Why did BSI Bank Singapore ignore red flags in SRC transactions?

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BSI Bank Singapore Failed to Disclose Sham Transactions Due to Fee Incentives and Lack of Oversight

BSI Bank Singapore did not comply with its legal obligations to report suspicious transactions linked to SRC International (Malaysia) Limited to Singaporean authorities, primarily because the bank was allegedly "seduced" by the fees generated from these dealings. This failure to report, despite clear "red flags," contributed to the serious breaches of anti-money laundering requirements that ultimately led to the bank's withdrawal of its merchant bank status in Singapore in 2016.
Failure to Lodge Suspicious Transaction Reports

Kevin Swampillai, a former employee of BSI Bank Singapore, testified that the bank did not report sham transactions totaling US$864.5 million between November 2011 and April 2012 to the Monetary Authority of Singapore (MAS) and the Commercial Affairs Department (CAD). Given the inherent red flags associated with these transactions, BSI Bank Singapore was legally obligated to file Suspicious Transaction Reports (STRs) with these authorities.
Monetary Gain Over Regulatory Compliance

The bank's oversight was reportedly driven by the substantial fees it was earning from facilitating these transactions. This financial incentive appears to have overridden the bank's regulatory duties, including its Know-Your-Client (KYC) and Anti-Money Laundering (AML) obligations. Swampillai acknowledged that if a client refused to disclose necessary information, the bank should have rejected the transactions and filed STRs, a protocol that was not followed in this instance.
Abuse of Fiduciary Structures to Obscure Funds

Fiduciary Funds, which involve monies from offshore entities managed by third-party fund managers, were utilized in a manner that obscured the ultimate destination of the funds and created a false impression of legitimacy. Swampillai confirmed that these fiduciary structures were abused to hide the identities of investors and the flow of funds, preventing meaningful KYC and AML checks.
Evasion of Disclosure Requirements by Jho Low

When pressed by BSI Bank for details regarding the fund transfers from SRC International, Malaysian businessman Jho Low asserted that the transactions were government-to-government in nature and subject to strict confidentiality. Despite these claims, BSI eventually ceased pressing Low for further information due to the potential loss of significant revenue, indicating that commercial considerations influenced the bank's compliance approach.

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Why did BSI Bank Singapore ignore red flags in SRC transactions?

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