STANCHART UNDER PROBE OVER US$1.4b CLIENT TRANSFERS
Regulators investigating transfer of US$1.4b in client assets to Singapore
REGULATORS in Europe and Asia are investigating Standard Chartered Plc (StanChart) over the role staff may have played in transferring US$1.4 billion (RM5.92 billion) of private bank client assets from Guernsey to Singapore before new tax transparency rules were introduced, said people with knowledge of the probes.
The bank conducted an inquiry and notified regulators after employees raised questions early last year about the timing of the transactions and whether the source of customers’ funds had been properly vetted, said the people.
The assets — held in its Guernsey trust unit for mainly Indonesian clients, some of whom had links to the military — were moved in late-2015 before the Channel Island adopted the Common Reporting Standard, a global framework for the exchange of tax data, at the start of last year, said the people.
StanChart shuttered its operations on the island last year.
The Monetary Authority of Singapore, the country’s central bank, and Guernsey’s Financial Services Commission were investigating the chain of events, said the people.
The United Kingdom Financial Conduct Authority, StanChart’s home regulator, was aware of the transfers, but wasn’t reviewing them, said a source.
StanChart’s processes and the way the transfers were handled were being examined, but regulators hadn’t suggested that bank employees colluded with clients to evade tax, they said.
Chief executive officer Bill Winters had dealt with a near-constant stream of misconduct issues old and new in his two-year tenure, from violating United States sanctions on Iran to accusations of bribery in Indonesia.
The bank remains under the scrutiny of an independent monitor until December 2018 as part of a deferred prosecution agreement with the US in 2012. It has paid almost US$1 billion in settlements for engaging in deals with Iran and for failing to improve anti-money laundering systems. If the lender slips up significantly again, it could face further fines or even the loss of its US banking licence.
A focus of the bank’s internal investigation was whether StanChart had adequately scrutinised the source of the customers’ funds and performed the appropriate “know your client” due diligence, said the people.
Employees of the trust in Guernsey and relationship bankers in Singapore flagged the US$1.4 billion of asset transfers, when they were first proposed in 2015, noting a sudden flurry of requests in what was previously a static series of accounts, said the sources. The transfers were approved by StanChart’s financial crime compliance team after a review, they said.
Guernsey staff highlighted disparities between the earnings of some customers and balances in their accounts: in the most egregious cases, clients had a stated annual income of tens of thousands of dollars yet held tens of millions in their accounts, said the people. AFP