Citigroup Inc, DBS Group Holdings Ltd and other banks caught up in Singapore’s biggest money-laundering scandal are ramping up scrutiny of their wealthy customers and potential clients to avoid exposure to illicit flows, people familiar with the matter said.
Private bankers at several institutions are also receiving additional training to help them spot tricks used by criminals to mask their backgrounds and sources of funds, the people said.
The moves, which are voluntary, show how lenders are trying to close loopholes that enabled a group of criminals from China to launder more than S$3 billion (US$2.22 billion) in proceeds from online gambling through at least 16 financial institutions in the island nation.
Photo: Edgar Su, Reuters
The scandal has tarnished Singapore’s image and exposed weaknesses in how local and foreign banks and brokerages screen their clients.
The Monetary Authority of Singapore (MAS) recently completed on-site inspections of some banks that were involved in the case.
Lenders that had the most dealings with the criminals — through deposit accounts, loans and other financial services — are expected to face fines and other punitive measures from the financial regulator after its review concludes, some of the people said.
The MAS would assess if the financial institutions have implemented adequate and appropriate controls against money laundering and terrorism financing, and would take action if they have fallen short of requirements, as it has done in past cases, a MAS spokesperson said in response to questions from Bloomberg News.
Supervisory engagements are ongoing, the spokesperson said.
After the laundering case became public in August last year, Singapore’s government set up an inter-ministerial committee to review its anti-money laundering regime and strengthen defenses in sectors including financial institutions, property agents and precious metals dealers.
The assets seized by authorities included cash, gold bars, jewelry, cars, and residential and commercial properties.
The 10 accused have pleaded guilty, and have been sentenced to prison for 13 to 17 months. Another 17 people are under investigation and remain at large.
The 10 convicted individuals were linked to accounts across 16 financial institutions operating in Singapore that held more than S$370 million in deposits and investments.
The banks that held the most assets include Credit Suisse Group AG, Citigroup’s local unit and United Overseas Bank Ltd.
DBS is also among banks tightening their processes for vetting major transactions by clients, the people said.
The country’s largest bank had about S$100 million in exposure, mainly from financing property purchases.
Anti-money laundering processes are evolving to keep up with changes in how criminals act, as well as regulatory and industry developments, a DBS spokesperson said.
“Criminals will adapt their behavior now that there has been discovery of their methods, so we will need to continue thinking about how to stay one step ahead,” the DBS spokesperson added.
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