DBS Group Holdings’ Hong Kong unit was fined HK$10 million (S$1.7 million) by the city’s regulator for lapses in adhering to anti-money laundering and counter-terrorist financing regulations.
The disciplinary action follows an investigation by the Hong Kong Monetary Authority (HKMA) of DBS Hong Kong’s systems and controls for compliance, the regulator said in a statement. The lapses took place between April 2012 and April 2019.
A DBS Hong Kong spokesperson said the bank takes its anti-money laundering obligations “seriously” and accepts HKMA’s decision, calling the issues at hand “sporadic and historical in nature.” Over the years, the Hong Kong unit has implemented new group policies and its actions have improved its capabilities to detect and mitigate money laundering risks, the spokesperson added.
The fine, while small, will be another stain for Singapore’s largest bank, which is among lenders ensnared in a money laundering scandal in its home city-state. More than S$3 billion of assets have been frozen or seized by the police in this case, and DBS had significant exposure through funds held in its accounts and loans made.
Hong Kong authorities identified a failure to continuously monitor business relationships and conduct enhanced due diligence in high-risk situations. The bank also failed to keep records on some customers, the regulator said.
This included failing to obtain copies of identity documents of 609 authorisers for IDEAL, a corporate internet banking service provided by the bank. No identity verification was conducted against these authorisers from April 2012 to July 2017, according to the HKMA.
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The bank also failed to take “reasonable measures” to establish the source of wealth of high-risk customers to mitigate money laundering or terrorist financing in the business relationships of 15 customers, the regulator said.
“The HKMA requires banks to put in place effective customer due diligence measures to combat money laundering and terrorist financing,” said Raymond Chan, executive director of enforcement and anti-money laundering at the Hong Kong Monetary Authority. BLOOMBERG
