Singapore plans to bar former Goldman Sachs Group Inc banker Tim Leissner from its securities industry for 10 years and fined Standard Chartered and Coutts & Co over breaches related to a scandal-plagued Malaysian sovereign fund.
Leissner, who left Goldman Sachs in February, was sanctioned because he issued an unauthorised reference letter on behalf of Low Taek Jho, the Monetary Authority of Singapore (MAS) said in a statement on Friday.
Low, a Malaysian financier, has been linked to alleged efforts to siphon billions of dollars from 1Malaysia Development.
The move against Leissner, which would be among the most high-profile individual bans ever handed down by Singaporean regulators, is the latest step by the MAS to address the reputational damage caused by anti-money laundering lapses linked to 1MDB.
The regulator withdrew the banking licenses of Falcon Private Bank and BSI’s local units earlier this year and fined UBS Group and DBS Group Holdings.
“These actions send a strong signal that we will not tolerate the abuse of Singapore’s financial system for illicit purposes,” MAS managing director Ravi Menon said in the statement.
“The supervisory investigations into the intricate web of international fund flows has been a learning experience for financial institutions as well as for MAS. Our financial sector will emerge cleaner and stronger.”
Besides serving notice of its intention to issue a so-called prohibition order against Leissner, the MAS fined Standard Chartered S$5.2 million (US$3.64 million) and Coutts S$2.4 million.
“Prior to today, Mr Leissner had not heard of any contemplated regulatory action by the MAS and had not been contacted by the MAS or given any opportunity to respond to the MAS regarding the allegations raised in the Notice,” said Marc S. Harris, Leissner’s counsel at law firm Scheper Harris & Kim in Los Angeles, in an e-mailed statement.
“He has been invited by the MAS to respond to the allegations raised in the Notice, and he looks forward to doing so.”
The proposed order will prohibit Leissner from performing any activity regulated by the city’s securities laws or taking part in the management of any capital-market services firm in Singapore, the MAS said.
The banker moved to Hong Kong in November 2011 but maintained his representative status in Singapore until his resignation from Goldman Sachs in February, according to the MAS.
The letter Leissner issued on behalf of Low was on Goldman Sachs’s letterhead and stated that the firm had found no money-laundering concerns after conducting due diligence on Low and his family, the MAS said.
The statements were untrue and were made by Leissner without his New York-based employer’s knowledge or consent, the regulator said.
“Today’s announcement refers to a matter we discovered in January of this year and identified as a clear violation of the firm’s standards,” Goldman Sachs said in a statement.
“At that time we promptly took steps to separate Mr. Leissner from the firm and reported the matter to regulatory authorities in several jurisdictions, including Singapore. We continue to cooperate with the MAS.”
Leissner left Goldman Sachs after 18 years with the bank and relocated to Los Angeles earlier this year. The former star banker was instrumental in building Goldman Sachs’s business in Malaysia, and helped oversee bond offerings for 1MDB in 2012 and 2013 that earned the firm almost $600 million.
Low’s Hong Kong-based company Jynwel Capital didn’t respond immediately to an e-mail request for comment on the Singapore central bank statement. 1MDB has consistently denied wrongdoing and Malaysia’s government has said it will cooperate with lawful investigations of local companies or its citizens in relation to the fund.
The MAS said it’s nearing completion of its examinations of financial institutions in Singapore through which 1MDB-related fund flows took place, and will provide a final update in early 2017.
The city-state has charged four people, including three former BSI bankers, for their roles in transactions and money flows linked to 1MDB.
“You have seen criminal charges being brought, you have seen banks being closed, you have seen sanctions being imposed,” Singapore Law Minister K Shanmugam said at a Foreign Correspondents Association lunch on Friday.
“If you look at the whole suite of actions, one would say pretty tough, tougher than what anyone has seen in any of the other centers where I think parallel activities have taken place.”
Allegations that billions of dollars have been improperly siphoned out of the Malaysian fund has led to investigations across the globe including by Swiss and US authorities. The US Department of Justice said in July that more than US$3.5 billion was misappropriated from 1MDB, as the agency sought to seize about $1 billion of assets it claims was laundered through the U.S. banking system.
Five wire transfers totaling US$636 million were sent between May and December 2012 from a bank account of a company registered in the British Virgin Islands to an account at Standard Chartered Bank in Singapore held in the name of Blackstone Asia Real Estate Partners, the DOJ alleged in a suit filed on July 20.
The Blackstone account, not related to Blackstone Group, was controlled by a man named by the DOJ as a “a close associate” of Low.
Standard Chartered said it reported the transactions “both before and at the time we exited the accounts in early 2013,” according to an e-mail statement from the bank.
“We have made significant investments in strengthening our controls, processes, and surveillance systems, and continue to do so.”
The MAS said it fined Standard Chartered for 28 breaches of its anti-money laundering and counter-terror financing laws and imposed a penalty on Coutts, which is owned by Royal Bank of Scotland Group, for 24 breaches. RBS separated Coutts’s international businesses from the rest of the private bank and sold them to Switzerland’s Union Bancaire Privee last year.
“We welcome the conclusion of the Monetary Authority of Singapore’s investigations into our legacy international business,” RBS said in an e-mail. “We regret any failings in our AML processes and the length of time it has taken to detect and resolve this issue.”