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Singapore sets up money laundering and monetary enforcement departments

The Monetary Authority of Singapore (MAS) will set up a dedicated anti-money laundering (AML) department from 1 August, along with a separate department to strengthen the enforcement of its regulations.14 Jun 2016

MAS already has a "robust regime" in place to counter the risk of Singapore's financial sector being used for money laundering and terrorist financing, but international finance is increasingly complex  and there is a need for greater supervision, MAS said

The dedicated AML department will look after all policies on money laundering and other illicit financing risks, MAS said. It will monitor risks and carry out on-site supervision of how financial institutions manage these risks.

"These functions used to be carried out by different departments in MAS; the new structure will enhance supervisory focus," the authority said.

The new enforcement department will also bring together functions that have previously been managed by a range of departments, MAS said.

The department is needed because "with a financial sector that comprises more than 1,500 financial institutions of varying sizes and systemic importance, it is not possible to prevent regulatory breaches and misconduct even with intrusive supervision".

"A strong enforcement capability is necessary to conduct rigorous investigations of suspected violations and misdemeanours and to take swift actions to establish culpability and punish as appropriate the institutions or individuals who have breached MAS’ regulations," MAS said.

The new department will work with the Commercial Affairs department on joint investigations into capital markets misconduct. It will also be responsible for enforcement actions that arise from breaches of MAS' banking, insurance and capital markets regulations, MAS said.

Ravi Menon, managing director of MAS, said: "As our financial centre grows in scale, sophistication, and connectivity, so does the risk of criminal elements abusing our financial system. We will strengthen our supervision of financial institutions’ controls to combat money laundering and illicit financing. And we will enhance our enforcement capability to deter poor controls or criminal behaviour in the industry. MAS is resolved to ensure that Singapore remains a clean and trusted financial centre."

MAS ordered a bank to close last month for failing to meet its obligations to combat money laundering. It was the first time the regulator has closed a bank since 1984.

MAS said BSI Bank's Singapore subsidiary was responsible for 41 breaches of AML regulations, for which the bank has been fined SIN$13.3 million ($9.62m), and that its investigations had revealed "a pervasive pattern of non-compliance" by the company.

"MAS’ decision to withdraw BSI Bank’s status as a merchant bank takes into account the repetitive lapses as well as the 2015 inspection findings which revealed: widespread control failures which led to numerous serious breaches of various anti-money laundering regulations; poor and ineffective oversight by the senior management of BSI Bank; unacceptable risk culture, with blatant disregard for compliance and control requirements as well as MAS’ regulations; numerous acts of gross misconduct by certain staff," MAS said at the time.

Six former staff members at the bank, including former chief executive Hans Peter Brunner and former deputy chief executive Raj Sriram, have been referred to Singapore's public prosecutor by MAS. The prosecutor will "evaluate whether they have committed criminal offences", the regulator said.