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StanChart and Coutts fined by MAS for anti-money laundering breaches

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The Monetary Authority of Singapore (MAS) has imposed a penalty of S$5.2 million on the Singapore branches of Standard Chartered Bank (SCB) and of S$2.4 million on Coutts, for breaches of MAS's anti-money laundering (AML) requirements by the two banks.

THE Monetary Authority of Singapore (MAS) has imposed a penalty of S$5.2 million on the Singapore branches of Standard Chartered Bank (SCB) and of S$2.4 million on Coutts, for breaches of MAS's anti-money laundering (AML) requirements by the two banks.

The breaches were related to 1MDB-related fund flows through these banks, it said.

MAS also said it plans to issue a prohibition order against Tim Leissner, a former director of Goldman Sachs (Singapore), for making false statements on behalf of Goldman Sachs (Asia), when he was managing the relationship with 1MDB relating to the arrangement of three bond issuances from 2012 to 2013.

In a stern note, Ravi Menon, managing director of MAS, said: "MAS has taken tough regulatory actions against various financial institutions this year for AML control lapses. These actions send a strong signal that we will not tolerate the abuse of Singapore's financial system for illicit purposes."

He added: "The supervisory investigations into the intricate web of international fund flows has been a learning experience for financial institutions as well as for MAS. Our financial sector will emerge cleaner and stronger from the lessons learnt."

MAS had inspected StanChart's 1MDB-related fund flows which took place from 2010 to 2013. The inspection revealed "significant lapses" in the bank's customer due diligence measures and controls for ongoing monitoring, stemming from inadequate policies and procedures, insufficient independent oversight of front office staff, and a lack of awareness of money laundering risks among some bank staff.

"While the regulatory breaches were serious, MAS' inspection did not find pervasive control weaknesses or wilful misconduct at SCB," it said.

StanChart has since taken measures to address the weaknesses and strengthen its controls. MAS has also asked the bank's management to take disciplinary action against officers who had failed to perform their duties effectively. It also directed the bank to appoint an independent party to confirm that rectification measures have been implemented and to report its findings to MAS.

As for Coutts, MAS's supervisory examination revealed breaches in relation to customer due diligence measures for politically exposed persons from around 2003 to 2009.

The breaches were due to actions or omissions of certain officers who have since left the bank, MAS said. These officers include Yak Yew Chee and Yvonne Seah, who had left Coutts to join BSI Bank in late 2009.

Coutts International was sold by Royal Bank of Scotland to Union Bancaire Privee in March 2015 and is in the process of winding down its Singapore operations.

MAS has served notice of its intention to issue a prohibition order against Mr Leissner for making false statements on behalf of Goldman Sachs (Asia) without the bank's knowledge or consent.

The proposed order will prohibit Mr Leissner from performing any regulated activity under the Securities Future Act, or taking part in the management of any capital market services firm in Singapore for 10 years.

Mr Leissner was found to have issued an unauthorised reference letter to a financial institution in June 2015, using the letterhead of Goldman Sachs (Asia), saying that Goldman Sachs had conducted due diligence on Low Taek Jho and his family, and had not detected any money laundering concerns.

Mr Low is a Malaysian tycoon and key figure in the 1MDB-linked probe.

"These statements were untrue and were made by Mr Leissner without Goldman Sachs' knowledge or consent," MAS said.

A team comprising Goldman Sachs staff mainly from Hong Kong, but also from Singapore, Malaysia and the United Arab Emirates, arranged these bond issues, and they were fully underwritten by London-based Goldman Sachs International. MAS said it will continue to work with foreign regulatory authorities to examine Goldman Sachs's role in the 1MDB bond transactions.

MAS said it is nearing completion of its supervisory examinations of financial institutions in Singapore through which 1MDB-related fund flows took place, and will provide a final update in early 2017.