Singapore’s central bank said it will enhance controls against money laundering and take swift action against banks, after the findings that financial institutions in the city-state handled money flows linked to Malaysian state fund, 1MDB.
Mr Ravi Menon, managing director of the Monetary Authority of Singapore, said at its annual news conference on Monday, “There is no doubt that the recent findings have made a dent in our reputation as a clean and trusted financial center,”
MAS is determined to fix the problem, working together with the industry
Menon said the central bank will support its enforcement, conduct rigorous investigations and take swift action against errant financial institutions.
“The central bank would not go into the details of its ongoing investigations into banks and other financial institutions, but it shows that the financial sector is particularly vulnerable to money laundering and illicit financing risks.”
Menon also said, MAS will also take a different tack when it comes to money laundering offences, potentially naming and shaming banks for larger breaches, deviating from its past practice of conducting investigations on other offences in private.
“The central bank is exploring the use of machine learning algorithms to identify manipulative trading behaviors in capital markets or to detect money laundering transactions,” Menon said.
“It is neither realistic nor desirable to expect the MAS to police every single transaction or activity in our financial markets,”
“The responsibility lies with every FI (financial institution) to instill high standards of risk management and proper conduct at all levels.” he said.
Between 2013 and 2016, MAS conducted 608 inspections of financial institutions, a six-fold increase from 2010 to 2013, Menon said.
Investigation of money laundering
Authorities in Singapore announced last week that they had seized S$240 million ($177 million) of assets in an investigation of 1MDB-related fund flows for possible money laundering.
They said they found problems at three major banks: top local lender DBS Group Holdings Ltd, the world’s largest private bank UBS AG, and UK-based bank Standard Chartered.
And an onsite inspection of another Swiss bank, Falcon PBS, owned by one of the world’s leading sovereign wealth funds – Abu Dhabi’s International Petroleum Investment Company (IPIC), in April 2016 found “substantial breaches” of anti-money laundering regulations, the MAS said.
Last week’s announcement came after Singapore’s central bank said in May it was closing down the Singapore operations of Swiss private bank BSI AG for serious breaches of anti-money laundering rules, the first such action in 32 years.