THE financial regulator in Dubai has imposed a US$1.12 million fine on the Dubai International Financial Centre (DIFC) branch of Bank of Singapore (BOS) for a number of contraventions, such as inadequate systems and controls, and shortfalls relating to anti-money laundering (AML).

In a statement on Thursday (Nov 10), the Dubai Financial Services Authority (DFSA) said the fine was reduced from US$2 million, as the bank had offered the regulator an “enforceable undertaking” to remediate the failings and settle the matter.

The DFSA said it found deficiencies in the bank’s AML business risk assessments; assessment of risks posed by its clients; customer due diligence and enhanced customer due diligence practices; identification of clients’ source of wealth and funds; and suspicious activity reporting.  

Ian Johnston, chief executive of the DFSA, said: “The DFSA has a high degree of concern over any AML-related contraventions and will take appropriate action to make sure that the systems and controls implemented by Authorised Firms operating in the DIFC are robust.”

DFSA also said the bank had acted outside the scope of its DFSA licence, by arranging deals in investments in relation to rights under long-term insurance contracts, when not authorised to do so. The regulator noted that the bank has since applied for permission to do so.

It added that BOS – which is a wholly-owned subsidiary of OCBC – has also agreed to remedy the deficiencies in its systems and controls, and engage an external compliance expert to assist the bank in complying with its obligations and verify that the remediation has been completed.

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In response to queries from The Business Times (BT), Vivek Gehani, deputy senior executive officer, BOS DIFC Branch, said: “We have further strengthened our controls to ensure compliance with the regulations of Dubai Financial Services Authority. We are committed to rectifying the findings highlighted by the regulator.”

A spokesperson from the Monetary Authority of Singapore (MAS), Singapore’s financial regulator, also told BT: “MAS is aware of the developments relating to Bank of Singapore DIFC branch. We have been in close contact with our counterparts in Dubai and closely engaging the bank’s head office in Singapore to address the issues.”