Singapore closes down another bank linked to 1MDB money laundering activities
The Monetary Authority of Singapore (MAS) today (Oct 11, 2016) closed down another merchant bank, Falcon Private Bank Ltd, Singapore Branch (Falcon Bank), for facilitating money-laundering activities linked to 1Malaysia Development Berhad (1MDB).
Falcon Bank is the second financial institution after BSI Singapore to be forced to cease operations in the Island Republic’s 1MDB probe. Before BSI.
Some 10 countries in the world, led by the US Department of Justice (DoJ), are investigating the 1MDB-lined alleged multi-billion-dollar/ringgit money laundering activities.
1MDB, a sort of sovereign wealth fund, is a wholly owned entity of Malaysia’s Finance Ministry. The Finance Minister is Najib Razak who is also the country’s prime minister.
After the fall of the two banks in Singapore, the global probe is expected to claim more victims, individuals and financial institutions over the 1MDB scandal.
Amazingly, nothing is moving or happening in Malaysia as the the enforcement authorities, namely the police, Malaysian Anti-Corruption Commission (MACC) and Bank Negara Malaysia (BNM), continue to behave like nothing is happening.
The Barisan Nasional (BN) Members of Parliament are also behaving the same.
This can only happen in Bolehland (Land of Any Possibility) Malaysia while foreign money-laundering investigators and financial authorities are painstakingly probing to recover money allegedly stolen from 1MDB.
Here are the details of what happened in Singapore:
"MAS shuts down Falcon Private Bank in Singapore, slaps fines on DBS and UBS after 1MDB probe
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| The reception area of Falcon Private Bank's Singapore office at Centennial Tower.PHOTO: REUTERS |
11 HOURS AGO
UPDATED
3 HOURS AGO
Ann Williams
SINGAPORE - The Monetary Authority of Singapore (MAS) announced on Tuesday (Oct 11) that it is withdrawing the merchant bank status of Falcon Private Bank Ltd, Singapore Branch (Falcon Bank), for serious failures in anti-money laundering (AML) controls and improper conduct by senior management at the head office in Switzerland as well as the Singapore branch.
MAS said Falcon Bank's Singapore branch manager, Mr Jens Sturzenegger, was arrested by the Commercial Affairs Department (CAD) on Oct 5.
Falcon Bank is the second financial institution after BSI Singapore to be forced to cease operations here in the Republic's 1MDB probe. Before BSI, the last time MAS shut down a financial institution was in 1984 when it ordered the closure of Jardine Fleming (Singapore) Pte Ltd for serious lapses in its advisory work.
MAS also fined Falcon Bank S$4.3 million for 14 breaches of MAS Notice 1014 - Prevention of Money Laundering and Countering the Financing of Terrorism. The breaches include failures to adequately assess irregularities in activities pertaining to customer accounts, and file suspicious transaction reports.
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MAS is also imposing financial penalties amounting to S$1 million on DBS for 10 breaches and S$1.3 million on UBS for 13 breaches of the same regulation. The two banks must also appoint an independent party to confirm that rectification measure have been "effectively implemented" and report their findings to MAS.
Singapore's central bank said the actions on the three banks follow supervisory examinations into 1MDB-related fund flows that took place through these banks from March 2013 to May 2015.
MAS' actions also come a day after two more former bankers at BSI Singapore were charged in court with 1MDB-related offences.
Said MAS managing director Ravi Menon in the statement on Tuesday: "Keeping Singapore a clean and trusted financial centre is a shared responsibility. The board and senior management of each financial institution play a pivotal role. They must put in place robust mechanisms to detect suspicious activities, promote strong risk awareness among their staff, and empower their compliance and risk management people. Most of all, they must set the tone from the top - that profits do not come before right conduct.
"MAS will work closely with the industry to ensure that standards are kept high and will take strong deterrent actions against institutions that fall short."
MAS said its investigations benefited from close cooperation with various overseas regulatory counterparts, in particular the Swiss Financial Market Supervisory Authority (FINMA).
It said clients and customers of Falcon Bank are assured that the merchant bank here has the full support of its head office which is financially sound. MAS is also working closely with FINMA to oversee an orderly closure of the merchant bank branch in Singapore.
Falcon Bank has been operating as a merchant bank in Singapore since August 2008. MAS conducted inspections on Falcon Bank in 2013 and 2015. The 2013 inspection found weaknesses in the bank's controls for client acceptance and transaction surveillance that led to breaches of AML requirements, said MAS. Falcon Bank paid a composition fine of S$300,000 for these breaches, and MAS instructed the merchant bank to strengthen its AML controls.
But the 2015 inspection uncovered an even larger number of regulatory breaches as well as serious failings on the part of head office senior management and the Singapore branch manager.
Detailing the lapses, MAS said:
- The merchant bank's head office failed to guard against conflicts of interest when managing the account of a customer who was associated with the bank's former board chairman Mohamed Ahmed Badawy Al-Husseiny. The former chairman misled and influenced the Singapore branch into processing the customer's unusually large transactions despite multiple red flags
- The improper conduct of the Singapore branch manager and certain senior managers at the head office had impaired the effectiveness of the Singapore branch's compliance function in discharging its responsibilities. Their interference was wrongful and egregious in nature, and contributed to substantial breaches of AML regulations.
- Falcon Bank has demonstrated a persistent and severe lack of understanding of MAS' AML requirements and expectations. Taking into account the totality of Falcon Bank's conduct, MAS' assessment is that the merchant bank will be unable to comply with these requirements and expectations going forward.
On DBS and UBS Singapore branch, MAS said it has completed its inspections of the two banks in relation to their 1MDB-related fund flows and found no pervasive control weaknesses. Instead, the control lapses "relate to specific bank officers who failed to carry out their duties effectively", said MAS.
