Authorities in Switzerland and Singapore are punishing BSI, the Swiss private bank based in Lugano, for alleged money-laundering offenses, shutting their activities in Singapore and seizing part of its profits.
Switzerland’s attorney general has opened criminal proceedings against BSI Bank in connection with alleged money-laundering and corruption by Malaysia’s statement investment fund 1MDB.
In a separate move, the country's financial market regulator said the bank was in serious breach of money-laundering regulations and had to forego a profit of 95 million Swiss francs. Finma has opened enforcement procedures against two managers of the bank.
Banking License Revoked
The Swiss authorities aren't alone in becoming active against BSI: Singapore's Monetary Authority (MAS) ordered BSI to close its local branch. This is the first withdrawal of a banking license in the city state since 1984.
MAS has also fined the bank about 9.5 million Swiss francs for 41 offenses against the money-laundering regulations. The attorney of the city state is currently evaluating whether six former managers and staff committed criminal acts. Hanspeter Brunner, a previous CEO of BSI Singapore, and Raj Sriram, the deputy CEO, are amongst those six.
The Singapore authorities have allowed BSI to transfer its assets and liabilities to the local branch of EFG International, acting in coordination with Finma. The Swiss regulator has approved the takeover of BSI by EFG International. MAS however ordered BSI to close down after the integration into EFG.
Internal Shortcomings
The Swiss attorney general is investigating the bank for shortcomings of within the organization on the basis that the bank wasn't able to prevent the alleged criminal activities currently under investigation by the authorities.
The decision by Finma suggests that proper procedures at the bank would have prevented the money-laundering and bribery it is being fined for. Swiss law allows a criminal investigation in cases where companies fail to implement all necessary and reasonable provisions to prevent a criminal act. Money-laundering, corruption and criminal activities of third parties are examples of such acts.
Suspicious Transactions
The bank is said to have executed several large transactions over the course of a couple of years, whose aims were obscure and whose background the bank failed to investigate despite being evidently suspicious.
The BSI managers and staff, who are responsible for the misconduct, won't be allowed to work for EFG International, Finma said. Stefano Coduri, chief executive officer of BSI, has resigned.
Finma also said it was happy that the takeover of BSI presented customers and staff of the bank with a future.
