Singapore’s financial regulator imposed penalties amounting to a total of S$3.8 million ($2.8 million) on four financial institutions for breaches related to the Wirecard AG scandal.
DBS Group Holdings Ltd., Oversea-Chinese Banking Corp. as well as the local entities of Citigroup Inc. and Swiss Life Holding AG were found to have inadequate money laundering and terrorism financing controls in place when they dealt with parties linked to Wirecard, the Monetary Authority of Singapore said in a statement on Wednesday.
The penalties amount to S$400,000 on Citibank N.A., Singapore Branch, S$600,000 on OCBC, S$200,000 on Swiss Life (Singapore) Pte., with the heftiest fine of S$2.6 million imposed on DBS, according to the statement.
Among its breaches between July 2015 and February 2020, DBS failed to adequately establish the source of wealth of higher-risk customers and maintain up-to-date client due diligence and risk ratings. Singapore’s biggest bank also failed to “adequately inquire into the background and purpose of unusually large transactions that were not consistent with its knowledge of the customers or had no apparent economic purpose,” MAS said.
Singapore has been moving to try to curb illicit flows as the country gains in stature as a key financial and wealth hub. In May, Parliament passed a bill that paved the way for banks to share information on potentially risky clients.
Read More: Singapore Will Let Banks Share Client Data to Fight Crime
MAS expects financial institutions in Singapore to step up their controls against facilitating such flows as the country grows in importance as a global financial hub, Ho Hern Shin, deputy managing director of financial supervision at MAS, said in the statement. Firms must have robust measures to know their customers, monitor on-going transactions, and be more vigilant when customers use complex structures, she said.
The penalized firms have addressed the deficiencies identified by MAS, which include boosting their processes as well as training to improve staff’s vigilance in detecting and escalating risk concerns, according to the statement.
Wirecard
Wirecard filed for bankruptcy in 2020 after acknowledging that 1.9 billion euros ($2 billion) it had listed as assets probably didn’t exist. The German firm’s units that operated in Singapore had been asked to cease their payment activities in 2020. This week, two former Wirecard employees were handed prison terms in the city-state, the first criminal convictions related to the fraud at the firm.
DBS is in a better position to respond faster and more robustly if faced with similar circumstances, the lender said in a statement. The Wirecard-related transactions were part of an “elaborately orchestrated scheme,” it added, saying that while it acted upon some of these activities, it was unable to unravel the scheme in its entirety. A spokesperson for Citi Singapore said the bank has taken steps to strengthen its know your customer process.
--With assistance from Andrea Tan.
(Updates with banks’ comments in last paragraph, specific local entity names of banks in third paragraph.)