Compliance Corner: US Treasury, Monetary Authority Of Singapore, Others

Editorial Staff, 19 April 2021


The latest compliance news: regulatory developments, punishments, guidance, permissions and new product and service offerings.

US Treasury Department
The US Treasury Department has said that Vietnam, Switzerland and Taiwan have gone over its thresholds for possible currency manipulation under a 2015 US trade law, but the organisation did not formally state that these countries are currency manipulators.

The Treasury said that it will start to engage with Taiwan and continue talks with Vietnam and Switzerland. The latter two countries were branded by the Trump administration, as of December last year.

The Treasury said that Taiwan, Vietnam and Switzerland exceeded 2015 currency thresholds during 2020 - a more than $20 billion bilateral trade surplus with the US, foreign currency intervention exceeding 2 per cent of gross domestic product and a global current account surplus exceeding 2 per cent of GDP.

“Under the Omnibus Trade and Competitiveness Act of 1988 (the 1988 Act), Treasury has determined that there is insufficient evidence to make a finding that Vietnam, Switzerland, or Taiwan manipulates its exchange rate for either of the purposes referenced in the 1988 Act,” the department said in a statement last Friday.

Janet Yellen, the Treasury Secretary, said: “Treasury is working tirelessly to address efforts by foreign economies to artificially manipulate their currency values that put American workers at an unfair disadvantage.”

The department said that 11 economies warrant placement on its “Monitoring List” of major trading partners which merit close attention to their currency practices: China, Japan, Korea, Germany, Ireland, Italy, India, Malaysia, Singapore, Thailand, and Mexico. All except Ireland and Mexico were included in the December 2020 Report.

Monetary Authority of Singapore, Bank J Safra Sarasin
The Monetary Authority of Singapore has imposed a composition penalty of S$1 million ($749,373) on Bank J Safra Sarasin's Singapore branch for failing to follow anti-money laundering and counter-terrorism financing rules.

The regulator said that in setting the size of the penalty it took into account that the bank had acted to remediate the deficiencies.

Between March 2014 and September 2018, BJS committed “serious breaches” of AML/CFT requirements. These breaches stemmed from “material lapses” in the bank’s AML/CFT control processes during customer onboarding and in the ongoing monitoring of business relations with customers. This had placed BJS at higher risk of being used as a conduit for illicit activities. 

BJS failed to establish, by appropriate and reasonable means, the source of wealth and source of funds of customers and beneficial owners of the customers who presented higher risks of money laundering and terrorism financing. In many cases, BJS relied on the customers’ representations without obtaining information to corroborate them. It also failed to adequately inquire into the background and purpose of unusually large or unusual patterns of customer transactions that had no obvious economic purpose.

The Securities and Futures Commission
Hong Kong’s Securities and Futures Commission has reprimanded Optimas Capital and fined it $1.05 million over failures to ensure short position reports for a collective investment scheme under its management complied with local reporting rules.

An SFC investigation following a self-report by Optimas found that a total of 350 reportable short positions held by the CIS had been omitted in 56 SPRs prepared and submitted by Optimas to the SFC between 23 June 2017 and 9 July 2018, the regulator said in a statement. 

The errors found in the SPRs prepared by Optimas occurred as a result of a programming mistake in a script developed by its operations manager at the material time. The script in question was created to automate the process of identifying short positions held by the CIS in order to filter out those that were reportable. However, Optimas failed to detect the programming mistake promptly due to inadequate supervision and review over the work of its operations manager at the time.

The SFC considers that Optimas had failed to act competently to ensure that the SPRs it prepared would be accurate and compliant with the applicable requirements under the SPR Rules.

In deciding the sanction, the SFC took into account all relevant circumstances, including Optimas’ prompt remedial actions and cooperation in resolving the SFC’s concerns and its otherwise clean disciplinary record.

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