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Monday
Dec052016

Singapore to ban ex-Goldman Sachs banker who handled 1MDB bond business

Singapore authorities are banning the former director of Goldman Sachs in Singapore for ten years for his role in the 1MDB scandal.

The Monetary Authority of Singapore said Friday it served notice of its intention to issue "a Prohibition Order" against Tim Leissner.

The order will bar Leissner from working in Singapore's capital markets for ten years, MAS said.

Leissner resigned from Goldman Sachs in February 2016. He had moved from Singapore to the bank's Hong Kong office in November 2011. 

Even after his move, Leissner was listed as the representative of Goldman's Singapore office. He was "therefore subject to MAS’ requirements to being fit and proper to carry out regulated activities," MAS said Friday.

Leissner issued an unauthorized reference letter to a bank in Luxembourg in June 2015, using Goldman Sachs letterhead.

The letter said "Goldman Sachs had conducted due diligence on Mr Low Taek Jho and his family, and had not detected any money laundering concerns with respect to Mr Low or his family."

"These statements were untrue and were made by Mr Leissner without Goldman Sachs’ knowledge or consent," MAS said.

Low has been tied by U.S., Swiss, and Singapore prosecutors to the diversion of $3 billion or more from the Malaysia sovereign wealth fund known as 1Malaysia Development Berhad or 1MDB.

In July, Singapore seized about $88 million in accounts controlled by Low, a Malaysian businessman.

On Friday, MAS said Leissner managed the client relationship with 1MDB for its three bond issues from 2012 to 2013. 

The bond issues were fully underwritten by London-based Goldman Sachs International.

A Goldman team from Hong Kong, Singapore, Malaysia, and the United Arab Emirates handled the work.

MAS said it's still working "with foreign regulatory authorities on examining Goldman Sachs’ role in the 1MDB bond transactions."

Goldman Sachs said Friday it learned about the letter in January this year and reported it to Singapore authorities. The bank said it put Leissner on leave before he resigned.

*     *     *

In October, Singapore shut down the local unit of Falcon Private Bank for anti-money laundering deficiencies connected to 1MDB. Zurich-based Falcon Private Bank is owned by a subsidiary of Abu Dhabi's sovereign fund, International Petroleum Investment Company.

In May, MAS closed the local operations of Swiss-based BSI Bank for money-laundering lapses linked to the Malaysian sovereign wealth fund.

Police in Singapore arrested a former BSI banker, Yeo Jiawei. At his trial that started last month, prosecutors said he helped launder up to $2.3 billion looted from 1MDB.

At least a half dozen other former bankers have been arrested in Singapore, including the local manager of Falcon Private Bank, Jens Sturzenegger.

Evidence from Singapore played a key role in the 144-page civil forfeiture complaint the U.S. Justice Department filed in July against about $1 billion in assets allegedly bought with money stolen from 1MDB.

The DOJ said $3.5 billion was allegedly misappropriated from the Malaysia sovereign wealth fund.

The Monetary Authority of Singapore also said Friday it fined two banks in connection with 1MDB.

Standard Chartered Bank paid a penalty of S$5.2 million (about $3.66 million) and Coutts & Co Ltd paid S$2.4 million (about $1.69 million) for breaching AML requirements "in the context of 1MDB-related fund flows."

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Richard L. Cassin is the publisher and editor of the FCPA Blog.