Second bank linked to 1MDB Malaysia scandal shut down
SINGAPORE’S central bank yesterday shut down a second Swiss bank under investigation for alleged money-laundering activities linked to Malaysian state fund 1MDB as it vowed strong action against violators.
The Monetary Authority of Singapore (MAS) said it had ordered Falcon Bank to cease operations because of “serious failures in antimoney-laundering [AML] controls and improper conduct” by senior management both at the head office in Switzerland and the local branch.
“Falcon Bank has demonstrated a persistent and severe lack of understanding of MAS’ AML requirements and expectations,” it said.
“Taking into account the totality of Falcon Bank’s conduct, MAS’ assessment is that the merchant bank will be unable to comply with these requirements and expectations going forward.”
The central bank said it imposed financial penalties totalling S$4.3 million (US$3.1 million) on Falcon Bank for 14 breaches of a law on preventing money laundering and countering the financing of terrorism.
MAS also said it had received information that Falcon Bank’s Singapore branch manager, Jens Sturzenegger, had been arrested on October 5 by the Commercial Affairs Department (CAD), the government’s white-collar crime investigation agency.
Singapore, a regional financial hub, last year launched a probe into illicit fund flows linked to 1MDB.
Allegations of misappropriations of millions of dollars from 1MDB have triggered a corruption scandal in neighbouring Malaysia that has embroiled Prime Minister Najib Razak. Both Mr Najib and 1MDB have strongly denied any wrongdoing.
Switzerland and the United States are also conducting their own investigations into 1MDB.
MAS announced that it has also fined local bank DBS and Swiss lender UBS for several breaches of antimoney laundering requirements.
It said the “control lapses observed in DBS and UBS relate to specific bank officers who failed to carry out their duties effectively” and that it did not find “pervasive control weaknesses” in these banks.
DBS was ordered to pay S$1 million for 10 violations while UBS was ordered to pay S$1.3 million for 13 breaches. The regulator in May kicked out Swiss bank BSI for similar violations linked to the 1MDB probe, the first time it ordered a bank to shut in 32 years.
At least three former BSI private bankers have been charged in Singapore in relation to the investigations.
In July, Singapore authorities said they had seized nearly US$180 million in assets through investigations into the 1MDB scandal.
Half of these assets were linked to Low Taek Jho – known as Jho Low – a jet-setting Malaysian financier who is a close family friend of Mr Najib. He helped set up 1MDB and played a key role in its financial decisions.
Singapore closely guards its reputation for financial integrity and has admitted that money laundering hurts its image.
The MAS also said it is in the final stages of assessment for the Singapore branch of Standard Chartered Bank and has referred Raffles Money Change, a local financial company, for investigation by the CAD.
The MAS said clients are assured that Falcon Bank, which is a branch of Falcon Private Bank Ltd in Switzerland, “has the full support of its head office, which is financially sound”.
Falcon Private Bank is owned by the International Petroleum Investment Company from Abu Dhabi, one of the world’s leading sovereign wealth funds.
Earlier, on October 10, Singapore charged two more former private bankers with forgery and failing to report suspicious transactions in cases linked to 1MDB.
Yak Yew Chee and Yvonne Seah were both hit with seven charges – three for forgery and four for failing to report suspicious transactions, court documents showed. Both worked for BSI.
The 57-year-old Mr Yak had worked as a private banker for Mr Low, his lawyer said.
According to the charge sheets, Mr Yak is accused of forging three reference letters to Swiss banks and funds, and of failing to report suspicious money transfers involving accounts belonging to Mr Low.
In the reference letters, which were dated February 2014, Mr Yak said the Low family was worth $1.63 billion.
Singapore has also charged another ex-BSI banker Yeo Jiawei and another man with various offences. Several other people are being questioned. –
The Centennial Tower where the Falcon Bank office in Singapore is located.