Quoteworthy: "That’s what the great embarrassment for dictators — when they didn’t know what happened." –— US president Joe Biden made a public political provocation by referring to China’s Xi Jinping as a “dictator”
MAS penalises Citibank, DBS and OCBC O39 for breaches of anti-money laundering requirements
The Monetary Authority of Singapore (MAS) has imposed composition penalties amounting to $3.8 million on Citibank Singapore, DBS Bank and OCBC Singapore, as well as insurer Swiss Life (Singapore), for breaches of the central bank’s anti-money laundering (AML) requirements.
The breaches were identified during MAS’s investigation of the alleged involvement of Singapore-based individuals and entities in the Wirecard scandal. MAS says it cannot comment on whether its investigations into control deficiencies in financial institutions named in the media about Wirecard’s fraud revealed any illicit fund flows, which remains within the remit of the Singapore Police Force’s Commercial Affairs Department (CAD).
Wirecard, a Germany-based payments processing firm now insolvent, had significant operations in Singapore. Its former CEO Markus Braun is now on trial in Germany for fraud, market manipulation and false accounting.
The central bank says the financial institutions, which have accepted the penalties, were found to have had inadequate AML controls in place when dealing with individuals who were involved in transactions with or had links to Wirecard or its related parties.
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In its media statement, MAS says that although the breaches were serious, it did not find “wilful misconduct” by any staff of the penalised financial institutions. “The financial institutions have taken prompt remedial actions to address the deficiencies identified by MAS,” it adds. These actions include enhancements to their procedures and processes and training to improve staff vigilance in detecting and escalating risk concerns.
DBS, which received most of the total penalty amount, was issued a composition penalty of $2.6 million for breaches between July 2015 and February 2020 relating to accounts maintained by 11 corporate customers.
MAS says DBS had failed to maintain relevant and up-to-date customer due diligence information relating to customers’ beneficial ownership or to update customers’ money laundering and terrorism financing risk ratings, which resulted in the bank’s failure to perform timely enhanced due diligence measures on the customers.
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DBS failed to adequately establish the source of wealth of higher-risk customers and their beneficial owners, relying instead on customers’ representations of their wealth without adequate corroboration. The bank also did not adequately inquire into the background and purpose of unusually large transactions that were not consistent with its knowledge of the customers or had no apparent economic purpose, says MAS. In response, DBS says it takes its AML obligations “seriously” and accepts the regulator’s decision. DBS explains that the transactions were part of an elaborately orchestrated scheme.
Meanwhile, OCBC was imposed a $600,000 composition penalty for breaches between June 2015 and January 2016 relating to accounts maintained by one corporate customer.
MAS says that OCBC failed to inquire into the background and purpose of transactions even though they were inconsistent with OCBC’s knowledge of the customer and its business. They were unusually large and exhibited an unusual pattern with no apparent economic purpose. OCBC failed to probe into the customer’s ownership and control structure when the customer-declared beneficial owner was not a party named in the customer’s corporate registration documents. An OCBC spokesperson says it has since devoted “significant resources” to improve its AML standards and capabilities.
Citibank was handed a $400,000 composition penalty for breaches between September 2019 and June 2020 relating to accounts maintained by two corporate customers.
According to MAS, Citibank failed to adequately understand the control structure of the customers and failed to correctly identify the customers’ beneficial owner, despite having information which suggested that the control structure and beneficial owners declared by the customers were incorrect. Citibank also failed to inquire into unusually large transactions that had significantly exceeded one customer’s past transaction amounts and had no apparent economic purpose. This included an outflow to a party allegedly involved in fraud. “The case dates back to before June 2020, and since then, we have taken steps to strengthen our know your customer (KYC) process,” says a Citi Singapore spokesperson.
As for Swiss Life, a composition penalty of $200,000 was imposed for breaches in May 2017 relating to an investment-linked life insurance policy underwritten by the insurance company. MAS says it failed to sufficiently understand the reasons behind the higher-risk customer’s complex ownership and control structure and adequately corroborate the source of wealth of the customer’s beneficial owner.
The central bank’s investigation into Citadelle Corporate Services for its suspected contravention of the Trust Companies Act (TCA) by carrying on a trusted business without a licence did not reveal any breaches committed by Citadelle. MAS will therefore be taking no further action against Citadelle.
