UBO Identification

In a recent move to strengthen anti-money laundering and counter-terrorism financing (AML/CFT) requirements, the Monetary Authority of Singapore (MAS) has imposed composition penalties on several prominent financial institutions. These penalties, totaling S$3.8 million (equivalent to USD2.8 million), were revealed after MAS examinations following the Wirecard scandal and allegations of involvement by Singapore-based entities.

This article explores the key lessons learned from Singapore’s recent penalties and emphasizes the importance of correctly investigating and identifying beneficial ownership structures for AML purposes. By understanding the breaches and failures in investigating beneficial ownership, the increased regulatory focus on AML breaches, and the role of accurate beneficial ownership data, financial institutions can enhance their compliance processes and mitigate potential risks.

Breaches and Failures in Investigating Beneficial Ownership

Several financial institutions in Singapore, including DBS, OCBC, Citibank, and Swiss Life (Singapore), were found in breach of specific requirements related to beneficial ownership structures¹. Let’s take a closer look at each institution’s violations:

DBS

DBS, the largest recipient of the composition penalties, was fined S$2.6 million by MAS for violations that occurred between July 2015 and February 2020. The regulator found that DBS failed to maintain accurate and up-to-date due diligence information on the beneficial ownership of certain customers and neglected to update their risk ratings¹.

OCBC

OCBC overlooked probing into the ownership and control structures when the declared beneficial owners were not named in corporate registration documents. This failure to investigate led to a breach of regulations and subsequent penalties.

Citibank

Citibank incurred a penalty of S$400,000 for breaching regulations related to two corporate customers between September 2019 and June 2020. Despite possessing information that suggested incorrect declarations, the bank failed to grasp the control structure of these customers and correctly identify their beneficial owners.

Swiss Life (Singapore)

Swiss Life (Singapore) received a penalty of S$200,000 for breaches related to an investment-linked life insurance policy in May 2017. The insurer neglected to understand the intricate ownership and control structure of a higher-risk customer and failed to adequately verify the source of the beneficial owner’s wealth.

These examples highlight that not only banks but also companies in other regulated sectors, such as insurance, can risk incurring penalties due to client due diligence failures.

Increased Regulatory Focus on AML Breaches

Singapore’s MAS has emphasized the growing importance of strengthening controls against illicit financial flows as the country assumes an increasingly significant role as an international financial center. In light of this, MAS conducted thorough checks to assess the adequacy of financial institutions’ AML/CFT policies and controls, specifically in their dealings with entities and individuals associated with the Wirecard scandal.

The Role of Accurate Beneficial Ownership Data

During times of heightened regulatory scrutiny, financial institutions in Singapore and worldwide must rely on accurate and official beneficial ownership data. Accessing official sources of information that provide necessary documentary evidence and automate due diligence operations is crucial for compliance and risk mitigation.

One solution that can greatly assist in this regard is Know Your Customer (KYC). KYC stands as the leading provider of real-time registry connections globally and offers unmatched ultimate beneficial ownership (UBO) mapping capabilities fueled by AI and machine learning.

By leveraging KYC’s advanced technologies, financial institutions can streamline their due diligence processes, retrieve UBO information from official company documents, and ensure they maintain relevant and up-to-date information on beneficial ownership structures.

This technology helps identify any complex ownership and control structures, discrepancies, or red flags much faster, enabling swift action to mitigate potential risks and significantly reducing the possibility of oversight and non-compliance.

Conclusion

The recent penalties imposed by MAS on DBS, OCBC, Citibank, and Swiss Life highlight the critical need for financial institutions to investigate and identify beneficial ownership structures accurately. As regulators continue to intensify their scrutiny, relying on accurate and official beneficial ownership data becomes paramount.

Cellbunq’s solutions, including Business Data connections and AI-driven UBO mapping capabilities, equip financial institutions in Singapore and globally to protect themselves against financial and reputational risks. By leveraging these tools, institutions can bolster their AML/CFT measures, ensure compliance, and maintain the integrity of the financial system.

To learn more about how Cellbunq’s solutions can automate registry access and UBO identification processes, request a live demo today