SINGAPORE - Wealth and fund management company Swiss-Asia Financial Services (SAFS) was issued a composition penalty of $2.5 million for breaching the Monetary Authority of Singapore’s (MAS) anti-money laundering and countering the financing of terrorism (AML/CFT) requirements.
MAS said on May 7 that it also reprimanded SAFS’ chief executive officer Olivier Pascal Mivelaz and chief operating officer Steve Knabl for failing to ensure the company complied with these requirements.
In particular, the central bank noted that SAFS experienced “significant growth” in its business from September 2015 and October 2018 although “its AML/CFT controls across a wide range of areas did not keep pace with the growth”.
MAS added that the controls had been “inadequate, resulting in multiple breaches” of its AML/CFT requirements over the same period which, in turn, “exposed SAFS to the risk of financial crime”.
Mr Mivelaz and Mr Knabl were further rapped for not ensuring that regular internal audits were carried out to assess the effectiveness of the company’s anti-money laundering and countering the financing of terrorism controls, in view of the company’s significant business growth during the period.
Breaches uncovered during the central bank’s investigations included failure to account for certain relevant risk factors related to SAFS’ customers and business activities in its enterprise-risk assessment, which had been approved by Mr Mivelaz and Mr Knabl.
The company was also found to have failed to scrutinise multiple third-party transactions in its customers’ accounts, though such transactions were noted by MAS to be “not consistent with SAFS’ knowledge of the customers”.
Other breaches included the failure to identify several customers as being of higher risk for money laundering or terrorism financing (ML/TF) despite red flags, such as a corporate customer with bearer-share ownership.
As bearer shares are owned by an individual holding a physical share certificate, MAS noted that they are “prone to misuse for illicit activities”, given their high level of anonymity.
SAFS did not adequately establish the sources of wealth or funds of certain higher-risk customers, added MAS, nor did the company get approval from its senior management to establish or continue business relations with them.
MAS also flagged the company’s failure to submit suspicious transaction reports on several customers “even though there was sufficient basis to do so” as SAFS was aware of news reports of their customers’ alleged involvement in financial crime.
The central bank noted that SAFS has since “taken the necessary remedial actions” to address these deficiencies.
“Financial institutions (FIs) providing wealth management services to high-net-worth individuals must take commensurate measures to mitigate heightened ML/TF risks,” said Ms Loo Siew Yee, MAS’ assistant managing director for policy, payments and financial crime. “The boards and senior management of FIs are expected to put in place adequate AML/CFT controls, actively oversee the implementation of the controls, and ensure that compliance and internal audit functions are working effectively and keeping pace with the FI’s business growth.” THE BUSINESS TIMES
