Banks and insurer penalized for failing to comply with anti-money laundering and counter-terrorism financing regulations amid Wirecard-linked transactions.
SINGAPORE: The Monetary Authority of Singapore (MAS) has fined DBS, OCBC, Citibank, and Swiss Life a total of S$3.8 million (US$2.83 million) for breaches related to anti-money laundering (AML) and counter-terrorism financing (CTF) requirements. These breaches were uncovered during investigations into their dealings with individuals and entities linked to the Wirecard scandal.
The financial institutions were found to have inadequate controls to detect and prevent money laundering and terrorism financing, particularly involving transactions with or related to Wirecard AG and its associated parties. The penalties imposed were S$2.6 million for DBS, S$600,000 for OCBC, S$400,000 for Citibank, and S$200,000 for Swiss Life, all of which have accepted the penalties.
MAS emphasized that while the breaches were serious, no wilful misconduct was found among the staff of the financial institutions involved.
The Wirecard scandal, which erupted in 2020, involved a massive financial fraud after the company’s auditor revealed that €1.9 billion, supposedly held in escrow by third-party partners, did not exist. The fraud led to a collapse of the company and global repercussions, including the scrutiny of financial institutions in Singapore that had business ties with Wirecard.
DBS’ S$2.6 Million Fine DBS was fined for lapses between July 2015 and February 2020, concerning accounts maintained by 11 corporate customers with links to Wirecard. The bank failed to update key customer information, such as beneficial ownership and money laundering risk ratings, and did not adequately investigate the sources of wealth or large, unusual transactions. DBS acknowledged its failures, stating that the transactions were part of a complex network designed to conceal actual control or ownership, which was not entirely detected despite the bank’s efforts.
OCBC’s Oversight OCBC was fined S$600,000 for similar failures in relation to one corporate customer from June 2015 to January 2016. The bank failed to investigate the background and purpose of unusually large transactions, which were inconsistent with its understanding of the customer’s business. OCBC also did not probe into the customer’s ownership structure, despite discrepancies between the declared beneficial owner and the information in the company’s corporate registration.
Citibank’s Mistakes Citibank received a fine of S$400,000 for lapses from September 2019 to June 2020, when the bank did not investigate unusual transactions from two corporate customers. Citibank failed to verify the control structure of these customers, and it did not question large transactions that had no apparent economic purpose, including an outflow to a party allegedly involved in fraud.
Swiss Life’s Breach Swiss Life was fined S$200,000 for its failure to understand the complex ownership and control structure behind an investment-linked life insurance policy it had underwritten in May 2017. The insurer did not adequately verify the source of wealth of the policyholder’s beneficial owner, which was a breach of anti-money laundering regulations.
MAS stated that all the institutions involved had taken remedial actions, including enhancing their procedures and conducting staff training to improve vigilance in detecting suspicious activities.
“As Singapore grows in importance as an international financial centre, MAS expects financial institutions to step up their controls against illicit financial flows,” said Ms. Ho Hern Shin, deputy managing director of financial supervision at MAS.
No Action Against Citadelle Additionally, MAS announced that no further action would be taken against Citadelle Corporate Services, which was investigated for operating a trust business without a license. The investigation, conducted in collaboration with the Attorney-General’s Chambers, found no breaches of the Trust Companies Act.
This latest round of penalties highlights the importance of strong regulatory oversight as financial institutions are held accountable for their role in preventing financial crimes, especially in light of high-profile scandals like Wirecard.
