For 1MDB-Related Anti Money Laundering breaches, The Monetary Authority of Singapore has imposed financial penalties on more banks in the city state.

The Monetary Authority of Singapore (MAS) has imposed financial penalties of $5.2 million and $2.4 million respectively on Standard Chartered Bank, Singapore Branch (SCB) and Coutts & Co, Singapore Branch (Coutts) for breaches of anti-money laundering (AML) requirements.

These breaches occurred in the context of 1MDB-related fund flows through these banks.

Making False Statements

MAS has also served notice of its intention to issue a Prohibition Order against Tim Leissner, a former Director of Goldman Sachs (Singapore) (GS S’pore) for making false statements on behalf of Goldman Sachs (Asia), without the latter’s knowledge or consent.

Leissner had overall responsibility for managing the relationship with 1MDB when Goldman Sachs was engaged by 1MDB to arrange three bond issuances from 2012 to 2013.

Lack of Awarness

MAS has completed its inspection of SCB in relation to its 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, which resulted in numerous breaches of MAS’ AML regulations.

The control lapses stemmed from inadequacies in policies and procedures, insufficient independent oversight of front office staff, and a lack of awareness of money laundering risks among some bank staff.

Disciplinary Actions

While the regulatory breaches were serious, MAS’ inspection did not find pervasive control weaknesses or wilful misconduct at SCB. MAS notes that the bank has proactively taken measures to address the weaknesses identified and strengthen its controls. MAS has instructed SCB’s management to take disciplinary action against those officers who failed to perform their duties effectively.

MAS has imposed on SCB financial penalties amounting to S$5.2 million for 28 breaches. MAS has also directed the bank to appoint an independent party to confirm that rectification measures have been effectively implemented and to report its findings to MAS.

Omissions of Certain Officers

MAS’ supervisory examination of Coutts revealed breaches of AML requirements in relation to customer due diligence measures for politically exposed persons (PEPs). The relationships for these PEP customer accounts were established between 2003 and 2009.

The failure to exercise the necessary enhanced due diligence on these accounts was the result of actions or omissions of certain officers who have since left the bank.

These officers include Yak Yew Chee and Yvonne Seah, who had left Coutts to join BSI Bank in late 2009.

MAS has imposed on Coutts financial penalties amounting to $2.4 million for 24 breaches of MAS Notice 1014 - Prevention of Money Laundering and Countering the Financing of Terrorism. 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.

Prohibited For 10 Years

MAS has served notice of its intention to issue a Prohibition Order against Tim Leissner, a former director and representative of GS S’pore. The proposed Order will prohibit Leissner for a period of 10 years from:

  • performing any regulated activity under the Securities and Futures Act
  • taking part, directly or indirectly, in the management of any capital market services firm in Singapore.

Leissner moved to Goldman Sachs (Asia) in Hong Kong in November 2011. But he maintained his representative status with GS S’pore till his resignation from Goldman Sachs in February 2016, and was therefore subject to MAS’ requirements to being fit and proper to carry out regulated activities.

Jho Low Due Diligence

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

These statements were untrue and were made by Leissner without Goldman Sachs’ knowledge or consent. Leissner managed the client relationship with 1MDB for all its three bond issues from 2012 to 2013.

Final Update in early 2017

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 has engaged and will continue to work with foreign regulatory authorities on examining Goldman Sachs’ role in the 1MDB bond transactions. The regulator 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.