Singapore shuts Falcon bank unit, fines DBS, UBS over 1MDB
SINGAPORE - ZURICHOct 12, 2016 - 12:00 am GMT+3
Oct 12, 2016 12:00 am
Singapore's central bank Tuesday shut down a second Swiss bank in the city-state and fined banks DBS and UBS in its biggest crackdown on alleged money-laundering activities connected with Malaysian sovereign fund 1MDB. The Monetary Authority of Singapore (MAS) said in a statement it had ordered Falcon Private Bank's Singapore branch to cease operating because of "a persistent and severe lack of understanding" of Singapore's money-laundering controls. It also accused Falcon's senior management in Switzerland and Singapore of "improper conduct".
In Zurich, the Financial Market Supervisory Authority (FINMA), ordered Falcon to turn over 2.5 million Swiss francs ($2.56 million) in what the watchdog said were illegal profits. It also said it has opened enforcement proceedings against two former Falcon executives, without citing them by name. Singapore authorities arrested the Singapore branch manager of Falcon Private Bank, Jens Sturzenegger, on Oct 6, MAS said. Zurich-based Falcon, owned by one of the world's leading sovereign wealth funds, Abu Dhabi's International Petroleum Investment Company (IPIC), said in a statement it "welcomes the completion of the regulators' investigations about its involvement with the 1MDB case".
MAS said it is working closely with Swiss financial watchdog FINMA to oversee an orderly closure of Falcon Bank in Singapore. DBS was fined S$1 million ($728,067) and UBS S$1.3 million for breaches in Singapore's law on prevention of money laundering. DBS and UBS said in separate statements they would take action against staff responsible for the lapses in their money-laundering controls. The MAS said it is also finalising its assessment of the Singapore branch of Standard Chartered Bank.
The MAS action against Falcon followed a similar move against Swiss-based BSI Bank's Singapore branch in May, also for failing to control money-laundering activities connected with 1MDB. That was the first time in 32 years Singapore had shut down a bank. Singapore has so far charged three former BSI bankers and others for their roles in 1MDB-related transactions.
Malaysia's 1MDB, once a pet project of Prime Minister Najib Razak who chaired its advisory board, is the subject of money-laundering investigations in at least six countries, including Switzerland, Singapore and the United States. The U.S. Department of Justice filed lawsuits on July 20th seeking to seize dozens of properties ties to 1MDB, saying that over $3.5 billion was misappropriated from the fund. The lawsuits do not name Najib but say around $700 million of misappropriated funds flowed into the accounts of "Malaysian Official 1", who U.S. and Malaysian officials have identified as Najib.
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Research Associate at Center for Islam and Global Affairs (CIGA) at Istanbul Sabahattin Zaim University