Another kind of storm blowing around the BSI buildings in Lugano. Source: Wikimedia
Singapore’s financial regulators are closing Swiss private bank BSI SA’s branch as criminal proceedings were started against the institution amid a global probe into the troubled Malaysian 1MDB state fund.
The Monetary Authority of Singapore (MAS) said it would withdraw BSI Bank’s licence over money-laundering charges as the Swiss Attorney General said it was taking legal action over criminal probes into 1Malaysia Development Bhd, also known as 1MDB.
The authorities in Malaysia and at least six other nations, including the US, have launched corruption probes into 1MDB, which announced that it held an account with BSI in Singapore.
In 2015 Singapore froze bank accounts belonging to a former BSI Singapore employee as part of its 1MDB probe.
The Singapore watchdog said: “MAS found considerable evidence of gross dereliction of duty and failure to discharge oversight responsibilities on the part of BSI Bank’s senior management. Their ineffective governance led to a poor-risk culture, which prioritised questionable customer demands ahead of compliance with anti-money laundering regulations and the bank’s own internal controls.”
The latest clampdown represents an aspect of the global money laundering and embezzlement probe surrounding 1MDB. In Malaysia, a parliamentary committee reported at least US$4.2 billion of irregular transactions by the government fund, and recommended the advisory board led by the embattled Prime Minister Najib Razak be axed.
BSI’s Group CEO Stefano Coduri has resigned as Switzerland’s regulator said it planned to seize 95 million Swiss francs (US$96 million) from the bank and prosecute two former members of staff. Swiss law allows for the prosecution of firms that fail to prevent corruption by third parties.
The 1MDB managers announced: “1MDB remains committed to fully cooperating with any foreign lawful authority, subject to advice from the relevant domestic lawful authorities, and in accordance with international protocols governing such matters.”
BSI also said it was cooperating fully with the Singaporean and Swiss investigations into 1MDB.
BSI’s annual report said it managed clients’ funds of 84.3 billion Swiss francs at the end of 2015, a fall of nearly 10 billion francs from a year earlier.
The MAS said it would impose S$13.3 million (US$9.6 million) in financial penalties on BSI for 41 breaches, including a failure to conduct due diligence on high-risk accounts and sufficiently monitor suspicious transactions.