Singapore's financial regulator, the Monetary Authority of Singapore (MAS), is set to conduct an on-site inspection of Credit Suisse Group AG. A move prompted by the recent money laundering scandal which has sent shockwaves through the city-state.

MAS Targets Credit Suisse's Local Unit for Examination

This action comes in the wake of at least one of Credit Suisse's customers being charged with money laundering, part of a larger investigation that has embroiled several domestic and international banks in Singapore.

The local unit of Credit Suisse is among the institutions targeted for examination by MAS to assess the adequacy of their handling of high-net-worth clients. According to sources familiar with the matter, MAS officials will soon be conducting interviews with personnel and scrutinizing documents. These individuals requested anonymity because the information had not been made public.

This regulatory intervention highlighted the gravity of the ongoing scandal, which involves the seizure of over S$2.8 billion in assets, including cash and jewelry, linked to a group of alleged money launderers of Chinese origin.

MAS's upcoming inspection is distinct from its routine interactions with banks and has suggested concerns regarding the financial institutions' significant exposure to the suspects and their overall procedures for client vetting.

Credit Suisse is among the banks known to have connections with either the accused individuals or their companies. For instance, one of the suspects, Vang Shuiming, held S$ 92 million in an account with the Swiss lender, marking the largest known account associated with the case.

Credit Suisse, when approached for comment, declined to provide a statement. An MAS spokesperson referred to comments made by the Minister of State, Alvin Tan in parliament earlier this month. Tan had stated that the regulator was conducting supervisory reviews and inspections of banks with "a major nexus" to the case, expressing concerns about the predominance of financial assets in the seized assets.

Vang Shuiming, one of the suspects, held accounts at other banks, including Bank Julius Baer (S$ 33 million), United Overseas Bank, and RHB Bank Bhd.'s local unit, according to police affidavits. Vang faces multiple charges, including forgery of a bank document to deceive Citibank Singapore.

EXCLUSIVE: Singapore’s financial regulator will launch an on-site inspection of Credit Suisse after at least one client was charged with money laundering https://t.co/nk7CVCVHec

— Bloomberg (@business) October 18, 2023

Credit Suisse's Previous Encounter with MAS Scrutiny in 2017

It remains unclear which other banks will undergo inspection by MAS. The probe is expected to examine internal red flags raised and the timing of filing suspicious transaction reports.

For Credit Suisse, this inspection is just one of several challenges for its new parent company, UBS Group AG, as it focuses on integrating thousands of employees from its former rivals across the world.

This isn't the first time Credit Suisse has faced scrutiny from MAS. In 2017, it was inspected for its involvement in the '1MDB scandal', Malaysia's largest corruption case, which resulted in a S$ 700,000 fine, the smallest penalty imposed on banks in Singapore at that time.

Since the eruption of the current case in August, Singaporean banks have intensified their scrutiny of clients, particularly those of Chinese origin with multiple passports. Authorities are also exploring potential links between the accused individuals and single family offices, with plans to tighten relevant regulations as necessary.

Investigations into the money-laundering ring date back to 2021 when banks and companies filed suspicious transaction reports, as communicated by Singapore's Minister of Communications, Josephine Teo. These reports played a crucial role in alerting authorities to suspicious activities within the country's financial system.