Swiss approve dissolution of bank in Malaysia scandal

Swiss financial regulators approved today 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.
In the toughest punitive action yet announced in the affair, FINMA said in a statement 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 95 million Swiss francs (86 million euros/USD 96 million) of BSI's "illegally generated" profits.
FINMA said it was investigating two former top managers, who were not identified, to determine what they knew about the illegal activities, warning that it may launch further probes.
"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.

The Office of the Attorney General of Switzerland said earlier in the day that it had opened criminal proceedings against BSI "based on information revealed by the criminal proceedings in the 1MDB case".

Malaysia's prime minister, who founded 1Malaysia Development Berhad (1MDB) in 2009, has battled allegations that billions were looted from the investment vehicle in a vast campaign of fraud and embezzlement stretching from the Middle East to the Caymans.
The fund, which ran up more than USD 11 billion in debt in a series of much-questioned investments, has steadfastly denied money was stolen or that it was in financial trouble.
Najib also faced questions after the Wall Street Journal revealed USD 681 million in transfers to his personal bank accounts.
But since the scandal erupted last year, Najib has weathered the allegations by curbing scrutiny by authorities, purging officials demanding accountability, and stifling media reporting.

He insists the USD 681 million was a gift from the Saudi royal family, most of which he returned. A Saudi official in April said that was true, but only after weeks of silence that cast doubt on the claim.
In a more recent report, the newspaper said Malaysian investigation documents indicated more than USD 1 billion in 1MDB-linked money had been funnelled to Najib.
Najib and 1MDB vehemently deny that claim.
Najib has faced calls to resign but has tightened his grip on the ruling party and thwarted domestic investigations. His position is not seen as being under imminent threat.