1MDB financial mastermind Jho Low berated BSI bankers who questioned transactions which resembled money-laundering transfers. He invoked a surprising excuse.
The methods for moving billions from Malaysian state fund 1MDB to the private coffers of Jho Low and others is emerging through the trial of one former BSI wealth planner and the guilty plea of his boss, as finews.com reported.
Low, believed by prosecutors to be the architect of 1MDB's illicit financial dealings, reacted angrily when his relationship manager at BSI, Yak Yew Chee, pushed him to comply with money-laundering rules and explain millions transferred back and forth within his family, according to prosecution documents published by «The Edge» (behind paywall).
He cited family ties and respect for his elders in particular as an integral part of his culture – and argued it would be «taboo and bad luck» not to carry out the illicit transfers.
Family Helps Mask Money Trail
Low is from the Malaysian state of Penang and was educated at the prestigious Harrow School in the U.K., where he reportedly met and became friends with the Malaysian Prime Minister's stepson, Riza Aziz. The two are believed by U.S. prosecutors to have used 1MDB funds to bankroll «The Wolf of Wall Street,» the story of a broker who bilked wealthy investors out of millions while celebrating a drug-, booze-, and sex-suffused lifestyle.
Prosecutors believe that Low (pictured below) transferred money to and from his affluent father in order to further mask the illicit 1MDB money trail. BSI presumably pushed Low on exactly this point, which drew a testy response.
«There should be absolutely no question or concern given that these are fund flows of direct family members and direct BO's [beneficial owners],» Low wrote to Yak and six other former BSI bankers in an email dated November 2012.
Killer Compliance Argument
«When good wealth creation is generated, as a matter of cultural respect and good fortune that arises from respect, we always give our parents the proceeds,» Low wrote. «I hope this clarifies as this is culturally sensitive...and our family is very particular about respect of the elderly and being appreciative to family.»
This translates to a killer argument in the white-glove world of private banking, where advisors are trained to cater to the every wish of their clients and have little experience in throwing out clients, as one expert detailed to finews.com.
BSI's response to Low's explanation wasn't made public, but it can be safely assumed that Yak and BSI swallowed the argument and acquiesced.
Uncooperative Client Advisor
«The client advisor responsible for these relationships was repeatedly notably uncooperative in terms of compliance, particularly in dealing with the inadequate clarification of transactions,» Swiss regulator Finma wrote in May, when it moved with the Monetary Authority of Singapore (MAS) to shut BSI down in the city-state. Yak pled guilty earlier this month to several counts of forgery and failure to report money-laundering.
With private bankers of Yak's stature, savvy and sensitivity in dealing with different cultures, social skills, and diplomacy is increasingly important compared to technical and financial skills, according to economic sociologist Brooke Harrington.
Whereabouts Unknown
Singapore is boxed in, geographically and economically, by neighboring countries such as Indonesia and Malaysia. The city-state faces enormous challenges in discerning the legitimacy of foreign funds, as well as dissecting the numerous cultural, social and political norms of foreign clients – something that Low appears to have exploited to his advantage in his dealings with BSI.
Low's whereabouts remain unknown.
