The Singapore unit of the UK-based bank has come under fire after the city-state's de facto central bank and financial regulator found it had breached anti-money laundering policies when transferring trusteeships from its Guernsey business two years ago.

Singapore has fined Standard Chartered a total of S$6.4 million ($4.9 million) for breaching anti-money laundering regulations when transferring trusteeships.

The Monetary Authority of Singapore (MAS) said yesterday it had fined Standard Chartered’s Singapore branch S$5.2 million and Standard Chartered Trust (Singapore) S$1.2 million.

The UK-based bank, which has a significant presence in the city-state, breached anti-money laundering policies when trust accounts of Singapore clients were transferred from Standard Chartered Trust (Guernsey) to the Singapore trust business between December 2015 and January 2016.

The MAS found Standard Chartered’s risk management controls were “unsatisfactory”, noting that the transfers were made shortly before Guernsey implemented the Common Reporting Standards, the global tax information sharing initiative, raising “questions of whether the clients were attempting to avoid their CRS reporting obligations”.

However, the bank “did not adequately assess and mitigate against this risk factor, and also failed to file suspicious transaction reports in a timely manner,” the regulator added. 

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Still, the MAS took into account “mitigating factors” when deciding on regulatory action, it said. Standard Chartered had “pro-actively” notified the MAS of its internal review on the trust accounts, and showed “strong commitment” to address deficiencies. 

Standard Chartered’s Singapore operations “have taken prompt and substantive remedial measures” to bolster their anti-money laundering regime, the MAS said. 

“MAS requires financial institutions to adequately assess money laundering risks when deciding whether to accept customers,” the regulator’s deputy managing director, Ong Chong Tee, said. “They should also have in place good systems and processes to monitor customer transactions. We expect financial institutions to remain vigilant by instilling a strong risk culture.”

Josephine Wong, a spokesperson for the bank, said in an emailed statement: "We regret that we fell short of our own standards in adequately mitigating the risks involving some clients who might have attempted to avoid reporting obligations under the Common Reporting Standard by transferring their trusteeships between December 2015 and January 2016. 

"We take this matter very seriously. We proactively reported it to the authorities, conducted a thorough review of the relevant trust structures, and made structural and procedural changes to ensure that our employees are better equipped to identify, assess, and mitigate potential risks. Reinforcing the importance of a robust risk management culture, we have set the tone from the top and continue to cultivate a strong sense of risk awareness across the bank.

"We continue to take ongoing rigorous action to strengthen our controls and culture, including further enhancing our training programmes to ensure that relevant, timely training is provided to enable us to stay updated with the latest developments. We will continue to monitor, review and strengthen these measures to bolster our overall defence against potential financial crime risks."

Last week, Standard Chartered said it had placed its head of compliance, Neil Barry, on leave for an unspecified reason.

Wong, however, said "his leave is not related to the performance or abilities of the [bank's] compliance function", but "we cannot comment further at this time".

Singapore is hot on the heels of banks that fail to comply with its stringent anti-money laundering regulations.

In 2016, for example, the MAS ordered BSI and Falcon, two private banks, to shut shop after it found severe deficiencies in their anti-money laundering policies.