Over an 18-month period from Jan 1, 2022 to June 30 this year, the Monetary Authority of Singapore (MAS) enforced $7.88 million in financial penalties and compositions. The sum included $7.1 million which was related to anti-money laundering/counter-terrorism financing (AML/CTF) breaches.
This was part of the MAS’s fourth enforcement report released on Sept 19, which detailed enforcement actions taken against financial institutions (FI) and individuals for market abuse, financial services misconduct and money laundering-related offences.
The report comes just slightly a month after the revelation of the billion-dollar money laundering scandal, one of the biggest that rocked Asia’s financial world of late. The case, initially involving $1 billion worth of seized assets including good-class bungalows, Bentley cars and Patek Philippe watches, has now increased to more than $2.4 billion according to the Singapore Police Force on Sept 20.
At a media briefing on Sept 19, MAS said that for 2023 and 2024, it will continue focusing on asset and wealth managers’ compliance with “business conduct and anti-ML and countering the financing of terrorism requirements”, and will hold senior management accountable for their FI’s lapses where appropriate.
The regulator highlighted progress updates for two ongoing, multi-year cases that were first brought to light in 2020 and 2021.
EHT dents S-REIT’s reputation
The first involves the breach of the Securities and Futures Act (SFA) by Eagle Hospitality Trust (EHT), a REIT that defaulted on its loans less than a year after it was listed in May 2019 in an IPO that was undersubscribed. Among the 18 US hotels in EHT’s portfolio was the Queen Mary, a retired ocean liner that was sold into the REIT at an inflated valuation — along with an attendant list of issues related to upkeep.
Not long after the IPO, various substantial shareholders, including DBS, which arranged the listing, began to cut their respective stakes. This triggered further scrutiny on this counter, made worse by the pandemic that started in early 2020. This then led EHT, controlled by Howard Wu and Taylor Woods, to default on loans totalling some US$341 million.
The case is seen as a dent in the reputation of Singapore’s REITs market, which has gained popularity among investors, and for having attracted overseas assets to list here.
In its update, MAS says that it is in the process of reviewing the large amount of documents seized and information obtained in the course of the investigation and has sought advice from industry experts on the EHT case.
Nickel investment scam
The second involves alleged fraud involving nickel trading by Envysion Wealth Management, now known as Hui Xun Asset Management (HXAM). MAS says it has completed reviewing the documents obtained from HXAM and its interviews with persons acquainted with the case.
To recap, Singaporean businessman Ng Yu Zhi had scammed investors through a nickel investment scheme with at least $1 billion in funds involved. He had also cheated at least $48 million from a fund management company, Envysion Wealth Management. The alleged offences took place between October 2017 and February 2021. Some of Ng’s victims were top legal professionals, including Pek Siok Lan, then general counsel for Temasek, and Thio Shen Yi, joint managing partner of TSMP Law Corporation.
Several high-profile cases fall under this period of investigation by the MAS. These include the investigation of four FI about their dealings with payments systems provider Wirecard-linked persons, commodities giant Noble Group, and hedge fund Three Arrows Capital.
MAS has imposed a civil penalty of $12.6 million on Noble Group for publishing misleading information in its financial statements, in breach of the SFA in August 2022.
It also reprimanded Three Arrows Capital for “providing false information to MAS and exceeding the assets under management (AUM) threshold allowed for a registered fund management company (RFMC)” back in June 2022. Just last week, the MAS imposed a nine-year ban on each of the two co-founders of Three Arrows Capital.
Link to 1MDB scandal
Earlier this month, MAS issued a lifetime ban on ex-Goldman banker Roger Ng, who had already been sentenced to a 10-year jail term by a US court for his role in the 1MDB scandal.
In addition, the regulator made 39 criminal convictions of individuals involved in market misconduct and related offences. This was the result of joint investigations with the Commercial Affairs Department. It also issued 18 prohibition orders against unfit representatives while $12.96 million in civil penalties were imposed on two individuals for false trading and one individual for insider trading as well as one entity for disclosure-related breaches.
The MAS opened 136 cases during this reporting period. Insider trading ranked top with the most number of opened cases at a figure of 32, followed by disclosure-related breaches at 25 cases.
In total, the MAS took an average of 11 months to conclude its cases during the reporting period. A case is deemed open when it is referred to the Attorney-General’s Chambers for criminal prosecution or civil action, approved for regulatory action or when a decision is made to take no further action.
Peggy Pao, executive director (enforcement), MAS, says: “MAS has taken strong enforcement actions and deepened relationships with our partners to uphold the integrity and reputation of Singapore as a trusted financial centre. Even as the novelty and complexity of our cases increase, we will continue to administer an effective and fair enforcement regime in order to deter misconduct, protect consumers and maintain investor confidence."
