(Bloomberg) — Singapore’s financial regulator will conduct an on-site inspection of Credit Suisse Group AG after at least one of its clients was accused of money laundering in a scandal that has rocked the city-state.
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Credit Suisse’s local unit will be among the banks that the Monetary Authority of Singapore plans to examine to determine whether it is properly handling the surveillance of wealthy clients, according to people familiar with the matter. Officials from the regulatory body are scheduled to interview employees and review documents within weeks, said the people, who asked to remain anonymous because the information is not public.
The planned inspection confirms the seriousness of the scandal that affected at least 10 local and international banks in the Asian financial center. A group of alleged money launderers of Chinese origin have had assets worth more than S$2.8 billion (US$2 billion) seized, ranging from cash to jewellery.
The sources said that the Monetary Authority of Singapore’s upcoming visit will be outside its regular engagements with banks, and points to potential problems related to lenders’ high exposure to suspects and comprehensive handling of customer screening. Credit Suisse is among the banks that have relationships with the defendants or their companies. One of the suspects, Fang Xueming, held S$92 million in the Swiss bank, the largest account known so far in the case.
Credit Suisse declined to comment. A MAS spokesman referred Bloomberg News to comments made in Parliament this month by State Minister Alvin Tan, who said the regulator was conducting supervisory reviews and inspections of banks with a “key connection” to the case. Tan also said it was worrying that financial assets made up the bulk of what had been seized so far.
For Credit Suisse, the review is just one of many problems that new parent UBS Group AG will have to deal with as it focuses on integrating thousands of employees from its former rival around the world. The Monetary Authority of Malaysia conducted a similar examination on Credit Suisse in 2017 for its role in the 1MDB saga, Malaysia’s largest corruption case, and subsequently fined the bank S$700,000. This amount was the smallest penalty imposed by the regulator on banks in Singapore at the time.
In the case of 1MDB, MAS’s actions in the wake of the scandal also included banning financiers for violations and closing the local units of two Swiss banks.
Besides Credit Suisse, Vang also had bank accounts with others including Julius Baer Bank where he had S$33 million as well as United Overseas Bank Ltd. and the local unit of RHB Bank Bhd, according to police statements. Other charges against Fang include forging a bank document to deceive Citibank Singapore Limited.
Another suspect, Wang Dehai, stashed millions at UBS, Industrial and Commercial Bank of China Limited and Bank of China Limited in Hong Kong, according to a police affidavit seen by Bloomberg News after a court hearing on Wednesday. Wang has been wanted in China for alleged illegal online gambling activities since 2017, according to the document, which referred to UBS as Union Bank of Switzerland.
The sources added that it was not clear what other banks would be subject to the MAS inspection, which could look at what red flags were raised internally and when so-called suspicious transaction reports were filed.
After the case broke in August, banks in the city-state intensified existing scrutiny of customers, especially those of Chinese origin who hold multiple passports, Bloomberg reported last month. The authorities are also looking into how one or more of the defendants are linked to single family offices with incentives, and will tighten the rules where necessary.
Communications Minister Josephine Teo told Parliament that investigations into the money laundering network date back to 2021 after banks and companies submitted reports of suspicious transactions. The authority said earlier that these reports alerted the authorities to an attempt to carry out suspicious activities through the country’s financial system.
–With assistance from Joyce Koh and Lou De Wei.
(Updates with UBS and the involvement of two major banks in the scandal in the ninth paragraph. An earlier version was updated with details of MAS actions after another scandal.)
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