The Hong
Kong Monetary Authority (HKMA) has imposed a HK$10 million ($1.28 million) fine
on DBS Bank (Hong Kong) Limited (DBS HK) for breaching anti-money laundering
and counter-terrorist financing regulations. The penalty follows an
investigation that uncovered significant control deficiencies at the bank
between April 2012 and April 2019.
Hong Kong Regulator Fines
DBS Bank HK$10 Million for AML Lapses
The HKMA’s
investigation revealed that DBSHK failed to adequately monitor business
relationships and conduct enhanced due diligence in high-risk situations. The
bank also neglected to maintain proper records for some customers and lacked
effective procedures to fulfill its duties under the Anti-Money Laundering and
Counter-Terrorist Financing Ordinance (AMLO).
“The
HKMA requires banks to implement effective customer due diligence measures to
combat money laundering and terrorist financing,” Raymond Chan, Executive
Director of Enforcement and Anti-Money Laundering at the HKMA, emphasized the
importance of robust compliance practices. “These measures should undergo
regular review to ensure their continued effectiveness.”
Among the
specific lapses identified, DBS HK failed to obtain identity documents for 609
authorizers of its corporate internet banking service, IDEAL, affecting 477
corporate customers. The bank also neglected to establish the source of wealth
for 15 high-risk customers, potentially exposing itself to money laundering and
terrorist financing risks.
“The region’s crackdown on banks’ money laundering
activities marks a significant shift, with regulators intensifying their
efforts,” commented Rory
Doyle, Head of Financial Crime Policy at Fenergo. “This latest fine
against Singapore’s largest bank highlights persistent issues in monitoring
business relationships and conducting enhanced due diligence in high-risk
situations, along with inadequate record-keeping.”
In
determining the penalty, the HKMA considered several factors, including the
seriousness of the findings and the need to send a strong deterrent message to
the banking industry. The regulator also acknowledged that DBSHK has taken
remedial actions to address the identified deficiencies and has no previous
disciplinary record related to the AMLO.
$2.2 Billion Case
A
spokesperson for DBSHK responded to Bloomberg, stating that the
institution takes its AML (Anti-Money Laundering) and CTF (Counter-Terrorism
Financing) procedures “seriously” and accepts the regulator’s
decision. However, they noted that the issues for which the fine was imposed
were “sporadic and historical in nature.”
HKMA fines DBS Hong Kong US$1.28 million after money-laundering investigationThe bank failed to conduct enhanced due diligence in high-risk situations in periods between April 2012 and April 2019, the HKMA says https://t.co/66diAQ1rc1 pic.twitter.com/k4izfNAFrv
— Bien Perez (@BienPerez) July 6, 2024
Last year,
DBS was fined for similar violations, along with Citibank, Oversea-Chinese
Banking Corp. (OCBC), and Swiss Life, for allegedly breaching Anti-Money
Laundering/Counter-Terrorism Financing (AML/CFT) requirements. The total fines
amounted to $2.83 million.
“Banks will
need to enhance their due diligence efforts significantly. Many will need to
perform comprehensive reviews of their compliance systems and quickly implement
necessary upgrades,” added Doyle.
While the
fine is relatively modest, it does not change the fact that one of Singapore’s
largest banks has been involved in several major controversies in the past,
including a billion-dollar money laundering scheme, where the police secured
$2.2 billion.
This article was written by Damian Chmiel at www.financemagnates.com.
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