DBS Group Holdings Ltd Has Been Fined By MAS Over 1MDB

On Tuesday, Singapore’s financial industry regulator, the Monetary Authority of Singapore (MAS), had ordered the closing down of the Singapore branch of Swiss bank Falcon Private Bank due to money laundering issues that are linked to the tainted Malaysian sovereign wealth fund, 1MDB.

Falcon Private Bank’s Singapore arm is the second bank to be closed down by the MAS for 1MDB-related issues. The first casualty was BSI Bank, whose parent is also a Swiss bank, BSI SA.

In the same announcement in which the MAS ordered Falcon Private Bank to shutter its doors, the regulator also revealed that it will be fining DBS Group Holdings Ltd (SGX: D05) and yet another Swiss bank, UBS.

DBS, Singapore’s largest bank, was the only Singapore-based bank that was found to have run afoul of regulations in 1MDB-related fund flows. MAS found that DBS had 10 breaches of MAS Notice 626 – Prevention of Money Laundering and Countering the Financing of Terrorism. For that, DBS would be fined a total of S$1.0 million.

DBS’s fine might seem extremely mild when compared to Falcon Private Bank’s punishment. However, MAS indicated that it has found no pervasive control weakness within DBS and that the lapse in compliance was due to “specific bank officers who failed to carry out their duties effectively.”

Falcon Private Bank on the other hand, had “demonstrated a persistent and severe lack of understanding of MAS’ AML [anti-money laundering] requirements and expectations.” In other words, the problems at Falcon Private Bank are a lot deeper when compared to DBS.

The fine on DBS might just be a slap on the wrist for the bank, given the size of its assets and profits (it currently has S$451 billion in assets). But, the incident also highlights the increasing level of regulations within the banking sector.

It’s not just the regulatory environment that’s changing. Banks have also recently been under scrutiny for the environmental practices of their corporate clients. More eyes are being trained on banks. Are the good old days of banking over?

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore writer Stanley Lim does not own shares in any companies mentioned.