB fined in relation to 1MDB scandal

The Monetary Authority of Singapore (MAS) announced today that it has completed its two-year review of banks involved in 1MDB-related transactions known to-date.

According to a media release by MAS, in its latest series of regulatory actions, financial penalties has been imposed on Credit Suisse and United Overseas Bank (UOB); Prohibition Orders (POs) have been issued against three individuals while MAS has also served notice of its intention to impose the same regulatory action on three others.

Financial penalties imposed on banks

With latest inspections of Credit Suisse and UOB revealing several breaches of anti-money laundering (AML) requirements and control lapses, MAS has imposed financial penalties amounting to S$0.7 million and S$0.9 million respectively for breaches of MAS Notice 626 - Prevention of Money Laundering and Countering the Financing of Terrorism.

"These include weaknesses in conducting due diligence on customers and inadequate scrutiny of customers’ transactions and activities.  MAS did not however detect pervasive control weaknesses within these banks," the media release stated.

MAS has also directed the banks to appoint independent parties to assess and confirm to MAS that rectification measures have been effectively implemented. The management of both banks were also instructed to take disciplinary measures against errant staff where appropriate.

MAS noted that the banks are currently taking measures to address the weaknesses identified and strengthen their AML controls.

Other banks found for various breaches of AML requirements in relation to the 1MDB scandal include BSI Bank, Falcon Bank, DBS, UBS AG, Standard Chartered Bank, and Coutts.

Financial penalties amounting to 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.

In addition to the financial penalties, BSI Bank and Falcon Bank have been shut down due to egregious failures of AML controls and improper conduct by senior management.

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Prohibition Orders against convicted employees

Apart from taking regulatory action on the banks, MAS has issued POs, ranging from 10 years to lifetime, against four former employees of financial institutions implicated in these transactions.

Further to its announcement earlier this year, MAS has issued lifetime POs against Jens Fred Sturzenegger and Yak Yew Chee, as well as a 15-year PO against Seah Mei Ying (formerly known as Yvonne Seah Yew Foong) with effect from yesterday (29 May 2017).

MAS has also notified another three current and former employees of its intention to issue POs against them, ranging from 3 to 6 years.

These include a 6-year PO against Ang Keng Wee Kelvin, a former representative of Maybank Kim Eng Securities (MKES); a 3-year PO against Kevin Scully, the chief executive officer of NRA Capital (NRA); and a 6-year PO against Lee Chee Waiy, NRA's former head of research.

In the duration of the PO, the individuals are prohibited from:

• Providing any capital markets and financial advisory services
• 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.

Ravi Menon, managing director, MAS, said, “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."

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