MAS fines DBS, OCBC, Citibank, Swiss Life S$3.8 million for breaches linked to Wirecard case
SINGAPORE: The Monetary Authority of Singapore (MAS) has fined banks DBS, OCBC, Citibank and insurer Swiss Life a total of S$3.8 million (US$2.83 million) for breaching its requirements on anti-money laundering and countering terrorism financing.The breaches were identified when MAS examined the financial institutions following news of irregularities relating to Wirecard AG’s financial statements and the alleged involvement of Singapore-based individuals and entities.
The financial institutions were found to have inadequate money laundering and terrorism financing controls when they dealt with people who were "involved in transactions with, or had links to, Wirecard AG or its related parties".
MAS issued fines of S$2.6 million for DBS, S$600,000 for OCBC, S$400,000 for Citibank, and S$200,000 for Swiss Life.
All four financial institutions have accepted the penalties, said the authority.
"Although the breaches were serious, MAS did not find wilful misconduct by any staff of these financial institutions," said the central bank.
The Wirecard scandal broke three years ago after its auditor could not verify €1.9 billion (US$2.07 billion) supposedly held abroad in escrow by third-party partners and subsequently refused to sign off on 2019 accounts.
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DBS FINED S$2.6 MILLION
DBS' S$2.6 million penalty was for breaches between July 2015 and February 2020, relating to accounts maintained by 11 corporate customers.According to MAS, DBS failed to maintain relevant and up-to-date customer due diligence information relating to customers’ beneficial ownership and it did not update customers’ money laundering or terrorism financing risk ratings.
This resulted in the bank's failure to perform timely enhanced due diligence measures on the customers.
The bank also did not "adequately establish the source of wealth" of higher risk customers and their beneficial owners, relying instead on customers’ representations of their wealth without adequate corroboration.
In addition, MAS found that DBS failed to 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".
DBS said it accepts MAS' decision. It said the lapses related to a network of customers that is "ultimately traceable to Wirecard".
"These transactions 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," said DBS.
"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."
The bank said it could have done better.
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OCBC CUSTOMER IMPLICATED
MAS fined OCBC S$600,000 for breaches between June 2015 and January 2016, relating to accounts maintained by one corporate customer.The bank failed to look into the background and purpose of the transactions even though they were not consistent with its knowledge of the customer and their business. The transactions were also "unusually large and exhibited an unusual pattern that had no apparent economic purpose".
"OCBC also failed to probe into the customer’s ownership and control structure when the customer’s declared beneficial owner was not a party named in the customer’s corporate registration documents," said MAS.
A spokesperson for OCBC said the Wirecard case involved an "intricate web of entities and transactions" in multiple jurisdictions, and that one of its business banking customers was implicated.
"We take such matters seriously. Over the past few years, we have devoted significant resources to a strategic uplift of our anti-money laundering and combating the financing of terrorism standards and capabilities," the spokesperson said.
CITIBANK FAILED TO LOOK INTO "UNUSUALLY LARGE TRANSACTIONS"
Citibank was fined S$400,000 for breaches between September 2019 and June 2020 relating to accounts maintained by two corporate customers.MAS said that Citibank failed to adequately understand the control structure of the customers and failed to correctly identify the customers' beneficial owners.
This was despite having information that suggested the control structure and beneficial owners declared by the customers were incorrect.
"Citibank 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," said the central bank.
"This included an outflow to a party allegedly involved in fraud."
A spokesperson for Citibank said the case dates back to before June 2020 and it has since taken steps to strengthen its processes.
INSURER SWISS LIFE FINED
Swiss Life (Singapore) was fined S$200,000 for breaches in May 2017 for an investment-linked life insurance policy it had underwritten.According to MAS, the insurer 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.
CNA has contacted Swiss Life for its response to the fine.
MAS said the financial institutions have taken prompt remedial actions to address the deficiencies identified.
These included enhancements to their procedures and processes, and training to improve staff's vigilance in detecting and escalating risk concerns.
"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," said Ms Ho Hern Shin, deputy managing director of financial supervision at MAS.
"They must implement robust measures to know their customers, monitor ongoing transactions to ensure that these are consistent with their understanding of their customers and their businesses, and exercise greater vigilance when customers use complex structures."
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NO ACTION AGAINST CITADELLE
On Wednesday, MAS said it completed its investigation into Citadelle Corporate Services for the suspected contravention of the Trust Companies Act by carrying on a trust business without a licence."As the investigation did not reveal any breaches of the (Act) committed by Citadelle, MAS will be taking no further action against Citadelle."
This decision was taken in consultation with the Attorney-General's Chambers, said MAS.
In July 2020, Singapore authorities launched an investigation into Citadelle after scrutinising collapsed Wirecard's operations in Singapore.
