|
 The Monetary Authority of Singapore (MAS) said on Tuesday it had
withdrawn BSI Bank's status as a merchant bank in Singapore for
serious breaches of anti-money laundering rules, the first time in
32 years it has taken such action against a bank.
In a statement that highlighted an "unacceptable risk culture,"
regulatory lapses and gross misconduct of some of BSI's staff, MAS
said it was also reviewing transactions of other banks in Singapore.
(ttp://bit.ly/1TtsyAw)
The central bank has referred five former executives of BSI Bank to
the public prosecutor for possible criminal charges, including its
previous Asia CEO, Hanspeter Brunner, and another suspended
executive.
Brunner did not respond to a request for comment.
"BSI Bank is the worst case of control lapses and gross misconduct
that we have seen in the Singapore financial sector," said Ravi
Menon, managing director of MAS.
'STRONG SIGNAL'
The Singapore central bank's action was "a shot across the bow to
the industry," said Chris Wilson, a partner at PwC Consulting,
specializing in anti-money laundering and financial crime.
"This sends a strong signal to senior management of any institution
out there that they could also face these issues," he said, adding
that regulators in other countries may now review their own rules or
step up enforcement.
MAS did not explicitly name 1Malaysia Development Bhd (1MDB)in its
statement. But the Swiss Financial Market Supervisory Authority or
Finma said in Zurich that Swiss-based BSI AG had committed serious
breaches of money laundering regulations through business
relationships and transactions linked to the corruption scandals
surrounding the Malaysian state investor.
The fund, which was founded by Malaysian Prime Minister Najib Razak
in 2009 shortly after he came to office, is being investigated for
money-laundering in at least six countries.
A Malaysian parliamentary committee in April identified at least
$4.2 billion in irregular transactions by 1MDB. It recommended the
fund's advisory board, which Najib chaired, be disbanded. Both 1MDB
and Najib have denied any wrongdoing.
The Malaysian attorney general's office in January cleared Najib of
any criminal offences or corruption, declaring that $681 million
deposited into his personal bank account was a gift from Saudi
Arabia's royal family.
The probes surrounding 1MDB have cast an unwelcome spotlight on
Singapore, which is one of the world's leading wealth management
centers and has been trying to burnish its anti-money laundering
credentials.
SWISS ACTION
In Switzerland, Lugano-based BSI now faces a criminal investigation
from the Office of the Attorney General (OAG), while financial
watchdog FINMA ordered it to fork over almost $100 million in
profits.
The OAG suspects that internal BSI deficiencies meant it was unable
to prevent suspected offences in a wider OAG investigation in
connection to 1MDB.
Swiss authorities said in February a criminal investigation into
1MDB had revealed that about $4 billion appeared to have been
misappropriated from Malaysian state companies.
[to top of second column] |
1MDB said in a statement on Tuesday it has not been contacted by any foreign
authority.
The OAG investigation comes amid a takeover of BSI by Swiss rival EFG
International AG, which agreed in February to buy it from Brazil-based BTG
Pactual for 1.33 billion Swiss francs ($1.34 billion).
FINMA said the deal could still go ahead on condition that 143-year-old BSI be
fully integrated with EFG and then dissolved. BSI's assets in Singapore will be
transferred to EFG, MAS said.
SEIZING PROFITS
FINMA also said it is seizing 95 million Swiss francs of profits from BSI and
had launched enforcement proceedings against two of its former senior managers.
No BSI senior managers will be allowed to take similar positions at EFG, FINMA
added.
"Management ignored clear warning signals and the system of controls failed,"
FINMA CEO Mark Branson told reporters, adding that other legal issues involving
BSI left it little choice in its measures.
"Unfortunately, it is also not an isolated case... So we, like our colleagues in
Singapore, had to come to the conclusion that the bank must be dissolved."
BSI responded to the OAG, FINMA and MAS measures by saying that group CEO
Stefano Coduri had stepped down with immediate effect and that it had undertaken
steps to strengthen management, including introducing a new chief risk officer
and appointing a new group legal counsel."BSI acknowledges that these events are
important steps with regard to the regulators to resolve legacy issues," it said
in a statement, "and removing uncertainty for clients and staff in relation to
1MDB."
The actions in Singapore and Switzerland show both the transnational problem of
money laundering and the trend for greater international regulatory
collaboration, said Chrisol Correia, director of international anti-money
laundering compliance at LexisNexis Risk Solutions .
"This will lead to new operational challenges as banks’ economic crime controls
are updated and expanded," he said, adding customers will need to disclose more
information "or find it difficult to continue to access the banking system.”.
(Reporting by Anshuman Daga and Saeed Azhar and Joshua Franklin in ZURICH
Additional reporting by Oliver Hirt in ZURICH,Michelle Price in HONG KONG and
Praveen Menon in KUALA LUMPUR)
[© 2016 Thomson Reuters. All rights
reserved.] Copyright 2016 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed. |
