HKMA fines DBS Hong Kong US$1.28 million after money-laundering investigation

The penalty comes after an investigation by the city’s de facto central bank found that DBS failed to “continuously monitor business relationships and conduct enhanced due diligence in high-risk situations during various periods between April 2012 and April 2019” and to keep records regarding some of its customers, the HKMA said in a statement on Friday.

“The HKMA requires banks to put in place effective customer due diligence measures to combat money laundering and terrorist financing,” said Raymond Chan, executive director of the HKMA’s enforcement and anti-money-laundering unit. “These measures should be subject to regular review to ensure that they remain effective.”

DBS Hong Kong failed to take reasonable measures to establish the source of wealth and the source of funds of high-risk customers between December 1, 2018 and February 28, 2019, and to take additional measures to mitigate the risk of money laundering or terrorist financing involved in its business relationships with 15 customers during the period, the HKMA said in a statement of disciplinary action released on Friday.

Between April 1, 2012 and April 30, 2019, the bank also failed to establish and maintain effective procedures to provide sufficiently detailed guidance that would assist analysts in examining transaction alerts and documenting their findings, the HKMA said.

Between March 1 and September 30, 2017, DBS Hong Kong also failed to identify transactions that had no apparent economic or lawful purpose when reviewing alerts generated from its transaction monitoring system, as well as to examine the background and purpose of suspicious transactions and set out the findings in writing, with respect to 15 customers, HKMA said.