Mon, Jul 18, 2016 - Page 14 News List

UBS, DBS, Falcon face scrutiny over transactions

PAYING THE PRICE:The probe could lead to fines and other penalties if the banks were found to have broken regulations on money laundering, unnamed sources said


A sign sits above the entrance to the UBS Group AG headquarters in Zurich on May 2.

Photo: Bloomberg

Singapore’s central bank is scrutinizing several banks, including UBS Group AG and DBS Group Holdings Ltd, to see if they broke anti-money laundering rules in handling transactions linked to scandal-hit Malaysian state fund 1MDB, three people with knowledge of the matter said.

The Monetary Authority of Singapore is looking at several aspects of the banks’ operations including whether they were diligent enough in knowing who their customers were and what the source of their funds was, and whether they were careful in screening politically-exposed persons such as government officials, banking and legal sources aware of the review said.

The probe could lead to fines and other penalties if lapses are found, said the sources who declined to be identified.

It is unclear which transactions by the banks are being examined.

Switzerland’s Falcon Private Bank Ltd and Coutts International, which is owned by Geneva-based Union Bancaire Privee, are also among the banks under review, they said.

UBS, Coutts and DBS, which is Singapore’s top lender, all declined to comment.

When asked about the review, a Zurich-based spokesman for Falcon, which is owned by one of the world’s leading sovereign wealth funds — Abu Dhabi’s International Petroleum Investment Co — said: “We have transparently shared our view and have nothing to add.”

The authority is in talks with several banks and is to make an announcement on any punitive action against them after the review is completed, sources said.

The full details are not known at this stage.

The latest probes follow the authority’s decision in late May to close down the operations of Swiss private bank BSI AG in Singapore for serious breaches of anti-money laundering rules, the first time in 32 years it has taken such action against a bank.

The authority then said that there had been gross misconduct by some of BSI’s staff and poor management oversight of the bank’s operations.

Though the authority did not specifically say this related to 1MDB-related transactions, although the Swiss Financial Market Supervisory Authority said at the time that BSI had committed serious breaches of money laundering regulations through business relationships and transactions linked to the corruption scandal surrounding 1MDB.

The authority also imposed a S$13.3 million (US$9.9 million) fine on the bank, and on the same day in May, the Swiss authorities said they would seize 95 million Swiss francs (US$97 million) of BSI’s profits.

In response, BSI announced that group chief executive officer Stefano Coduri had stepped down and that it had undertaken steps to improve management, including introducing a new chief risk officer and appointing a new group legal counsel.

Malaysian companies and banks linked to 1MDB are at the center of corruption and money laundering probes that have led investigators to look at transactions and financial relationships across the globe — from Malaysia to Singapore and the Seychelles, from Abu Dhabi to offshore companies in the Caribbean and from the US to Switzerland.

One of the sources said DBS had identified certain questionable financial activities and had voluntarily reported them to the relevant authorities.

Reporters could not determine what those activities were.

A Malaysian parliamentary investigation made public earlier this year found that US$4.2 billion of 1MDB’s money was unaccounted for or went to overseas bank accounts whose owners could not be ascertained.

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