MAS Shuts Down Falcon Private Bank in Singapore for AML Failures

The Monetary Authority of Singapore (MAS) announced today that it is withdrawing the merchant bank status of Falcon Private Bank, Singapore Branch for serious failures in Anti-Money Laundering (AML) Anti-Money Laundering (AML) Anti-money laundering (AML) is a term that describes laws, processes, and regulations that are intended to prevent illegally obtained funds from being disguised as income gained through legitimate means. The fundamental purpose of the AML laws is to help safeguard, detect, and report suspicious activity including the predicate offenses to money laundering and terrorist financing, such as securities fraud and market manipulation.Most exchanges have AML measures that include identity verification Anti-money laundering (AML) is a term that describes laws, processes, and regulations that are intended to prevent illegally obtained funds from being disguised as income gained through legitimate means. The fundamental purpose of the AML laws is to help safeguard, detect, and report suspicious activity including the predicate offenses to money laundering and terrorist financing, such as securities fraud and market manipulation.Most exchanges have AML measures that include identity verification Read this Term) controls and improper conduct by senior management at the Head Office in Switzerland as well as the Singapore Branch.

The move comes soon after the regulator announced it had stepped up its plans to issue an overhaul to its internal infrastructure and systems in a bid to help curb money laundering, as reported by Finance Magnates in June.

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MAS is also imposing financial penalties on DBS Bank Ltd (DBS) and UBS AG, Singapore Branch (UBS) for breaches of its AML requirements.

The actions on the three banks follow supervisory examinations by MAS into 1MDB-related fund flows that took place through these banks from March 2013 to May 2015. Falcon Bank is the second financial institution after BSI Singapore to be forced to cease operations in the Republic's 1MDB probe.

Falcon Bank

Swiss-headquartered Falcon Bank has been operating as a merchant bank in Singapore since August 2008 offering boutique private banking services. MAS conducted inspections on Falcon Bank in 2013 and 2015 which found weaknesses in the bank’s controls for client acceptance and transaction surveillance that led to breaches of MAS’ AML requirements. Falcon Bank paid a composition fine of S$300,000 for these breaches and MAS instructed the merchant bank to strengthen its AML controls.

A further inspection uncovered an even larger number of regulatory breaches as well as serious failings on the part of Head Office senior management and the Singapore Branch Manager.

As a result of these violations, MAS decided to withdraw Falcon Bank’s status as a merchant bank in Singapore. It has also imposed penalties of S$4.3 million for 14 breaches of MAS regulations relating to the Prevention of Money Laundering and Countering the Financing of Terrorism.

The breaches include failures to adequately assess irregularities in activities pertaining to customer accounts and file suspicious transaction reports.

MAS is currently working with FINMA, the home regulator of Falcon Private Bank, to oversee an orderly closure of the merchant bank branch in Singapore. Clients and customers of Falcon Bank have been assured that the merchant bank has the full support of its Head Office which is financially sound.

DBS and UBS

MAS has also completed its inspections of DBS and UBS in relation to their 1MDB-related fund flows. The inspections revealed several breaches of AML requirements and control lapses. There were deficiencies in the on-boarding of new accounts, weaknesses in corroborating the source of funds, inadequate scrutiny of customers’ transactions and activities, and failure to file timely suspicious transaction reports.

The control lapses observed in DBS and UBS relate to specific bank officers who failed to carry out their duties effectively. MAS’ inspections did not find pervasive control weaknesses within these banks but has nonetheless imposed penalties amounting to S$1 million on DBS for 10 breaches and S$1.3 million on UBS for 13 breaches of MAS regulations relating to the Prevention of Money Laundering and Countering the Financing of Terrorism.

Other Financial Institutions

MAS is finalising its assessment of Standard Chartered Bank, Singapore Branch and is shortly due to make an announcement.

Ravi Menon, Managing Director, MAS said, “Keeping Singapore a clean and trusted financial centre is a shared responsibility. The board and senior management of each financial institution play a pivotal role. They must put in place robust mechanisms to detect suspicious activities, promote strong risk awareness among their staff, and empower their compliance and Risk Management Risk Management One of the most common terms utilized by brokers, risk management refers to the practice of identifying potential risks in advance. Most commonly, this also involves the analysis of risk and the undertaking of precautionary steps to both mitigate and prevent for such risk.Such efforts are essential for brokers and venues in the finance industry, given the potential for fallout in the face of unforeseen events or crises. Given a more tightly regulated environment across nearly every asset class, One of the most common terms utilized by brokers, risk management refers to the practice of identifying potential risks in advance. Most commonly, this also involves the analysis of risk and the undertaking of precautionary steps to both mitigate and prevent for such risk.Such efforts are essential for brokers and venues in the finance industry, given the potential for fallout in the face of unforeseen events or crises. Given a more tightly regulated environment across nearly every asset class, Read this Term people. Most of all, they must set the tone from the top – that profits do not come before right conduct. MAS will work closely with the industry to ensure that standards are kept high and will take strong deterrent actions against institutions that fall short.”