MAS imposes over $20M in penalties for AML and market abuse violations

The Monetary Authority of Singapore (MAS) has recorded more than $20 million in penalties in its 4th Enforcement Report, along with its enforcement priorities for 2023-2024. Among other measures, the report details high-profile enforcement actions against four financial institutions for insufficient anti-money laundering and counter-terrorist financing (AML/CFT) measures. The total in penalties is a record amount for MAS within an 18-month period – in contrast, the 2020-2021 report recorded just over $2.7 million. 

“In this reporting period (January 2022 to June 2023), we took robust action … to uphold the integrity and reputation of Singapore as a trusted financial centre,” wrote Ms. Peggy Pao, Executive Director of Enforcement for MAS. “We will continually refine and enhance our processes to ensure that we remain well equipped to deliver effective enforcement outcomes.”

Singapore’s recent anti-financial crime work

The report comes on the heels of recent actions by Singapore authorities to combat financial crime in the nation-state. In August 2023, police made ten arrests, seizing illegal assets worth over $900 million in simultaneous raids nationwide. The raids were the culmination of a forgery and money laundering (ML) investigation facilitated by MAS and the Commercial Affairs Department (CAD). Since the raids, total assets have more than doubled, now valued at over $2.4 billion.

Following this case are reports that Chinese criminal networks are expanding to southeast Asia and moving beyond gambling ventures to include scams.

The Financial Times reported in September that Singaporean banks have responded to this case by upping their financial crime game. In particular, they are now subjecting clients to additional scrutiny, particularly if they are from China or several other jurisdictions deemed high-risk. This has resulted in extended waiting periods for customers in onboarding – as long as three to four months.

The recent MAS report focuses on the importance of strong AML practices within financial institutions.

Severe penalties for AML failures and trading crimes

According to MAS, enforcement actions during the reporting period included:

• $7.88 million in financial penalties and compositions against firms, including banks, insurance providers, and individuals.
• $12.96 million in civil penalties for offenses including insider trading and false trading.
• 39 criminal convictions, including 23 prison sentences, for crimes including insider trading and fraud.

Firms’ AML breaches included customer due diligence (CDD) failures, such as:

• Not sufficiently investigating activity out of line with the firm’s knowledge of their customer.
• Failing to verify a customer’s source of wealth.
• Failing to establish a sufficient understanding of clients’ beneficial ownership and control structures.
• Not performing true ongoing CDD, including failure to perform enhanced due diligence (EDD) or update client risk profiles and beneficial ownership information.

Enforcement actions to bear in mind

The report highlighted two new enforcement priorities alongside the regulator’s evergreen priorities. Firms should study the whole report but take special notice of the following areas of focus:

1. Digital asset ecosystem enforcement – MAS specifically mentioned its plans to introduce additional regulations into the sector to curb money laundering and terrorist financing. It pointed out the cross-border nature of its upcoming enforcement actions and said it plans to collaborate with international authorities in future financial crime cases.
2. Asset and wealth management sector focus – The regulator reiterated its intention to continue close supervision in this sector, in line with its recent actions. For example, in July 2023, it proposed a rule that would close AML loopholes by standardizing licensing exemption criteria for single-family offices (SFOs) – firms responsible for helping individual families manage their wealth. According to the criteria, firms would have to be family-owned and subject to more uniform AML/CFT oversight to be exempt from having to apply for a capital markets services (CMS) license under the Securities and Futures Act (SFA).