Singapore’s central bank has said that it had found lapses and weaknesses related to the beleaguered Malaysian wealth fund which has embroiled DBS, UBS and Standard Chartered in the scandal surrounding 1MDB.

Actions against the banks would be taken as the banks’ Singapore operations were found to have “lapses and weaknesses” in anti-money-laundering controls by the Monetary Authority of Singapore (MAS), the authority said on Thursday.

To conceal the funds’ true beneficiaries, shell companies in various jurisdictions used “extensive layers of transactions and subterfuge aimed at disguising the nature of certain activities and fund flows,” the preliminary investigation found.

Salling it at the time “the worst case of control lapses and gross misconduct that we have seen in the Singapore financial sector”, the MAS also completed  a related investigation of BSI Singapore in May which resulted in a decision to shut down that private bank.

“Firm regulatory action” would be taken to address the deficiencies at the three banks were related to lapses in specific processes and by individual officers, the MAS said. It however said that unlike at BSI Bank, the inspections didn’t find pervasive weakness or staff misconduct.

There were no immediate comments from UBS.

Standard Chartered said that it reported the suspicious transactions when it discovered them as it took financial crime compliance very seriously adding that its money-laundering controls have been strengthened.

“Egregious financial crime is highly sophisticated and intentionally designed to evade systems and controls,” DBS said. Some questionable activities were previously voluntarily reported to authorities, it added. The Singapore-based bank said that would continue to cooperate with regulators and law enforcement and it took its anti-money-laundering obligations seriously.

During the period when funds allegedly went missing from 1MDB, Malaysian Prime Minister Najib Razak previously chaired 1MDB’s advisory board.

The plot of the long-running scandal over billions of dollars missing from the Malaysia state fund 1MDB has been thickened by the Singapore announcement. Just a day earlier, moves ot seize assets tied to the beleaguered fund, including funds related to the film “The Wolf of Wall Street”, were initiated by U.S. authorities.

The MAS said that dealings in properties belonging to some of these individuals have been curtailed and bank accounts belonging to various individuals were seized in the course of Singapore’s investigations. It said that with about S$120 million of that total belonging Low Taek Jho and his immediate family, the assets amount in total to S$240 million ($176.82 million).

Najib’s stepson, Riza Aziz, who was named in the U.S. complaint, was a friend of Low.

Marking the biggest action ever taken under the Kleptocracy Asset Recovery Initiative, assets tied to an international conspiracy to launder funds funneled away from 1MDB and worth more than $1 billion were being sought to be seized by the U.S. prosecutors in the U.S.

Through a process of complex transactions and shell companies with bank accounts in Singapore, Switzerland, Luxembourg and the U.S., more than $3.5 billion from the state funds were laundered and diverted by officials at 1MDB, their relatives and other associates, the Department of Justice in the US said in a statement.

(Adapted from CNBC)

Categories: Economy & Finance, Regulations & Legal, Uncategorized