A Swiss private bank accused of turning a blind eye to shady money transfers and willful defiance of regulators will face criminal proceedings and be liquidated for its alleged role in the suspected embezzlement of USD 4 billion from a Malaysian state fund.
In a two-pronged crackdown, authorities in Singapore on today ordered the closure of the local branch of BSI, which is based in Lugano, Switzerland, citing serious breaches of anti-money laundering requirements, poor management oversight and gross misconduct by some staff.
And the Swiss attorney-general's office said it had begun criminal proceedings against the bank, pointing to signs that money laundering and bribery of foreign officials in the case of the 1MDB investment fund "could have been prevented had BSI SA been adequately organized."
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The Swiss financial markets supervisor, FINMA, detailed how the bank shunted tens of millions of dollars' through its system for years with little or no explanation or proper oversight.
BSI, "despite clearly suspicious indications, did not clarify the background to these transactions," it said.
The revelations, culminating a probe by FINMA begun three years ago, come three months after BSI's owner, Brazil's BTG Pactual, announced plans to sell the bank to Switzerland's EFG International for 1.5 billion-1.6 billion Swiss francs (USD 1.5 billion-USD 1.6 billion).
The two sides were aware then that regulators were looking into the case, people familiar with the case told The Associated Press.
The Swiss regulator said today it would approve the deal on condition that BSI be integrated into EFG and dissolved within a year.
The move comes after Switzerland's attorney general opened an investigation last year of two former 1MDB officials and persons unknown on suspicion of bribery and money laundering, among other offenses.
Investigations so far into 1MDB have indicated that USD 4 billion earmarked for development projects in Malaysia may have been misappropriated from state-owned companies.
Malaysian Prime Minister Najib Razak was behind the creation of 1MDB in 2009 and has been fighting allegations that cash from the fund flowed into his personal accounts. No public officials in Malaysia have yet been charged with wrongdoing, and the Malaysian government had no comment about the case today.
