SINGAPORE – Singapore regulators said Friday they will fine two banks a total of over $5.3 million for having breached money laundering rules in dealings with an indebted Malaysian state fund.
The Monetary Authority of Singapore fined the local branch of Standard Chartered Bank, which is headquartered in London, 5.2 million Singapore dollars ($3.6 million) for “significant lapses” in customer due diligence measures and controls.
Regulators also fined the Singapore branch of private bank Coutts 2.4 million Singapore dollars ($1.7 million) for inadequate customer due diligence on “politically exposed persons.” Coutts is winding down its Singapore operations after the Royal Bank of Scotland sold it to Union Bancaire Privee last March.
Singapore’s actions result from findings of a multinational probe into allegations that people close to Malaysian Prime Minister Najib Razak stole more than $1 billion from 1MDB, or 1Malaysia Development Bhd.
“The control lapses stemmed from inadequacies in policies and procedures, insufficient independent oversight of front office staff, and a lack of awareness of money laundering risks among some bank staff,” the monetary authority said in a statement.
In February, Singapore authorities said they had “seized a large number of bank accounts” in connection with the Malaysian fund probe.
Regulators are expected give a final update on their findings in early 2017.
The monetary authority said it planned to impose a 10-year ban on conducting banking business and functions on a former Goldman Sachs executive.
Tim Leissner led Goldman Sachs’ Singapore branch until February although he moved to Hong Kong in 2011. He managed three 1MDB bond issuances from 2012 to 2013 and issued an unauthorized reference letter to a financial institution in Luxembourg last June.
The authority said Leissner falsely claimed the bank had conducted due diligence on businessman Low Taek Jho, who is close to Najib’s family.
It said it was working with foreign “regulatory authorities” to investigate Goldman Sachs’ role in the bond transactions for 1MDB.
A lawyer for Leissner said he had not received any notices or been questioned by the Singapore Monetary Authority.
“Prior to today, Mr. Leissner had not heard of any contemplated regulatory action by the MAS and had not been contacted by the MAS or given any opportunity to respond to the MAS regarding the allegations raised in the notice,” Marc S. Harris of the Scheper Harris & Kim law firm in Los Angeles, California, said in a statement.
“He has been invited by the MAS to respond to the allegations raised in the notice, and he looks forward to doing so,” it said.