Monetary Authority of Singapore Issues Penalties over AML/CFT Breaches

The Monetary Authority of Singapore (MAS) has imposed penalties on Standard Chartered Bank and Standard Chartered Trust, with regard to breaches associated with Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT).

The monetary penalties were specified by the MAS in a statement. A penalty of S$5.2 million ($3.95 million) was issued to Standard Chartered Bank, Singapore Branch (SCBS), and an additional S$1.2 million ($0.91 million) was levied on Standard Chartered Trust (Singapore) Limited (SCTS).

The Scope of the Violations

According to the statement, the penalties were issued for violations of the authority’s requirements pertaining to AML and CFT.

More specifically, Standard Chartered Bank is said to have violated the terms of the requirements during a period spanning from December 2015 to January 2016, when trust accounts of SCBS customers were transferred from Standard Chartered Trust (Guernsey) to SCTS.

The timing of the transfers further elicited suspicion, as they took place shortly before Standard Chartered Trust (Guernsey)’s implementation of the Common Reporting Standards (CRS) for the Automatic Exchange of Financial Account Information in Tax Matters. This led to the appearance of the possibility that clients were taking steps to avoid the obligations to the newly introduced CRS reporting requirements.

According to the MAS, Standard Chartered Trust did not properly prepare for the risk associated with such transactions, nor did the company report the suspicious activity in time to ensure the full cooperation of the authority’s AML and CFT guidelines and requirements.

Moreover, the MAS investigated the violations and found that the risk management and controls of both entities were unsatisfactory and failed to comply with the necessary requirements put in place by the Singaporian authority.

Mr. Ong Chong Tee, Deputy Managing Director of MAS, said: “MAS requires financial institutions to adequately assess money laundering risks when deciding whether to accept customers. They should also have in place good systems and processes to monitor customer transactions. We expect financial institutions to remain vigilant by instilling a strong risk culture.”

A comprehensive assessment of the situation illustrates that the penalties might have been prevented had the companies taken action to improve their risk management and control protocols.

However, the breaches, that had already occurred, could clearly not be overlooked by the MAS, thereby justifying the penalties.

The Approach of the MAS

The MAS has shown a more varied approach to assessing and policing the financial industry, relative to other similar authorities. For instance, despite rumors that had surfaced, the authority made it clear that it would not heavily intervene in the FX market.

More recently, the MAS demonstrated that it is apt to accept the growing demand for cryptocurrency, by recognizing Bitcoin and blockchain technology as fintech investment avenues. The authority has expressed its understanding of the influence that Bitcoin could have on the overall financial industry in the future.

While it appears that the MAS is quite lenient in its approach toward the financial industry, it maintains a respectable level of regulatory constraint, ensuring that proper conduct is maintained within its jurisdiction.

The most obvious example would be the aforementioned penalties. The MAS also will not refrain from suspending the licenses of firms in cases where serious misconduct or repeat offenses occur.

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