Story Highlights
- SAFS was hit with a $2.5 million penalty by MAS for failing to implement proper AML/CFT controls between 2015-2018.
- Breaches included bypassing customer due diligence, inadequate risk assessments, and neglecting suspicious transactions.
- MAS reprimanded the CEO and COO for approving weak controls and a lack of internal audits. Swiss-Asia Financial Services is undertaking remedial measures.
Swiss-Asia Financial Services (SAFS) finds itself in hot water after the Monetary Authority of Singapore (MAS) levied a hefty penalty of $2.5 million for severe anti-money laundering and counter-terrorism financing (AML/CFT) regulation breaches.
Widespread Non-Compliance During Growth Spurt
The penalty stems from a period between September 2015 and October 2018, where MAS identified significant failings in SAFS’ adherence to AML/CFT requirements. This period coincided with significant business growth for Swiss-Asia Financial Services. However, the firm failed to scale up its controls proportionately, leaving it vulnerable to money laundering and terrorist financing risks.
The identified breaches paint a concerning picture. SAFS failed to consider crucial risk factors in its overall risk assessment, a fundamental step in mitigating AML/CFT threats. Even more worryingly, the firm initiated business relationships without conducting proper customer due diligence (CDD) – essentially taking on clients without understanding their background and potential risks. Transactions within customer accounts also went unchecked, with Swiss-Asia Financial Services neglecting to scrutinize the activities of third parties.
These lapses extended to customer risk assessment itself. Swiss-Asia Financial Services inadequately identified and assessed clients who posed a higher risk of money laundering or financing terrorism (ML/TF). This raises serious concerns about the potential infiltration of the financial system by criminals. To make matters worse, the firm failed to report suspicious transactions despite indicators of potential financial crimes. Finally, the lack of internal audits to assess the effectiveness of AML/CFT controls created a blind spot, allowing these issues to persist undetected.
MAS Holds Senior Management Accountable
The seriousness of the breaches is reflected in MAS’ decision to reprimand not just SAFS but also its CEO, Olivier Pascal Mivelaz, and COO, Steve Knabl. They were specifically faulted for approving inadequate risk assessments and failing to conduct regular internal audits to evaluate the effectiveness of AML/CFT controls.
In response to the action by MAS, Swiss-Asia Financial Services has pledged to take remedial measures. These measures aim to address the identified deficiencies and strengthen the firm’s AML/CFT framework. This is a crucial step to regain the trust of regulators and the public.
The MAS action serves as a stark reminder of the importance of robust AML/CFT controls, especially for financial institutions like SAFS that deal with wealth management. As Ms Loo Siew Yee, assistant managing director at MAS, emphasized, the onus lies with senior management to ensure these controls are adequate, actively monitored, and evolve alongside the institution’s business growth.
