Singapore banks’ red flags? No English, from Guangdong or Fujian with Hong Kong links

Training to spot financial criminals comes as Citi, DBS, others ramp up vetting after a US$2 billion dirty cash scandal rocked city state

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Buildings are seen illuminated at dusk in Singapore’s central business district. Lenders are trying to close loopholes that enabled a group of criminals from China to launder more than US$2.2 billion through at least 16 financial institutions in Singapore. Photo: Bloomberg

Published: 9:19am, 10 Jun 2024Updated: 3:22pm, 10 Jun 2024

Citigroup Inc., DBS Group Holdings Ltd. and other banks caught up in Singapore’s biggest money-laundering scandal are ramping up scrutiny of their wealthy customers and potential clients to avoid exposure to illicit flows, according to people familiar with the matter.

Private bankers at several institutions are also receiving additional training to help them spot tricks used by criminals to mask their backgrounds and sources of funds, said the people, who asked not to be identified discussing private matters.

The moves, which are voluntary, show how lenders are trying to close loopholes that enabled a group of criminals from China to launder more than S$3 billion (US$2.23 billion) in proceeds from online gambling through at least 16 financial institutions in the island nation. The scandal has tarnished Singapore’s image and exposed weaknesses in how local and foreign banks and brokerages screen their clients.

The Monetary Authority of Singapore recently completed on-site inspections of some banks that were involved in the case. Lenders that had the most dealings with the criminals – through deposit accounts, loans and other financial services – are expected to face fines and other punitive measures from the financial regulator after its review concludes, some of the people said.

The city state’s central bank will assess if the financial institutions have implemented adequate and appropriate controls against money laundering and terrorism financing and will take action if they have fallen short of requirements, as it has done in past cases, it said in response to questions. Supervisory engagements are ongoing, it added.

The Merlion statue and financial district in Singapore. The city state has been reviewing its anti-money-laundering regime and strengthening its defences. Photo: EPA-EFE

After the laundering case became public in August 2023, Singapore’s government set up an interministerial committee to review its anti-money-laundering regime and strengthen defences in sectors including financial institutions, property agents and precious-metals dealers.