Singapore Banks Investigate Rich Clients After A $3 Billion Money Laundering Case

Citigroup, DBS Group Holdings, and other banks involved in Singapore’s biggest money-laundering case are now intensifying their customer diligence process, paying much attention to their rich customers and potential clients to avoid repeating such cases.

Employees at several private banks are also receiving advanced training to help them identify the tricks used by fraudsters to conceal their backgrounds and funds of origin, states media sources.

The action voluntarily demonstrates how lenders are seeking to close loopholes that allowed particularly a group of Chinese criminals to launder more than $3 billion of proceeds from online gambling through 16 credit and financial institutions in Singapore.

It remains a major scandal that has affected Singapore’s reputation and highlighted the flaws in the way that both local and foreign banks as well as brokerages conduct their customer screening processes.

How Authorities Identified The Necessity Of CIP?

In late August 2023 when the laundering case was exposed, Singapore’s government initiated an inter-ministerial committee to establish measures for enhancing the anti-money laundering systems and making appropriate defense mechanisms for some vulnerable areas in the country including the financial bodies along with property agents or precious metal dealers.

The assets confiscated by the authorities included cash, cars, jewelry, gold bars, and residential and commercial properties.

All the 10 accused have entered a guilty plea and are imprisoned for 13 to 17 months. Another 17 individuals have strict investigation and are still on the loose.

MAS conducted staff interviews and on-site inspections of multiple institutions, to find possible flaws in their compliance checks.

The banks linked to the case did more than take deposits: most of the lenders extended credit facilities to the criminals’ locally incorporated businesses, facilitated mortgages, or assisted them in making investments identified in court papers.

The financial regulator also requested other banks that do not have any connection to the case to have their know-your-customer measures checked and analyzed by some third-party consultants, stated media sources.

10 of the convicted persons were associated with the accounts in 16 various Singaporean banking institutions which oversaw deposits and investments of over $370 million.

Monetary Authority Of Singapore Regulations

The Monetary Authority of Singapore (MAS) has recently commenced and completed an on-site audit of some of the implicated banks.

The lenders that engaged most frequently with the criminals in terms of deposit accounts, loans, and other financial services will likely to hit by fines and other penalties after the financial regulator completes a review, stated media sources.

“The MAS will look at whether the financial institutions have established sound and sufficient measures to mitigate risks related to money laundering and terrorism financing and will act if these banks have not complied with the measures established in the past, as the MAS has done,” said an MAS spokesperson.

An official from the MAS said that the regulatory authority is carrying out “intensive work in the form of detailed supervisory reviews and inspections of the financial institutions’’ connected with the case.

These supervisory engagements are ongoing, stressed the spokesperson.

Read Also:

• A Lawsuit Launched Against TD Bank For Anti-Money-Laundering Issues
• MAS Fines Swiss-Asia Financial Services S$2.5 Million For Breaking AML Laws

How Banks Have Responded To These Regulations?

Credit Suisse, Citigroup’s local unit, UOB, and many other banks were revealed to be holding most of the assets.

Citigroup Training

At Citi, it has been deemed that wealth bankers would only have one month to undergo training that covers money-laundering red signals, as reiterated by one of the sources.

Some of the warnings explained in the Citi training that was accessed by sources are customers or potential customers hailing from China’s Fujian and Guangdong provinces who do not speak English and who possess ‘golden’ passports of Turkey, Saint Kitts and Nevis, or Vanuatu among others, as per the training material obtain.

Other questionable transactions include large transfers from companies based in Hong Kong that have no proper online presence, claiming to be loan repayments on behalf of customers with the US bank.

“On our part, Citi has put in place measures of conducting numerous trainings for all employees whereby some of the training covers anti-money laundering,” answered a bank’s representative.

“I am confident that we can continue our mission of building an informed team capable of identifying new risks as well as potential issues threatening our clients,” he added.

DBS Roboust AML Checks

In addition, DBS is also among the banks that are now reviewing and putting in place more rigorous checking mechanisms for large transactions by clients.

The country’s largest bank-DBS estimated to have had about $100m destroyed, most of which it had lent on the purchase of properties.

A DBS spokesperson highlighted that “the anti-money laundering processes are dynamic with further enhancements to changes in the behavior of criminals, changes in the legislation, and rules and regulations that govern the banking systems.”

“Criminals will change their actions now that their strategies have been discovered, therefore there will always be a need for us to start thinking about how we will surpass them,” the spokesperson added.

UBS Group’s Ongoing compliance

UBS Group, which acquired Credit Suisse, is also among the firms practicing extra staff training, according to the sources.

Vang Shuiming had the most amount of money confiscated during the arrests with S$76m in his accounts and in those of his wife and related companies at Credit Suisse.

OCBC Risk Rating

To ensure compliance with the law, several measures have been conducted by OCBC which include the upgrade of the risk rating and the source of wealth review acknowledged by Loretta Yuen, the head of group legal and compliance.

“While constantly tracking our customers’ activities, we do involve them to investigate them over some activity that we feel is suspicious and then weigh their responses before taking legal actions against them,” she reacted.

Bankers have also complained about verifying the source of funds of new clients as well as the extra work involved when analyzing accounts, stated media sources.

The MAS states that intelligence and information from suspicious transaction reports eventually helped the police detect illicit activeness in the recent money laundering case filed by the financial institutions.