There were deficiencies in the on-boarding of new accounts, weaknesses in corroborating the source of funds, inadequate scrutiny of customers' transactions and activities, and failure to file timely suspicious transaction reports, MAS added.
In its Tuesday statement, MAS also said it is finalising its assessment of Standard Chartered Bank, Singapore Branch, and will make an announcement in due course.
It has also referred the 1MDB-related transactions processed by Raffles Money Change to CAD for their follow-up investigation. - Straits Times"
"
MAS Directs Falcon Bank to Cease Operations in Singapore
Financial Penalties Imposed on DBS Bank and UBS
Singapore, 11 October 2016… The Monetary Authority of Singapore (MAS) announced today that it is withdrawing the merchant bank status of Falcon Private Bank Ltd, Singapore Branch (Falcon Bank) for serious failures in anti-money laundering (AML) controls and improper conduct by senior management at the Head Office in Switzerland as well as the Singapore Branch.
MAS is also imposing financial penalties on DBS Bank Ltd (DBS) and UBS AG, Singapore Branch (UBS) for breaches of MAS’ AML requirements.
The actions on the three banks follow supervisory examinations by MAS into 1MDB-related fund flows that took place through these banks from March 2013 to May 2015. MAS’ investigations benefitted from close cooperation with various overseas regulatory counterparts, in particular the Swiss Financial Market Supervisory Authority (FINMA).
Falcon Bank
Falcon Bank has been operating as a merchant bank in Singapore since August 20081, offering boutique private banking services. It is headquartered in Switzerland. MAS conducted inspections on Falcon Bank in 2013 and 2015. The 2013 inspection found weaknesses in the bank’s controls for client acceptance and transaction surveillance that led to breaches of MAS’ AML requirements. Falcon Bank paid a composition fine of S$300,000 for these breaches, and MAS instructed the merchant bank to strengthen its AML controls. The 2015 inspection uncovered an even larger number of regulatory breaches as well as serious failings on the part of Head Office senior management and the Singapore Branch Manager.
MAS has decided to withdraw Falcon Bank’s status as a merchant bank in Singapore, taking into account the following factors:
The merchant bank’s Head Office failed to guard against conflicts of interest when managing the account of a customer who was associated with the bank’s former Board Chairman Mohamed Ahmed Badawy Al-Husseiny. The former Chairman misled and influenced the Singapore Branch into processing the customer’s unusually large transactions despite multiple red flags.
The improper conduct of the Singapore Branch Manager and certain senior managers at the Head Office had impaired the effectiveness of the Singapore Branch’s compliance function in discharging its responsibilities. Their interference was wrongful and egregious in nature, and contributed to substantial breaches of AML regulations. MAS has been informed that the Singapore Branch Manager, Mr Jens Sturzenegger, has been arrested by the Commercial Affairs Department on 5 October 2016.
Falcon Bank has demonstrated a persistent and severe lack of understanding of MAS’ AML requirements and expectations. Taking into account the totality of Falcon Bank’s conduct, MAS’ assessment is that the merchant bank will be unable to comply with these requirements and expectations going forward.
MAS has imposed on Falcon Bank financial penalties amounting to S$4.3 million for 14 breaches of MAS Notice 1014 - Prevention of Money Laundering and Countering the Financing of Terrorism. The breaches include failures to adequately assess irregularities in activities pertaining to customer accounts, and file suspicious transaction reports.
Clients and customers of Falcon Bank are assured that the merchant bank, which is a branch of Falcon Private Bank Ltd in Switzerland, has the full support of its Head Office which is financially sound. MAS is working closely with FINMA, the home regulator of Falcon Private Bank Ltd, to oversee an orderly closure of the merchant bank branch in Singapore.
DBS and UBS
MAS has completed its inspections of DBS and UBS in relation to their 1MDB-related fund flows. The inspections revealed several breaches of AML requirements and control lapses. There were deficiencies in the on-boarding of new accounts, weaknesses in corroborating the source of funds, inadequate scrutiny of customers’ transactions and activities, and failure to file timely suspicious transaction reports.
The control lapses observed in DBS and UBS relate to specific bank officers who failed to carry out their duties effectively. MAS’ inspections did not find pervasive control weaknesses within these banks. MAS has admonished the two banks and instructed their management to investigate the lapses, promptly address the control deficiencies, and take appropriate disciplinary measures against the staff involved.
MAS has imposed financial penalties amounting to S$1 million on DBS for 10 breaches and S$1.3 million on UBS for 13 breaches of MAS Notice 626 - Prevention of Money Laundering and Countering the Financing of Terrorism. MAS has also directed DBS and UBS to appoint an independent party to confirm that rectification measures have been effectively implemented and to report its findings to MAS.
Other Financial Institutions
MAS is finalising its assessment of Standard Chartered Bank, Singapore Branch, and will make an announcement in due course. MAS has referred the 1MDB-related transactions processed by Raffles Money Change to the Commercial Affairs Department for their follow-up investigation.
Conclusion
Mr Ravi Menon, Managing Director, MAS, said, “Keeping Singapore a clean and trusted financial centre is a shared responsibility. The board and senior management of each financial institution play a pivotal role. They must put in place robust mechanisms to detect suspicious activities, promote strong risk awareness among their staff, and empower their compliance and risk management people. Most of all, they must set the tone from the top – that profits do not come before right conduct. MAS will work closely with the industry to ensure that standards are kept high and will take strong deterrent actions against institutions that fall short.”
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1 Falcon Bank was originally owned by American International Group (AIG) and known as AIG Private Bank. In 2009, AIG Private Bank was acquired by Aabar Investments PJS and renamed as Falcon Bank. - MAS"
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