Singapore’s Monetary Authority to Inspect Credit Suisse in Money Laundering Scandal

The Monetary Authority of Singapore’s decision to conduct an on-site inspection of Credit Suisse underscores the seriousness of the money laundering scandal and the regulatory imperative to ensure that banks adhere to robust client vetting and money laundering prevention measures.

Singapore’s financial regulator, the Monetary Authority of Singapore (MAS), is set to conduct an on-site inspection of Credit Suisse Group AG, one of the banks embroiled in a money laundering scandal that has recently shaken the city-state. This decision comes after at least one of Credit Suisse’s customers was charged with money laundering, and it’s part of a broader effort by the MAS to determine whether banks properly handled the monitoring of their wealthy clients.

This scandal has had a significant impact on the reputation of at least ten domestic and international banks operating in Singapore. A substantial amount of assets, totalling more than S$2.8 (about $2 billion), were seized from a group of alleged money launderers with Chinese origins.

The planned inspection of Credit Suisse, which is a unit of the bank, is a clear indication of the seriousness of this issue and the need for regulatory intervention. The MAS is expected to interview personnel and review documents in the coming weeks, a move that is somewhat outside its regular engagements with banks. It underscores potential concerns related to the lenders’ exposure to the suspects and their overall handling of client vetting.

Credit Suisse is among the banks that have relationships with either the accused individuals or their associated companies. One of the suspects, Vang Shuiming, held S$92 million in an account at Credit Suisse, making it the largest known account associated with this case.

When approached for comments, Credit Suisse declined, but an MAS spokesperson referred to recent comments made in parliament by Minister of State Alvin Tan. In these remarks, Tan stated that the regulator is actively conducting supervisory reviews and inspections of banks with “a major nexus” to the money laundering case. He also expressed concern that financial assets made up the vast majority of what had been seized so far.

This is not the first time Credit Suisse has faced such scrutiny in Singapore. In 2017, it underwent a similar inspection regarding its role in the 1MDB saga, Malaysia’s biggest corruption case. As a result of that investigation, the bank was fined S$700,000. Interestingly, this amount was the smallest penalty imposed on banks in Singapore at the time.

Apart from Credit Suisse, the suspects in this money laundering case held accounts with other banks, including Bank Julius Baer, where Vang had S$33 million, as well as United Overseas Bank Ltd. and RHB Bank Bhd.’s local unit. One of the charges against Vang includes the forgery of a bank document to deceive Citibank Singapore Ltd.

Another suspect, Wang Dehai, had millions stashed in UBS, Industrial & Commercial Bank of China Ltd, and Bank of China Ltd. in Hong Kong, according to a police affidavit. Since 2017, Wang has been wanted in China for alleged illegal online gambling activities. The inspection will likely look into what red flags were raised internally and when suspicious transaction reports were filed, particularly related to the suspicious activities of these customers.

Following the eruption of this case in August, banks in Singapore have intensified their scrutiny of clients, particularly those of Chinese origin holding multiple passports. Authorities are also investigating whether one or more of the accused individuals may have been linked to single-family offices with financial incentives. Regulatory rules may be tightened as a result.

Investigations into this money laundering ring date back to 2021 when banks and companies filed suspicious transaction reports. According to Josephine Teo, the Minister of Communications, these reports alerted authorities to suspicious activities attempted through Singapore’s financial system.

The Monetary Authority of Singapore’s decision to conduct an on-site inspection of Credit Suisse underscores the seriousness of the money laundering scandal and the regulatory imperative to ensure that banks adhere to robust client vetting and money laundering prevention measures. The case serves as a reminder of the need for rigorous oversight and vigilance within the banking industry.