FINANCIAL institutions are required to alert the police and the financial regulator if they suspect that a transaction could be related to a crime, although there is no threshold set for when they must flag these activities.

They are also required to step up their measures to manage the higher risks of money laundering and terrorism financing posed by customers such as wealthy individuals, said a Monetary Authority of Singapore (MAS) spokesperson on Tuesday (May 23).

MAS said financial institutions must file Suspicious Transaction Reports with the police, and extend a copy to the regulator, if they have any reason to suspect that a financial transaction could be linked to a crime.

It was responding to queries from The Straits Times (ST) about anti-money laundering measures in the financial industry following an Angolan tycoon’s recent failed bid for S$2.6 million to be released from his Singapore bank account. He was sentenced in March 2022 to nine years’ jail in the southern African nation for embezzlement, money laundering and tax fraud.

Carlos Manuel De Sao Vicente had a Bank of Singapore (BOS) account containing more than US$558 million that was seized by the Commercial Affairs Department on Feb 19, 2021.

The white-collar crime unit also seized two other accounts with the same bank – one belonging to De Sao Vicente’s wife, Irene, which contained more than US$5 million, and the other belonging to his son Ivo, which contained US$10.5 million.

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On Sep 28, 2022, De Sao Vicente applied to the Singapore High Court for the release of US$4.9 million from his frozen account, later revising the amount to S$2.6 million. He contended that he had no other source of funds and needed the money to pay his legal expenses in Singapore, Switzerland and Angola, and for legal representations to various international organisations.

The court dismissed his application on May 17. In his written judgment, Justice Vincent Hoong said it was difficult to survey the true extent of De Sao Vincente’s wealth, given the numerous cross-jurisdictional transfers of large sums between his bank accounts and the international nature of his assets.

Chew Qi, BOS’ global head of financial crime compliance, said the bank acted promptly when news of measures taken by Swiss regulators were made public in 2020.

Swiss financial regulator Finma reprimanded Swiss bank Banque Syz in September 2020 for allowing an Angolan client to transfer millions in and out of his account with the bank without investigating the possible reasons for the substantial growth in his wealth.

Chew said BOS has robust anti-money laundering and client due diligence controls in place, starting when a customer begins their relationship with the bank.

“Ongoing monitoring is conducted, including regular screening for adverse news, monitoring of transactions to ensure that they are consistent with the client’s profile and sources of wealth, and stepping up surveillance for higher risk situations.

“Where the bank becomes aware of adverse news on our clients, we have protocols to respond swiftly to restrict account activity and to exit the relationship. These stringent measures were applied in the case of (De Sao Vicente),” he told ST on Tuesday.

MAS said it requires financial institutions (FIs) to have strict anti-money laundering controls in place. This includes carrying out due diligence on their customers to understand their background and purpose of opening an account.

“FIs also monitor customer transactions on an ongoing basis, to ensure that transactions are consistent with the purpose of the account and not unusual,” it said, adding that FIs are required to apply enhanced measures for customers who present higher money laundering and terrorism financing risks.

These measures include establishing customers’ source of wealth and funds, and more closely monitoring their accounts for anomalous transaction spikes and unexpected fund flows, especially to or from higher risk jurisdictions.

MAS said: “There is no prescribed definition of a higher risk customer; various factors have to be taken into account to determine if a customer presents a higher money laundering or terrorism financing risk.

“Given their attributes and size of transactions, high net worth individuals are often assessed as presenting higher money laundering and terrorism financing risks.”

MAS added that Suspicious Transaction Reports support its broader supervisory and surveillance role to ensure that FIs have robust defences against financial crime. THE STRAITS TIMES