UPDATE 1-Singapore puts onus on banks to avert fraud

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SINGAPORE, Jan 28 (Reuters) - Singapore's central bank said on Monday that it was not possible to eliminate fraud in the financial sector completely, but stressed that the boards and managements of banks are responsible for averting such incidents.

It made the statement after Societe Generale (SOGN.PA: Quote, Profile, Research) last week said it had discovered fraud by one of its traders that led to 4.9 billion euros ($7.18 billion) of losses.

Losses at SocGen dwarfed the $1.4 billion loss made by Nick Leeson in Singapore which led to the collapse of British Barings bank in the 1990s.

"Recent incidents show that it is not possible to completely eliminate fraud in financial institutions," the Monetary Authority of Singapore said in a statement to Reuters, adding it does interact with local banks on risk management.

"The primary responsibility for ensuring that such incidents do not occur lies with the board and management of financial institutions," it said.

A banking source told Reuters that the central bank has reminded banks last week to heighten vigilance in the wake of the SocGen incident.

The MAS said it is in regular touch with financial institutions in Singapore to promote best practices in risk management.

"We work closely with our regulated entities to reinforce 'board and senior management' focus on good internal controls and sound risk management practices," it said. (Reporting by Saeed Azhar and Kevin Lim; Editing by Paul Bolding)