StanChart's Heavier Fine Looks Light
Not all money-laundering is equal.
The kind that Standard Chartered Plc may have unwittingly facilitated is 86 percent more shameful than control lapses at DBS Group Holdings Ltd. and UBS Group AG. Or so it seems from the simple arithmetic of financial penalties imposed by the Monetary Authority of Singapore in the multibillion-dollar 1MDB scandal:
Still, StanChart should consider itself lucky.
What's S$5.2 million ($3.7 million) for an institution that had a conduct-and-compliance cost burden of $1 billion last year?
Besides, given all the embarrassing things the U.S. Department of Justice has said about StanChart's role in this unseemly saga of loot and plunder, the Singapore fine is a bit of an anticlimax.
According to the DoJ's complaint in a U.S. district court in California, a dodgy account held at the bank in Singapore received $637 million, an amount it says was siphoned off from the proceeds of bond sales by 1MDB, a Malaysian state investment firm. An additional $366 million came in via intermediaries.
Then, shortly after receiving the cash, the same account wired $472.75 million to Luxembourg. A part of it went on to acquire U.S. property.
That isn't all. A customer account sent 20 wire transfers, totaling $12.8 million, to a Singapore money changer -- a common laundering technique, according to the DoJ. A further $13 million left another account at the bank and was used to settle gambling expenses of the central figures in the tale.
The MAS said in its order that it didn't find "pervasive control weaknesses or willful misconduct" at StanChart. But if the DoJ is right, the bank did allow itself to be used as a laundromat. Regardless of whether they resulted from carelessness, stupidity or greed, two-way flows exceeding $1.5 billion must have been profitable. A fine amounting to 0.2 percent of that sum looks modest either as restitution or deterrent.
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