Of the five countries now probing the state fund’s finances, according to a report in the Straits Times (ST), Singapore is the only one so far to have secured convictions.
In answer to the scandal, apart from the probe, the Monetary Authority of Singapore (MAS) this year set up its own anti-money laundering department to monitor risks and supervise financial institutions. It also introduced more stringent anti-money laundering requirements for corporate services providers, lawyers and public accountants.
The report quoted observers as saying Singapore’s regulators had responded swiftly against individuals and banks that had acted as conduits for illegal fund flows from 1MDB.
MAS shut down two private banks – BSI and Falcon – and fined DBS Group, UBS and Standard Chartered Bank for lapses in money laundering controls.
Two former BSI bankers have pleaded guilty to forgery and failing to report suspicious transactions, and have been sentenced to prison and fined. One other former BSI banker, Yeo Jiawei, who claimed trial on charges of tampering with witnesses, was found guilty yesterday.
The transactions at 1Malaysia Development Bhd (1MDB), considered one of the world’s biggest financial scandals, had marred Singapore’s prized reputation as a trusted financial centre, said the report.
It also highlighted the lapses by some banks in failing to adhere to anti-money laundering controls.
The ST report said as much as US$4 billion (RM18 billion) was alleged to have been looted from 1MDB.
It noted that United States prosecutors, who launched a civil case to seize assets linked to the probe, had named Malaysian businessman Low Taek Jho, better known as Jho Low, as the mastermind behind the alleged money laundering scheme.
The United Nations Office On Drugs And Crime estimates that about US$2 trillion or 2% to 5% of global gross domestic product is laundered annually.
Samuel Sharpe, a partner at Duane Morris & Selvam, told the ST that no anti-money laundering system was perfect, given the size of the problem.
“The question is whether everything was done that should have been done.
“The focus of the investigation here appears to relate to bank accounts where 1MDB money may have been held or passed through, meaning the behaviour of certain banks and some individual bankers was of concern. Did they discharge their legal duties by screening their customers and were the transactions handled properly?” he asked.
The 1MDB probe showed that some of the biggest financial institutions in Singapore were not following rules on compliance, but, according to Sharpe, the actions taken by MAS have prompted organisations to review procedures.
“I don’t see any serious harm being done to Singapore’s reputation as a financial hub. There is no suggestion of any failure in the laws in place.
“If there is anything positive to come out of the 1MDB-related probe, it is there is now a greater awareness of the risks of money laundering and a renewed focus on compliance,” the ST quoted Sharpe as saying.