RBI imposes monetary penalties on 10 banks for breaches of anti-money laundering standards

In early February 2019, the Reserve Bank of India announced that it had imposed penalties on 10 banks for breaching anti-money laundering and counter-terrorist financing regulations.

Allahabad Bank, Bank of Maharashtra and the Indian Overseas Bank were each fined Rs 1.5 crore for non-compliance with directions issued by the RBI relating to the end use of funds, exchange of information with other banks, classification and reporting of fraud and restructuring of accounts. Andhra Bank, Bank of Baroda, State Bank of India and Union Bank of India were fined Rs 1 crore for the same violations. Corporation Bank was fined Rs 2 crore.

HDFC Bank Limited, IDBI Bank Limited and Kotak Mahindra Bank Limited were fined Rs 20 lakh each for breaches of RBI directions relating to Know-Your-Customer norms and AML standards.

The string of announcements relating to monetary penalties imposed by the RBI for failures to comply with AML/CFT directions and standards reflects a likely compliance crackdown on lenders.


OFAC imposes fine in North Korean sanctions case

On 31 January 2019, OFAC issued an enforcement notice (Enforcement Notice) announcing that e.l.f Cosmetics Inc (ELF) had agreed to pay US$996,080 to settle its potential civil liability for 156 apparent violations of US sanctions on North Korea. Between April 2012 and January 2017, ELF imported false eyelash kits with a total value of US$4,427,019.26 from two suppliers in China that contained materials sourced from North Korea. ELF's compliance programme had failed to detect that approximately 80% of the false eyelash kits supplied contained the contraband materials, and was therefore in violation of § 510.201(c) of the North Korea Sanctions Regulations.

OFAC's action against ELF is a reminder to businesses to implement effective supply chain due diligence and audits to verify the country of origin of goods and services. Companies that do not conduct thorough supply chain due diligence when sourcing products and services, particularly from higher risk regions, are at an increased risk of sanctions violations.


Malaysia launches National Anti-Corruption Plan

Malaysia launched a National Anti-Corruption Plan (NACP) in January, setting out a five-year plan to clamp down on corruption in government, following the infamous 1MDB scandal involving the previous government. “This plan is a strong statement from the current government that we will track down and prosecute past offenders, while current and future offenders will be facing harsher action,” said Dr Mahathir Mohamad, Prime minister, during the launch of the NACP.

Wave of anti-corruption and AML enforcement in Malaysia

  • On 20 February 2019, a lawyer with the title "Datuk" was detained by the MACC in relation to money laundering allegations amounting to RM15 million. "Datuk" is a state title conferred by the Ruler on the most deserving recipients who have contributed greatly to the nation or state.
  • MACC has launched an investigation under the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001, following a report lodged by an individual that RM90million was allegedly paid to PAS leaders.
  • After the High Court ordered and discharged three money laundering charges against the former prime minister of Malaysia, Najib Razak, upon the withdrawal application of the Attorney General, Najib was hit again by the Session Court with three counts of money laundering involving RM47million dating back five years.
  • Former executive chairman of Koperasi Hartanah Malaysia Berhad, Jali Sekak, and his two wives, were charged with a total of 25 counts of money laundering amounting to RM3.5 million at the Sessions Court. Jali was charged with 12 counts for using a total of RM1.8 million, which was believed to be proceeds from illegal activities to make payments to several individuals.
  • MACC detained two managers of two different companies to facilitate investigations into embezzlement of projects worth RM15 million.
  • A member of parliament, Datuk Seri Abdul Azeez Abdul Rahim, has been charged with 12 counts of graft and money laundering in the Sessions Court for receiving bribes amounting to RM5.2 million for allegedly assisting a local company, Menuju Asas Sdn Bhd, to obtain several government projects.

