Singapore MAS Fines Brokerage UOB Kay Hian $267,000 for Failure in Compliance, IPO Due Diligence, Red Flags for Nominee Arrangement, Anti-Money Laundering
1st September 2022 | Singapore
Singapore central bank Monetary Authority of Singapore (MAS) has fined brokerage UOB Kay Hian $267,000 (S$375,000) for failure in compliance, IPO due diligence, Red Flags for nominee arrangement & Anti-money laundering. For UOB Kay Hian corporate finance business (2012 to 2018), brokerage firm UOB Kay Hian had failed to sufficiently involve compliance in senior management meetings, failed to meet IPO due diligence standards (Association of Banks in Singapore Listings Due Diligence Guidelines), and inadequate internal audit including no internal audits done since establishment in Sept 2012. Between 2016 to 2017, UOB had also breached MAS anti-money laundering & countering the financing of terrorism (AML/CFT) requirements, failing to verify customers’ source of wealth during on-boarding, accepting substantial 3rd party payments for IPO without adequate due diligence, failing to detect & report suspicious transactions despite red flags of potential nominee arrangements. Singapore MAS: “UOBKH’s breaches of AML/CFT requirements exposed it to the risk of being used as a conduit for financial crime. UOBKH has taken remedial measures to enhance their internal policies and controls. In addition, MAS has required UOBKH to appoint an independent external party to validate the implementation and effectiveness of its remediation measures and report the findings to MAS.” Loo Siew Yee, MAS Assistant Managing Director (Policy, Payments & Financial Crime): “MAS expects capital markets services licensees to comply with all business conduct and AML/CFT regulations, including ensuring that its control functions act as an effective and independent line of defence against risks. Boards and Senior Management of licensees should exercise strong oversight of risk management and inculcate a high level of AML/CFT and compliance risk awareness among staff.”
“ Singapore MAS Fines Brokerage UOB Kay Hian $267,000 for Failure in Compliance, IPO Due Diligence, Red Flags for Nominee Arrangement, Anti-Money Laundering “
Singapore MAS Fines UOB S$375,000
The Monetary Authority of Singapore (MAS) has imposed a composition penalty of S$375,000 on UOB Kay Hian Private Limited (UOBKH) for its failures to comply with business conduct requirements under the Securities and Futures (Licensing and Conduct of Business) Regulations (SFR) and anti-money laundering and countering the financing of terrorism (AML/CFT) requirements under MAS Notice SFA04-N02. These failures were identified during an inspection by MAS. UOBKH has paid the penalty in full.
Composition of SFR offences
MAS’ business conduct requirements for capital market intermediaries are set out in Securities and Futures (Licensing and Conduct of Business) Regulations. Each breach of the SFR is an offence punishable under regulation 55 of the SFR, where the maximum prescribed fine is $50,000 per offence. The breach is compoundable under section 336(2) of the Securities and Futures Act read with section 26A of the Interpretation Act.
Composition of AML/CFT offences
MAS’ AML/CFT requirements for capital market intermediaries are set out in MAS Notice SFA04-N02 on Prevention of Money Laundering and Countering the Financing of Terrorism – Capital Market Intermediaries. Each breach of Notice SFA04-N02 is an offence punishable under section 27B(2) of the MAS Act, where the maximum prescribed fine is $1,000,000 per offence. The breach is compoundable under section 176 of the MAS Act.