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On June 20, two former employees of Wirecard Asia were jailed in Singapore for their involvement with embezzling funds from the subsidiary of the German-registered international payment services company, the first Wirecard-related conviction globally. — Bryan Wu
Grab cuts 1,000 jobs, maintains on track to meet earnings target
Under pressure to turn around, Nasdaq-listed Grab Holdings is cutting 1,000 jobs or 11% of its headcount, Reuters reported, citing a memo sent by CEO Anthony Tan. The cuts, the biggest since the start of the pandemic, were not “a shortcut to profitability” but a strategic reorganisation to adapt to the business environment, says Tan.
“Change has never been this fast. Technology such as generative AI (artificial intelligence) is evolving at breakneck speed. The cost of capital has gone up, directly impacting the competitive landscape,” Tan said in the letter.
Grab joins other regional big tech firms, GoTo and Sea, in mass layoffs, suggesting that Grab is succumbing to investor pressure for faster cost reduction. Grab added more than 3,000 staff in 2022, largely because it acquired supermarket chain Jaya Grocer, taking its total headcount to about 11,934 staff as of the end of 2022.
Tan maintains that even without the retrenchments, the company is on track to hit its target for adjusted ebitda breakeven this year. For its 1QFY2023 ended March, Grab’s revenue increased by 130.3% y-o-y to US$525 million ($704 million) but remains in the red to the tune of US$250 million. — The Edge Singapore
Maybank reaffirms sustainability push with RM4.5 billion for tech and talent
Maybank plans to invest up to RM4.5 billion ($1.3 billion) over five years to speed up its technology and talent capabilities, emphasise its sustainability-first practices and influence its wider operating ecosystem.
The bank aims to achieve carbon neutrality in Scope 1 and 2 emissions by 2030 and net zero carbon equivalent by 2050. As for the so-called Scope 3, Maybank is already working with key clients to support their decarbonisation journey.
Maybank says that 70% of its financed emissions come from less than 100 customers from top contributing sectors such as power and utilities, oil and gas, agriculture and construction.
“We are believers in the resilience of the region, and Maybank is committed to enabling clients wherever they are and supporting the evolution of their businesses,” says Maybank Group’s president and CEO Khairussaleh Ramli, at the Maybank Invest Asean conference on June 20.
A key theme of the conference, now in its 10th edition, is to showcase how Asean has been the net beneficiary of the re-shaping of trade and investments trends, plus the deepening of supply chains due to US-China tensions.
“The region is not immune to the rising risks of global fragmentation and geopolitical conflicts. Businesses must be prepared to manage vulnerabilities and respond swiftly to new opportunities,” says Khairussaleh.
Amid these shifts, there are clear opportunities. “The reshaping of their businesses will have far-reaching implications like new jobs, greener economies and just transition pathways towards creating more equitable societies,” he adds.
The bank has mobilised RM38.8 billion of sustainable financing cumulatively from 2021 to the end of March this year and is well underway to achieve its target of RM80 billion of sustainable financing by 2025.
Maybank Investment Banking Group CEO Michael Oh-Lau expects investments into renewables and other green technologies to accelerate this year. He says the investments will be mainly supported by sustainable debt financing, adding: “With the Asean Capital Market Forum’s (ACMF) Sustainability-Linked Bond Standards in place, industries have greater flexibility in participating in the sustainable finance market.”
“We can anticipate higher issuances of sustainability-linked and transition instruments in addition to the conventional green, social or sustainability instruments. We are at a pivotal point in the transition journey of Asean.”
Maybank, a leading player in Islamic finance activities, sees more opportunities across the wider market of quality, ethical investments. “As a group, we shall leverage Malaysia’s strength and build Singapore and Indonesia with our Singapore office as the Islamic wealth management hub for Maybank to capture cross-border wealth management flows,” says Maybank Singapore country CEO Dr John Lee.
“Singapore is a major financial centre for the intermediation of capital flows, and is increasingly seen as Asean’s green financing hub, accounting for over 50% of green financing activity in the region.”
He adds: “In view of these trends, we are well-positioned to grow our IWM business which integrates both ESG and Shariah principles.” — The Edge Singapore
