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Banks in Singapore are intensifying efforts to identify the sources of wealth as the city-state grapples with a ballooning S$2.4bn (US$1.8bn) money-laundering scandal. Scrutiny of customers from various countries, including China, has increased at financial institutions, resulting in longer waiting periods to open private banking accounts, which now range from three to four months, according to wealth advisers, asset managers, and private bankers. Additionally, some existing accounts are being closed.
The longer processing times are not an official rule change but a response to authorities tightening due diligence across the financial sector following the exposure of a transnational money laundering syndicate in August.
The focus of these institutions is on customers from countries such as China, Vanuatu, Turkey, St. Kitts and Nevis, Dominica, and Cyprus. Moreover, individuals with passports from these countries or the People’s Republic of China are being flagged for additional scrutiny.
In August, Singapore police arrested and charged 10 people in one of the country’s largest-ever money-laundering investigations, resulting in the seizure of more than S$2.4bn in assets, including luxury properties, gold bars, designer handbags, cash, crypto assets, and cars. All the suspects had Chinese passports, and the probe has expanded to include banks, precious metals dealers, real estate agents, and golf clubs.
The government has also faced scrutiny over the case due to the apparent lapses in anti-money laundering regulations.
Singapore has seen a significant increase in its appeal as a stable and neutral wealth hub during the coronavirus pandemic. Asset managers have attracted S$448bn in net new inflows of funds in 2021, a 16% increase from the previous year. The number of family offices has also risen sharply from just a few in 2018 to 1,100 by the end of 2022, as reported by the government.
The Monetary Authority of Singapore (MAS), the central bank, has instructed all financial institutions, including asset managers, to scrutinize transactions involving the suspects and individuals/companies connected to them amid the ongoing investigation. CIMB and Citigroup’s local subsidiary have been asked to provide documents, and police have taken control of funds held with Credit Suisse and Bank Julius Baer.
MAS emphasized its commitment to mitigating risks by regularly engaging with regulated entities but did not disclose specific details.
According to a director at a wealth management firm, the longer onboarding process for customers from certain places is due to banks meticulously reviewing their records to ensure no association with individuals/entities on the MAS list. The director also mentioned the closure of accounts held by individuals from those jurisdictions.
A managing director at an international firm catering to various Asian countries stated that processing times for new accounts could now take several months as stricter know your customer and anti-money laundering measures are implemented. The director added that most clients are pleased with Singapore’s crackdown on illicit activities, which indicates the maturity of the country as a financial hub.
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