Staff crunch as banks here look out for illicit funds
SINGAPORE'S fight to stem illicit fund inflows has shoved private bankers into a new quandary - finding enough qualified compliance specialists to ensure the money passing through their accounts is clean.
Like other wealth management centres globally, Singapore is forcing banks to make more stringent checks on their clients as governments crack down on tax evasion and money laundering.
In Singapore, private bankers say extensive checks on the origin of their clients' money, tax status of those funds, whether they have political ties, and the reasons behind fund transfers all mean it could take up to three months to open a bank account. Five years ago, it would have taken just a week.
Compliance jobs were considered unattractive until a few years ago, when top dollar went only to investment bankers and traders.
Tougher regulations globally since the 2008 financial crisis have boosted demand for experienced compliance officers, who can get a pay raise of as much as 30 per cent if they change companies, according to a Robert Walters survey this year.
"It's never easy to find the right people, and it's tougher than ever before - it's a war for talent as far as we are concerned," said Conrad Lim, deputy chief executive at LGT Bank (Singapore) and head of his bank's compliance department in Asia.
Mr Lim's compliance team has more than tripled in size over the last 10 years, but he is still looking to bring in more people as the bank's regulatory burden increases.
The know-your-customer checks may lead to longer turnaround times or the loss of clients, said Mark Wightman, Singapore-based partner for Wealth & Asset Management Advisory at EY.
But a softer approach may incur the wrath of regulators. The Monetary Authority of Singapore (MAS) said last week that it issued nine warnings and reprimands last year to financial institutions in Singapore for deficiencies in their anti-money-laundering or countering terrorism financing measures.
MAS did not identify the institutions, but said six banks were fined with penalties ranging from $1,000 to $700,000.
Earlier this month, The Wall Street Journal reported that Malaysian investigators had traced nearly US$700 million (S$959 million) in funds moved from Falcon Private Bank in Singapore into a bank account of Malaysian Prime Minister Najib Razak.
Singapore's police force said last week it had frozen two bank accounts in relation to the probe. Zurich-headquartered Falcon said on July 16 it is cooperating with MAS on the matter.
In April, MAS told banks that they need to do extra screening of clients with political connections and more thorough checks to guard against money laundering.
MAS managing director Ravi Menon concedes banks have a tough time finding the people to do this type of work, but said it is working with the industry to train more people in this field.