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Singapore to take action against banks as authorities seize assets tied to 1MDB

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Singapore to take action against banks as authorities seize assets tied to 1MDB

Singaporean authorities seized approximately S$240 millionworth of assets as part of their probe into fund flows related to Malaysianstate investment fund 1Malaysia Development Bhd., or 1MDB, as the vowed to take action against certain financial institutions for theirinvolvement in 1MDB-related transactions.

The asset seizures are related to the authorities' investigationinto various 1MDB-related fund flows through Singapore for possible moneylaundering, securities fraud and other offenses, according to a July 21 jointstatement from the Monetary Authority of Singapore, or MAS, theAttorney-General's Chambers and the Singapore Police Force's Commercial AffairsDepartment.

The MAS found lapses and weaknesses in anti-money-launderingcontrols in certain Singapore-based financial institutions. The central bankpromised to take action against these financial institutions.

The central bank completed its of and Singaporebranches of Standard CharteredPlc and UBS GroupAG, and found lapses in specific processes and delays in detectingand reporting suspicious transactions. The MAS will take firm regulatoryactions against the three banks.

The regulator also found substantial breaches of anti-money-launderingregulations in Falcon PrivateBank Ltd.'s Singapore branch. The supervisory examination is stillongoing, and the MAS is still examining information from the bank's head office.

The Swiss private bank is cooperating with Singaporeauthorities in their probe, Reuters reported July 21, citing a spokesman fromFalcon Private Bank.

Singapore is not the only jurisdiction that is looking intoissues related to the Malaysian state investment fund. The MAS announcementcame after the U.S. Justice Department filed lawsuits seeking to more than US$1 billionworth of assets linked to 1MDB. The assets, according to the DOJ, were theresult of US$3.5 billion that was misappropriated from 1MDB, The Wall Street Journal reported July 21.

Meanwhile, regulators in Switzerland are investigating1MDB-related transactions. A spokesman of Switzerland's FINMA said the watchdogbelieves banks being investigated for links with 1MDB had lax money-launderingcontrols, Reuters reported July 21. Previously, the watchdog had found privatebank BSI SA inbreach of money-launderingregulations in connection with 1MDB. The MAS had also BSI as a merchant bank inlight of its serious breach of anti-money-laundering requirements.

The investigations kicked off in 2015 after Malaysiangovernment investigators found that US$700 million of funds have flown into theprivate accounts of the country's Prime Minister Najib Razak from 1MDB througha range of intermediaries.

As of July 20, US$ wasequivalent to S$1.36.