Singapore Fines Credit Suisse and Local Bank in 1MDB Inquiry -- Update

By Jake Maxwell Watts and P.R. Venkat 

SINGAPORE--Singapore's financial regulator imposed fines on two large banks including Credit Suisse AG as it concluded a two-year investigation into widespread antimoney-laundering failures throughout its financial system related to alleged misappropriations from Malaysian state fund 1MDB.

The Monetary Authority of Singapore said Tuesday it had fined the Swiss bank 700,000 Singapore dollars (US$504,613) and Singapore's United Overseas Bank Ltd. S$900,000 after it found several breaches of regulations and inadequate scrutiny of customers' transactions and activities.

The fines were imposed after two years of investigations into the role of Singapore's financial institutions and their interactions with 1MDB, or 1Malaysia Development Bhd.

The MAS's review of Singapore's financial sector has exposed dozens of failures within banks large and small, sullying the city-state's reputation as a trusted financial center in a sensitive case involving large alleged misappropriations from a neighboring country.

During its extensive review, MAS shut two foreign private banks and fined six others in addition to UOB and Credit Suisse for various breaches of antimoney-laundering regulations. It has fined banks operating in Singapore a combined S$29.1 million for their roles in handling 1MDB-related fund flows.

Since its investigations began two years ago, MAS has issued prohibition notices against four former or current employees of financial institutions and said it intended to issue notices against three more, including the new ones mentioned Tuesday. In its statement Tuesday, MAS said it had made three new bans and served notices on three more.

Its managing director, Ravi Menon, said in a statement Tuesday that the regulator's extensive review "holds key lessons" for both the MAS and financial institutions in Singapore. He said the country's financial system "is in a better position today" than when 1MDB-related abuses took place.

Singapore is one of several countries around the world, including the U.S., probing 1MDB's activities. Swiss investigators said last year they believe US$4 billion may have disappeared from the fund, while the U.S. Justice Department has said it believes that some US$1 billion originating with 1MDB was plowed into hotels, luxury real estate, fine art, a private jet, and the 2013 film "The Wolf of Wall Street."

1MDB has denied wrongdoing and hasn't been charged with any crimes.

While the MAS didn't find pervasive control weaknesses at Credit Suisse and UOB, it said the two banks had breached regulations several times.

Credit Suisse said that it acknowledges the outcome of the review and regrets that it has fallen short of MAS and the bank's own high standards.

Switzerland's financial regulator, which had already concluded its own investigation of Credit Suisse, said later Tuesday it hadn't found any systematic breaches of supervisory law, but had sent the bank a written reprimand for antimoney-laundering shortcomings.

UOB said that it accepts the findings by the MAS and that it has instituted measures to address the areas of concern, including enhancing its training program to raise risk-and-control awareness among staff.

While the MAS review into financial institutions has concluded, criminal investigations conducted by Singapore's police force continue. At least five individuals have been sentenced for various crimes including fraud and failing to report suspicious transactions, while one of those awaits trial on additional charges. Singapore investigators said last year a combined S$240 million in assets had been seized or restricted as part of their probe.

Former BSI Bank Ltd. employee Yak Yew Chee and former Falcon Bank branch manager Jens Sturzenegger, both banned for life from operating in Singapore's financial sector, were among the bankers individually sanctioned by MAS on Tuesday. Mr. Yak's subordinate at BSI, Seah Mei Ying, formerly known as Yvonne Seah Yew Foong, is banned for 15 years. All three have been convicted of financial crimes related to their handling of 1MDB relationships.

MAS said it had also served notice of its intention to serve shorter prohibitions on Kelvin Ang Keng Wee, a former broker in Singapore and two employees of research firm NRA Capital Pte. Ltd. in Singapore, for the firm's alleged role in preparing an improper 1MDB-related asset valuation. Mr. Ang declined to comment via his lawyer. NRA didn't immediately respond to a request for comment.

Brian Blackstone contributed to this article.

Write to Jake Maxwell Watts at [e-mail] and P.R. Venkat at [e-mail]

(END) Dow Jones Newswires

May 30, 2017 05:20 ET (09:20 GMT)

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