MAS fines DBS, OCBC, Citi, Swiss Life for money-laundering rule breaches uncovered in Wirecard probe

THE Monetary Authority of Singapore (MAS) has imposed composition penalties amounting to S$3.8 million on DBS, OCBC, Citibank and insurer Swiss Life (Singapore) for breaching its anti-money laundering and countering the financing of terrorism (AML/CFT) requirements.

On Wednesday (Jun 21), MAS said the breaches were identified during its examinations following news of irregularities in German payments provider Wirecard’s financial statements, and the alleged involvement of Singapore-based individuals and entities in the matter.

Of the four financial institutions, DBS was imposed the largest composition penalty – amounting to S$2.6 million – for breaches between July 2015 and February 2020, in relation to the accounts of 11 corporate customers.

MAS said DBS had failed to maintain relevant and up-to-date due diligence information on the customers’ beneficial ownerships, and to update their risk ratings for money laundering and terrorism financing.

The bank also failed to adequately establish the source of wealth of higher-risk customers and their beneficial owners. In addition, it did not adequately inquire into the background and purpose of unusually large transactions that were not consistent with its knowledge of the customers, or had no apparent economic purpose.

OCBC was imposed a composition penalty of S$600,000 for breaches between June 2015 and January 2016 relating to the accounts of one corporate customer.

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The bank had failed to inquire into the background and purpose of transactions that were not consistent with its knowledge of the customer, or were unusually large and exhibited an unusual pattern that had no apparent economic purpose.

It also failed to probe into the customer’s ownership and control structure when its declared beneficial owner was not named in its corporate registration documents.

Citi was handed a composition penalty of S$400,000 for breaches between September 2019 and June 2020, in relation to the accounts of two corporate customers.

It had failed to adequately understand the customers’ control structure and correctly identify their beneficial owners, despite having information that suggested incorrect declarations.

The bank also failed to inquire into unusually large transactions that had significantly exceeded one customer’s past transaction amounts and that had no apparent economic purpose, including an outflow to a party allegedly involved in fraud.

Meanwhile, Swiss Life (Singapore) was given a composition penalty of S$200,000 for breaches in May 2017 relating to an investment-linked life insurance policy it underwrote.

The insurer had failed to sufficiently understand the reasons behind the higher-risk customer’s complex ownership and control structure. It also failed to adequately corroborate the source of wealth of the customer’s beneficial owner.

Additionally, MAS said it would take no further action against Citadelle Corporate Services, after it found that Citadelle did not breach the Trust Companies Act for carrying on a trust business without a licence.

The highest fines that MAS has meted out to financial institutions for AML/CFT breaches include S$13.3 million to BSI Bank, and S$5.2 million to Standard Chartered Bank.

While the breaches were serious, MAS said it did not find wilful misconduct by any staff of these financial institutions. All the institutions involved have accepted the penalties and taken prompt remedial actions to address the deficiencies identified.

MAS deputy managing director (financial supervision) Ho Hern Shin said: “As Singapore grows in importance as an international financial centre, MAS expects our financial institutions to step up their controls against facilitating illicit financial flows.”

An MAS spokesperson noted that the regulator’s checks were focused on assessing the adequacy of the financial institutions’ AML/CFT policies and controls in relation to their dealings with entities and individuals linked to the Wirecard scandal.

Meanwhile, investigations into possible money laundering are under the purview of the Singapore Police Force’s Commercial Affairs Department.

DBS issued a statement noting that the transactions in question were related to a network of customers that was ultimately traceable to Wirecard, and were part of an “elaborately orchestrated scheme” involving a network of complex corporate structures, nominee arrangements and financial products to conceal actual control and/or beneficial ownership.

The bank said: “While we detected and acted upon some of these activities through transaction monitoring and customer due diligence – and ultimately exited all relevant entities – we were unable to unravel the scheme in its entirety.

“We acknowledge that we could have done better. Today, DBS is in a materially better position to respond faster and more robustly if faced with similar circumstances.”

DBS added that it had worked closely with MAS to enhance the effectiveness of its anti-money laundering controls, and “materially improved” its ability to detect and mitigate risks arising from complex networks.

An OCBC spokesperson, noting that one of its business-banking customers was implicated in this case, said the bank “takes such matters seriously”.

The spokesperson said: “The Wirecard case involved an intricate web of entities and transactions spanning multiple jurisdictions. It demonstrates the complexity of global financial crimes that the financial industry must guard against.”

The bank said it has enhanced its transaction monitoring, due diligence and know-your-customer processes, and also deployed data analytics which have yielded positive outcomes in money laundering and financing terrorism risk detection and mitigation.

Meanwhile, a Citi Singapore spokesperson said: “The case dates back to before June 2020, and since then we have taken steps to strengthen our know-your-customer process.”