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Singapore Banks Enhance Due Diligence Amid Money Laundering Scandal Aftermath

Singaporean banks are extending their due diligence processes and, in some cases, closing accounts more slowly than usual. This tightening of procedures follows the largest money laundering scandal in Singapore's financial hub, involving $2 billion in assets.

Singapore Banks Enhance Due Diligence Amid Money Laundering Scandal Aftermath

Banks such as Oversea-Chinese Banking Corp Ltd (OCBC), Citigroup Inc, and United Overseas Bank (UOB) are, in certain instances, requesting additional documentation to verify clients' sources of wealth. The waiting period for affluent individuals to open bank accounts has significantly increased from the previous one to three months.

The Monetary Authority of Singapore emphasized the importance of financial institutions verifying customer identities, establishing the sources of wealth and funds for higher-risk clients, and monitoring transactions. The central bank stated that these requirements are not new, as high-net-worth individuals typically undergo more rigorous checks due to the nature and size of their transactions.

These changes in due diligence procedures by banks followed the arrest and charging of 10 foreign individuals, all from China, in connection with the money laundering scandal in August. Authorities seized around $2 billion worth of assets, including luxury real estate, cryptocurrencies, gold bars, designer handbags, and funds held in banks like Credit Suisse and Julius Baer.

A wealth manager with a Singapore bank noted that, post-scandal, only "high-quality clients with good profiles and substantial assets under management" can expect to open private banking accounts within three months.

Singapore's second-largest lender, OCBC, emphasized its dedication to strengthening controls and collaborating closely with regulators and peers to combat illicit activities. Citigroup echoed this commitment and highlighted its collaboration with authorities to protect the financial system's integrity. UOB mentioned its vigilance against money laundering and terrorism financing risks, employing robust checks through data analytics and technology solutions.

Credit Suisse and Julius Baer chose not to comment on the matter.

The money laundering scandal coincided with a significant increase in asset inflows to Singapore from China, Hong Kong, and other regions, drawn by the city-state's political stability, favorable tax policies, and fund-friendly regulations.

According to the latest figures from the central bank, total assets under management in Singapore surged by 16% to S$5.4 trillion in 2021, surpassing the global increase of 12% to $112 trillion that year.

In light of the scandal and its impact on Singapore's reputation as a wealth hub, authorities have intensified inspections of financial firms suspected of involvement.

These increased checks have led to some banks terminating their relationships with clients.

A Chinese national and permanent resident of Singapore revealed that OCBC notified them of the closure of their decade-old account without specifying a reason. The individual believed that the closure was due to suspicions of money laundering because the account had regular transactions with business partners in China.

OCBC did not provide specific comments on this case.

A real estate agent, who advises wealthy individuals both domestic and foreign, reported that the process of opening bank accounts now takes significantly longer for certain clients. Despite the challenges, many agree that it is crucial to prioritize caution to avoid involvement in criminal activities.


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