DBS, UBS and Standard Chartered have become embroiled in the scandal surrounding 1MDB, with Singapore's central bank saying it had found lapses and weaknesses related to the beleaguered Malaysian wealth fund.
The Monetary Authority of Singapore (MAS) said on Thursday that it found "lapses and weaknesses" in anti-money-laundering controls at the banks' Singapore operations and that it would be taking actions against them.
The preliminary investigation found "extensive layers of transactions and subterfuge aimed at disguising the nature of certain activities and fund flows," with shell companies in various jurisdictions used to conceal the funds' true beneficiaries.
In May, the MAS also completed a related investigation of BSI Singapore, which resulted in a decision to shut down that private bank, calling it at the time "the worst case of control lapses and gross misconduct that we have seen in the Singapore financial sector."
The MAS said the deficiencies at the three banks were related to lapses in specific processes and by individual officers, which would be met by "firm regulatory action," but the central bank added that the inspections didn't find pervasive weakness or staff misconduct, unlike at BSI Bank.
UBS said that it self-reported the suspicious transactions and was working with regulators on the matter.
Standard Chartered said it took financial crime compliance very seriously and that it reported the suspicious transactions when it discovered them. It added that the bank has strengthened its money-laundering controls.
DBS said "egregious financial crime is highly sophisticated and intentionally designed to evade systems and controls," and added that it had previously voluntarily reported some questionable activities to authorities. The Singapore-based bank said it took its anti-money-laundering obligations seriously and would continue to cooperate with regulators and law enforcement.
CNBC has contacted Prime Minister Najib Razak's office and 1MDB for fresh comment. Najib previously chaired 1MDB's advisory board during the period when funds allegedly went missing.
The Singapore announcement thickens the plot of the long-running scandal over billions of dollars missing from the Malaysia state fund 1MDB, coming a day after U.S. authorities moved to seize assets tied to the beleaguered fund, including funds related to the film "The Wolf of Wall Street."
In the course of Singapore's investigations, bank accounts belonging to various individuals were seized and dealings in properties belonging to some of these individuals have been curtailed, the MAS said. The assets amount in total to S$240 million ($176.82 million), with about S$120 million of that total belonging Low Taek Jho and his immediate family, it said.
Low has been a friend of Najib's family, particularly Najib's stepson, Riza Aziz, who was named in the U.S. complaint.
In the U.S., prosecutors said they were seeking to seize more than $1 billion of assets tied to an international conspiracy to launder funds funneled away from 1MDB, marking the biggest action ever taken under the Kleptocracy Asset Recovery Initiative.
In a statement, the Department of Justice said officials at 1MDB, their relatives and other associates diverted more than $3.5 billion from the state funds and laundered it through complex transactions and shell companies with bank accounts in Singapore, Switzerland, Luxembourg and the U.S.
The assets the DOJ said were purchased with the laundered funds included high-end real estate and hotels in New York and Los Angeles, a $35 million jet aircraft, artwork by Vincent Van Gogh and Claude Monet, a stake in EMI Music publishing rights and production of the 2013 film "The Wolf of Wall Street," which ironically was not only about a corrupt stockbroker, but also was banned from playing in Malaysia for being too risqué.
The film's producer, Red Granite Pictures, was co-founded by Najib's stepson Riza Aziz.