Singapore to Enhance Money Laundering Controls Amid 1MDB-Linked Investigation, Reports Reuters

By Saeed Azhar and Marius Zaharia

SINGAPORE (Reuters) – Singapore’s central bank announced plans to strengthen measures against money laundering and take decisive action against banks following troubling findings related to the management of funds associated with the Malaysian state investment fund 1MDB.

Ravi Menon, managing director of the Monetary Authority of Singapore, acknowledged at an annual press conference that the recent revelations have affected Singapore’s standing as a clean and reliable financial hub. He emphasized that the authority is committed to resolving these issues collaboratively with the banking industry.

Menon stated that the central bank will enhance its enforcement efforts, carry out thorough investigations, and promptly address misconduct among financial institutions.

This response comes in the wake of news that authorities had seized S$240 million (approximately $177 million) of assets in connection with potential money laundering linked to 1MDB. Investigations revealed issues involving three major banks: DBS Group Holdings Ltd, UBS AG, and Standard Chartered.

Additionally, an inspection in April 2016 of Falcon Private Bank, a Swiss institution owned by a prominent sovereign wealth fund, uncovered significant violations of anti-money laundering regulations, as reported by the Monetary Authority of Singapore.

This follow-up follows the central bank’s announcement in May concerning the closure of BSI AG’s operations in Singapore due to serious breaches of anti-money laundering rules—marking the first such decision in over three decades.

While Menon refrained from discussing specific ongoing investigations involving banks and financial institutions, he highlighted the financial sector’s particular vulnerability to money laundering and illicit financial activities.

The authority is considering a new approach to address money laundering violations, which may include publicly naming and shaming banks for substantial infractions, a shift from the previous practice of keeping such investigations private.

Menon also mentioned that the central bank is exploring the application of machine learning algorithms to detect manipulative trading practices and identify money laundering transactions. He remarked that it is neither feasible nor ideal for the authority to scrutinize every transaction within the financial markets; rather, each financial institution must uphold high standards of risk management and ethical conduct at all levels.

Between 2013 and 2016, the Monetary Authority conducted 608 inspections of financial institutions, representing a sixfold increase compared to the period from 2010 to 2013.