Securities Commission introduces new rules for digital payment

Securities Commission Malaysia has issued rules in line with the newly introduced Capital Markets and Services (Prescription of Securities) (Digital Currency and Digital Token) Order 2019. The guidelines will, among other things, establish criteria for determining fit and properness of issuers and exchange operators, disclosure standards and best practices in price discovery, trading rules and client asset protection. Those dealing in digital assets will be required to put in place anti-money laundering and counter-terrorism financing rules, cyber security and business continuity measures.


Procurement officer pleads guilty to receiving bribes of $740,000

Former procurement officer of Keppel Shipyard, Neo Kian Siong, has pleaded guilty to obtaining bribes of more than $740,000 between 2007 and 2014 in return for revealing prices of products quoted by suppliers to allow the bribers to undercut and win Keppel orders.

The defendant has pleaded guilty to all 26 corruption charges and two counts of dealing with the benefits of the unlawful gains and faces imprisonment of up to five years and/or a fine of up to $100,000 for each count of corruption.

New law to govern precious stones and metals

Registration with the Law Ministry is required for dealers in the precious stones and metals industry in accordance with a new law passed by the Singaporean Parliament on 11 February 2019.

The bill was submitted the Law Ministry in January 2019 and introduces a risk-based supervisory and regulatory regime for precious stones and precious metals dealers, with the intention to strengthen the anti-money laundering and countering financing of terrorism standards in the sector.

"Zero-tolerance in corruption" as Singapore charges Korean engineers

The Singapore Corrupt Practices Investigation Bureau stated that "Singapore adopts a strict zero-tolerance approach towards corruption" as they charged two Korean engineers employed by Dongah Geological Engineering, Singapore branch, for receiving bribes worth S$3,000 and S$4,000 respectively.

The two engineers were charged with accepting bribes from Fasten Hardware as an inducement for furthering the business interests between the two companies.


Bank manager jailed and fined $110 million for money laundering

The Makati regional trial court has ruled that the former branch manager (Maia Santos-Deguito) at Philippine lender Rizal Commercial Banking Corp (RCBC) was guilty of eight charges in connection with money laundering offences. This was in relation to the Philippines' largest money laundering transaction where, in February 2016, unknown criminals used fraudulent orders on the SWIFT payments system to steal funds from Bangladesh's central bank account at the Federal Reserve Bank of New York. The money was subsequently sent to accounts at RCBC branch in Manila and to Deguito before disappearing into the casino industry in the Philippines.

Deguito was sentenced to four to seven years' imprisonment for each offence as well as fined up to $110 million. Deguito's lawyer stated that Deguito would lodge an appeal against the court's decision.

As a consequence of the Bangladesh bank heist, the Philippines Anti Money Laundering Council is pushing various initiatives in relation to the regulation of money services business and pawnshops. The initiatives include encouraging consolidation to lessen industry fragmentation and foster effective competition and more sustainable growth, placing the industry and pawnshop under the supervision authority of the central bank.

Former mayor sentenced to 10-year imprisonment for graft

The Anti-Graft Court of the Philippines, Sandiganbayan's Fourth Division, has sentenced the former mayor of Quezon town in Bukidnon to 10 years' imprisonment for violating Section 3(e) of the Republic Act or the Anti-Graft and Corrupt Practices Act by using public funds to purchase construction equipment for his personal use.

This illustrates the Philippines' drive to eliminate corruption. According to the 2018 Corruption Perceptions Index, the Philippines has improved its ranking from 111th to 99th out of 180 countries.


Garuda sues Rolls-Royce over allegedly fraudulent contract

Garuda is bringing an action in the Central Jakarta District Court against Rolls-Royce demanding GBP35 million compensation as a result of a cancelled contract tainted by alleged bribery.

The case is against both Rolls-Royce and its subsidiary Rolls-Royce Total Care Services.

Separately, the former CEO of Garuda, Emir Satar, is currently under investigation by the Corruption Eradication Commission over allegations he received US$2 million in bribes from Rolls-Royce in relation to 50 contracts awarded to Rolls-Royce between 2005 and 2014.