Singapore's central bank and financial regulator has fined the units of British lender Standard Chartered PLC (SCB) for failing to comply with the country’s anti-money laundering regulations and anti-terrorism financing rules.
The Monetary Authority of Singapore (MAS) imposed penalties of S$5.2 million ($3.95 million) on the bank’s local branch Standard Chartered Bank (Singapore) Ltd., and S$1.2 million on its trust division Standard Chartered Trust (Singapore) Ltd.
The recent fines came less than two years, after the company received a similar penalty in the city-state in December 2016.
Standard Chartered’s Misconduct Issues
MAS stated that the case was related to the transfer of certain trust accounts from the Channel Island of Guernsey to Singapore, which occurred from December 2015 to January 2016.
MAS and the Guernsey Financial Services Commission have also been looking into SCB’s involvement in transferring $1.4 billion between Guernsey and Singapore on behalf of its Indonesian clients at its private bank in late 2015.
The transfers took place before the common reporting standards (CRS) were implemented, which was a global rule requiring the exchange of tax information.
The regulator saw that risk management and controls concerning the transfers in relation to the transfers were unsatisfactory. The timing had the central bank thinking whether the clients were trying to evade their CRS reporting obligations.
MAS said despite the questionable timing, SCB and its trust unit did not adequately assess and mitigate against this risk factor, and it also failed to file suspicious transaction reports in a timely manner.
MAS Deputy Managing Director Ong Chong Tee said the central bank requires financial establishments to adequately assess money laundering risk when deciding whether to accept customers, adding that they should already have good systems and process prepared to supervise customer transactions.
The transfers were initially reported by the lender’s staff, who grew concerned that the Indonesian clients might have asked for a higher level of scrutiny, as they could have connections to the military. They also had assets worth tens of millions of dollars, but annual incomes of just tens of thousands.
The bank performed its own probe and reported the issue to regulators. The firm said it was not allowed to disclose the identities of its clients, but added that it did not find any military links to the individuals in question.
SCB recognized that it fell short of its own standards to alleviate the risks concerning some clients, but said it was taking care of the inadequacies.
Standard Chartered chief executive Bill Winters stated that they have identified the problem and the important thing now is they were making investments needed to ensure that it will not happen again.
The company stated in 2016 that it was shutting down its trust operations in Guernsey and will just integrate that unit in Singapore.
Winters has been attempting to resolve misconduct matters in his three-year time at the company’s Asia-focused branch, some of which occurred before his appointment.
SCB was hit with an S$5.2 million fine in December for anti-money laundering errors that involved state investment fund 1Malaysia Development Bhd. (1MDB).
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