UBS said it reported itself to its regulator in Singapore when scandal-hit 1MDB tried to transfer money through the Swiss bank's accounts. The bank's action wasn't quick or decisive enough for the regulator.
UBS is the most prominent of six Singapore firms being scrutinized for dealing with money from 1MDB, a Malaysian fund which is under investigation in several countries for diverting state money to private hands, including luxury real estate and partially financing the award-winning film «The Wolf of Wall Street.»
In a statement, UBS highlights that it was its own reporting that alerted regulators to the wider problem.
Self-Reporter
«In this case, UBS self-reported the suspicious transactions and is working closely with regulators to address this matter,» UBS said in a statement to finews.ch. This echoes statements by DBS and Standard Chartered, which both said they had self-reported in the past, though it wasn't clear whether those banks did so in this case.
In past scandals such as Libor-rigging or foreign exchange manipulation, UBS has pursued a strategy of reporting its own wrong-doing – as well as that of other banks in some cases – in a bid to lessen the punishment for the Swiss bank.
Too Little, Too Late
UBS' reporting in the 1MDB case isn't directly comparable to this strategy. Banks are required to undertake an increasingly complex system of checks to detect suspected money-laundering, which they are then required to report.
The Swiss bank's reporting on 1MDB was too little and too late for Singapore, which identified control failings and weaknesses in how clients are accepted into the bank and in overseeing transactions. The regulator also charged UBS, along with two other banks, with an «undue delay» in detecting and reporting the transactions.
Enforcer vs Supporter
«Combatting sophisticated international financial crime is complex and UBS is constantly enhancing its comprehensive anti-money-laundering processes,» UBS said. The bank was told on Thursday that it can expect «firm regulatory actions» in the money-laundering scandal, along with DBS and Standard Chartered.
1MDB also poses a conundrum for Singapore: the city-state's sovereign wealth fund GIC is a major shareholder in UBS with nearly 6.4 percent of its stock. It will be interesting to see how Singapore strikes a balance between heavy-handed enforcer of its financial center and major backer of the bank.
