Swiss-Asia Financial Services fined S$2.5m for AML breaches

The Monetary Authority of Singapore (MAS) has imposed a fine of S$2.5m on Swiss-Asia Financial Services (SAFS) for breaches of MAS’ anti-money laundering and countering the financing of terrorism (AML/CFT) rules. 

MAS said in a statement on 7 May that it also issued a reprimand to SAFS’ chief executive officer (CEO), Olivier Pascal Mivelaz, and its chief operating officer (COO), Steve Knabl, for failing to discharge their duties and functions of ensuring that SAFS complied with MAS’ AML/CFT requirements.

Loo Siew Yee, assistant managing director (Policy, Payments & Financial Crime), MAS, said: “Financial institutions (FIs) providing wealth management services to high net worth individuals must take commensurate measures to mitigate heightened ML/TF risks.

"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.”

Between September 2015 to October 2018, SAFS, a wealth and fund management company, experienced significant growth in its business.

However, its AML/CFT controls across a wide range of areas did not keep pace with the growth and had been inadequate, resulting in multiple breaches of MAS’ AML/CFT requirements over the same period.

This exposed SAFS to the risk of financial crime. The breaches uncovered during MAS’ inspection included the following:

  • Failure to take into account certain relevant risk factors relating to the company’s customers and business activities in its enterprise-wide risk assessment (EWRA);
  • Failure to perform customer due diligence (CDD) measures before establishing business relations. SAFS’ practice was to establish business relations with customers before CDD measures were completed;
  • Failure to scrutinise multiple third-party transactions in customers’ accounts even though the transactions were not consistent with SAFS’ knowledge of the customers;
  • Failure to identify a number of customers to be of higher money laundering or terrorism financing (ML/TF) risk even though there were red flags (e.g., a corporate customer with bearer share ownership [1] ), resulting in failure to perform enhanced CDD measures on those customers. For other customers that the company had identified to be of higher ML/TF risk, SAFS failed to adequately establish the source of wealth and/or the source of funds of the customers and their beneficial owners. SAFS also did not obtain approval from its senior management to establish or continue business relations with some of these higher-risk customers;
  • Failure to submit suspicious transaction reports in relation to several customers even though there was sufficient basis to do so (e.g., SAFS was aware of news reports of customers’ alleged involvement in financial crime); and
  • Failure to conduct any internal audit to monitor the effectiveness of the company’s AML/CFT controls and its compliance with regulatory requirements.

MAS also issued a reprimand to Mivelaz and Knabl for failing to discharge their respective duties and functions of their offices as CEO and COO to ensure that SAFS complied with MAS’ AML/CFT requirements.

In particular, they had approved the inadequate EWRA. They also failed, over a period of four years, to ensure that regular internal audits were carried out to assess the effectiveness of SAFS’ AML/CFT controls in view of the company’s significant business growth during that time.

SAFS has taken the necessary remedial actions to address the deficiencies identified by MAS.

 

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