Asia: 1MDB puts Singapore private banking on notice
The Monetary Authority of Singapore has come out fighting after its private banking industry was immersed in the 1MDB scandal. A tax amnesty with Indonesia has posed further difficult questions about disclosure and privacy. Now the MAS has to show its teeth without wrecking an industry the country relies on.
1MDB is the scandal that keeps on taking. Having crippled institutional and political trust in Malaysia, brought down senior figures across the Middle East and triggered intensive investigations from Switzerland to the US, it has now given Singapore’s private banking industry its greatest test in a generation.
On October 11, the Monetary Authority of Singapore threw Falcon Bank out of the country – the second bank to be closed down over 1MDB connections, after BSI in May. It fined DBS S$1 million ($720,000) and UBS S$1.3 million for breaches of anti-money laundering requirements and control lapses. Standard Chartered is waiting to learn its own penalty, while the investigation continues.
The amount of money DBS and UBS have been fined is meaningless in the broader scheme of things, but it is clearly intended to send a message.
“We’re not terribly proud of the sanction,” says Piyush Gupta, CEO of DBS. “But if you go back and look at what MAS has cited us on, they are careful to make the point there is no pervasive or systemic problem with DBS’s processes. This [1MDB] was a very well-orchestrated and complex set of layering, by some people who were very thoughtful about what they were wanting to do.