The Monetary Authority of Singapore (MAS) yesterday slapped prohibition orders on two more individuals in relation to the 1MDB scandal. The move provided a sharp reminder of the tough regulatory regime under which the wealth industry is operating and underscored the need to have scale to survive, said Keith Pogson, senior partner for financial services for Asia Pacific at consultancy EY.

Singapore’s financial regulator said it had taken action against Kelvin Ang Wee Keng, formerly with Maybank Kim Eng Securities, and Lee Chee Waiy, formerly with NRA Capital, effective October 30. Both individuals were banned from offering any capital market or financial advisory service for six years.

MAS also said it intended to issue a lifetime prohibition order (PO) against Yeo Jiawei, a former wealth manager at BSI Bank. Yeo has been jailed by a Singapore court for 54 months for money laundering and fraud, according to media reports.

Pogson told AsianInvestor:“The latest announcement is a strong reminder that private banks in Singapore cannot be complacent about compliance. They need to have a full-scale compliance model, which has associated costs. Unless they are big enough to absorb those costs, it doesn’t make much sense to operate in this market.

“Smaller entities will find that they either need to acquire scale or exit the market,” he added. Pogson argued that a bank would need to at least $5 or $10 billion in assets under management to justify operating in Asian markets such as Singapore and Hong Kong.

Other experts have put the figure even higher, saying private banks now needed at least $30 billion in AUM to operate profitably in the region.

Rising scrutiny

MAS has now issued a total of six POs of varying lengths against individuals involved in breaches related to the scandal.

Two individuals were handed lifetime bans on May 30 – former Falcon Private Bank Singapore branch manager Jens Fred Sturzenneger and former BSI managing director Yak Yew Chee.

On Wednesday, MAS said Sturzenegger had appealed against its decision but the appeal was dismissed and the lifetime ban upheld.

The central bank also earlier said it was seeking a three-year PO against former NRA Capital CEO Kevin Scully. Yesterday it said it was reviewing Scully’s written submissions as to why a PO should not be issued against him and would announce its decision when the review is completed.

1Malaysia Development Berhad hit global headlines in 2015 after the state investment fund came under investigation for alleged impropriety, following investigations that indicated millions of dollars had been funnelled into Prime Minister Najib Razak’s bank accounts. 

In the aftermath of the 1MDB revelations, know-your-client (KYC) and other compliance norms, which had been turning more stringent since the global financial crisis, became even tighter for both Hong Kong and Singapore, experts told AsianInvestor previously.

MAS’s most extensive review

MAS’s supervisory review of financial institutions involved in 1MDB flows was, by its own account, the most extensive ever undertaken. The two-year process uncovered a complex web of transactions involving numerous shell companies and individuals operating in multiple jurisdictions, including the US, Switzerland, Hong Kong, Luxembourg and Malaysia.

The review led to the closure of the SIngapore operations of BSI Bank and Falcon Bank as a result of failures to exercise adequate asset management and liability controls and improper conduct by senior management, MAS said.

“Financial penalties of S$29.1 million [$16 million] in aggregate have been imposed on eight banks [BSI Bank, Falcon Bank, DBS, UBS, Standard Chartered, Coutts, Credit Suisse and UOB] for various breaches of AML requirements,” the central bank said in its May 30 notice.