The watchdog has acted against two banks and is to ban a former director of the US firm as punishments continue over handling of illicit funds.

Singapore's financial regulator has fined Standard Chartered and Coutts for breaches of anti-money laundering laws and also intends to ban a former director of Goldman Sachs from the industry, adding to its actions against Falcon Private Bank and BSI for the handling of dirty Malaysian money.

The Monetary Authority of Singapore today said it has imposed financial penalties of S$5.2 million ($3.7 million) and S$2.4 million respectively on Standard Chartered Bank, Singapore Branch and Coutts & Co Ltd, Singapore Branch for breaches of its AML requirements. Those breaches concerned transactions involving money from 1MDB, the Malaysian state-run fund allegedly used by prominent individuals to siphon off money for personal use. (The acquisition of Coutts International by Union Bancaire Privée, which was completed in early April, was an assets-only transaction and, as such, UBP does not inherit Coutts' legal issues or liabilities, a spokesperson for UBP told this publication.)

Separately, MAS said it has served notice of its intention to issue a prohibition order against Tim Leissner, a former director of Goldman Sachs (Singapore), 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, MAS said in a statement.

The actions follow moves by MAS to ban BSI, the Switzerland-headquartered bank now owned by EFG International, from the Asian city-state. It has also taken similar action against Falcon Private Bank. The developments are part of a major scandal around 1MDB. The Malaysian state-run fund has denied wrongdoing. Authorities in Luxembourg, Switzerland and the US have become involved in the matter. In Switzerland, for example, accounts at certain banks relating to 1MDB were frozen.

MAS said it will issue a further statement early in 2017 about any final matters relating to its investigation.

Standard Chartered
MAS said its probe of Standard Chartered in connection to 1MDB-related fund flows revealed "significant lapses" in the bank's client due diligence measures and controls for ongoing monitoring, which resulted in numerous breaches of Singapore's 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," MAS said.

It added that the regulatory breaches were "serious", but that its investigation did not reveal pervasive control weaknesses or wilful misconduct at SCB, and 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 said.
 
Coutts
The regulator's 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 Mr Yak Yew Chee and Ms Yvonne Seah, who had left Coutts to join BSI Bank Limited in late 2009," MAS said.

"MAS has imposed on Coutts financial penalties amounting to S$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," MAS said.

Goldman Sachs
In the case of Leissner, a former director of Goldman Sachs and representative of its business in Singapore, the regulator proposes to ban him from the Singapore financial sector for 10 years.

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

"Mr 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) LLC. The letter stated that Goldman Sachs had conducted due diligence on Mr Low Taek Jho and his family, and had not detected any money laundering concerns with respect to Mr Low or his family. These statements were untrue and were made by Mr Leissner without Goldman Sachs’ knowledge or consent," MAS said.
 
"Mr Leissner managed the client relationship with 1MDB for all its three bond issues from 2012 to 2013. 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," MAS added.