Know Your Customer Commerzbank runs into compliance trouble in Singapore
Commerzbank has run into compliance trouble in Singapore. Officials of the Asian city-state are monitoring Germany’s second-largest commercial bank after sources said it didn’t check customers carefully enough for "Know Your Customer" rules meant to prevent financial crime.
The KYC measure requires banks to conduct thorough background checks of new clients and to ensure that existing customers continue to meet compliance standards. Singaporean authorities are now closely watching the bank.
"We take it very seriously," a Commerzbank source told Handelsblatt about the matter. The bank's management was shocked when they learned of the KYC issues, the source said. “The board was disappointed and angry and has made it clear that it wants to tackle the issues vigorously."
It follows a similar scolding from regulators in Britain in December. The German bank received a complaint from the Financial Conduct Authority in the UK over its insufficient customer checks, Handelsblatt reported. Commerzbank employs around 1,000 people in London and about 350 in Singapore.
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The Frankfurt-based bank recently dismissed a high-ranking compliance manager because of the issues and reorganized responsibilities. As compliance is becoming increasingly important, London-based Commerzbank employee Vijay Radhakishun has now been tasked with solving these problems together with his team. The bank’s board also called on its executives to sanction any rule violations.
KYC rules have been tightened considerably in recent years. According to experts, supervisors in the US are particularly strict, followed by Great Britain and Singapore.
The KYC problems come at an inopportune time for the bank because it is currently undergoing a reorganization. CEO Martin Zielke announced in the autumn of 2016 that 9,600 full-time positions were being cut as part of the "Commerzbank 4.0" strategy. By 2020, the bank plans to automate 80 percent of its processes and hopes to gain two million new customers.
Yasmin Osman is a financial editor with Handelsblatt’s banking team in Frankfurt, Andreas Kröner covers banks and financial markets. Stephanie Ott adapted this story for Handelsblatt Global in New York. To contact the authors: [email protected], [email protected] and [email protected].
