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Wednesday, 25 May 2016

BSI : "In the case of 1MDB, the bank executed numerous large transactions with unclear purpose over a period of several years and, despite clearly suspicious indications, did not clarify the background to these transactions,"



Najib Razak 1MDB scandal: Swiss approve dissolution of scandal-hit bank

Swiss financial regulators have approved the dissolution of Lugano-based BSI Bank over its links to a corruption scandal engulfing Malaysia's Prime Minister Najib Razak.
Swiss supervisor FINMA accused BSI, a merchant bank, of "serious breaches" of money-laundering regulations in its dealings with the Malaysian sovereign wealth fund 1MDB, which is at the heart of the corruption allegations.

Key points:

  • Singapore kicks out BSI
  • Swiss authorities agree to takeover and dissolve bank
  • BSI accused of 'serious breaches' of money-laundering rules in dealings with Malaysia's 1MDB
In the case of 1MDB, the bank executed numerous large transactions with unclear purpose.
Swiss Financial Market Supervisory Authority
In the toughest punitive action yet announced in the affair, FINMA said it was approving the takeover of the merchant bank by Zurich-based private banking group EFG International on the condition that BSI is integrated "and thereafter dissolved" within 12 months.

It ordered the seizure of $US96 million of BSI's "illegally generated" profits.

"In the case of 1MDB, the bank executed numerous large transactions with unclear purpose over a period of several years and, despite clearly suspicious indications, did not clarify the background to these transactions," the Swiss regulator said.

FINMA also said it was investigating two former top managers to determine what they knew about the illegal activities, warning that it may launch further probes.

Earlier on Tuesday, the Swiss Attorney-General's office said that it had opened criminal proceedings against parent firm BSI SA "based on information revealed by the criminal proceedings in the 1MDB case".

In a statement noting the Swiss actions, 1MDB said "it has not been contacted by any foreign lawful authority on matters relating to the company", and was prepared to cooperate with foreign investigators subject to guidance from Malaysia's Government. 

The fund's investments had not been impacted by the Swiss announcements, the statement added.

On the same day, Singapore's central bank said it was kicking out BSI, for "serious breaches of anti-money laundering requirements, poor management oversight of the bank's operations, and gross misconduct by some of the bank's staff".

In a statement, the Monetary Authority of Singapore (MAS) said it had also asked state prosecutors to investigate six senior executives of BSI Bank Limited, including its former chief executive for possible criminal offences.

Two Singaporean executives of the bank already face charges in the city-state.

1MDB background

Founded in 2009 by Mr Najib, 1MDB is teetering on the brink of collapse amid multiple investigations around the world into allegations that billions were looted from it.

The fund, which ran up more than $US11 billion ($15 billion) in debt in a series of much-questioned investments, has steadfastly denied money was stolen or that it was in financial trouble.

Last year, the Wall Street Journal revealed $US681 million in transfers to Mr Najib's personal bank accounts.

Malaysia's Prime Minister Najib Razak  
 
He said the money was a gift from the Saudi royal family, most of which he returned.
In April, a Saudi official said that was true, but only after weeks of silence that cast doubt on the claim.

In a series of more recent investigative reports, however, the newspaper said Malaysian investigation documents indicated more than $US1 billion in 1MDB-linked money had been funnelled to Mr Najib.

He and 1MDB vehemently deny that claim.

The Prime Minister has faced calls to resign but he has tightened his grip on the ruling party and thwarted domestic investigations.