24 May AtoZForex, Vilnius — The regulator in Singapore has shut down BSI bank in connection to the distressed development fund 1MDB of Malaysia. The prosecutors in Singapore as well as in Switzerland are weighing up criminal charges. BSI Bank was founded in the year 1873 in Lugano, Switzerland. It is a private bank that provides services to individuals possessing high net worth.
Reasoning behind the BSI Bank shut down
The Swiss-based private bank BSI would fail to keep its status as a merchant bank within Singapore. The BSI Bank shut down was ordered due to serious breached in the requirements of anti-money laundering, poor oversight from the management and immense misconduct by the BSI bank staff.
BSI has been accounted for 41 breaches with a total fine of SGD 13.3 Million (9.6 Million Dollars, 8.6 Million Euros, 6.7 Million Pounds). The breaches were accounted against the Monetary Authority of Singapore’s (MAS) regulation towards preventing money laundering and the countering of terrorism financing.
Previous Breaches by BSI Bank
In an MAS inspection in 2011, BSI was found guilty of process and policy lapses occurring at the front office along with control functions being weakly enforced. The lapses were consequently corrected. The bank was inspected once again in 2014 where serious shortcomings were discovered in processes of due diligence, on the underlying investment fund assets, structured for the customers of BSI. Based on repetitive lapses in its control regime, the management of BSI was ordered to scrutinize internal controls and risk management processes at the bank more effectively. The third MAS inspection in 2015 uncovered numerous breaches relating to regulations of anti-money laundering while reaffirming BSI’s pattern of non-compliance.
MAS’s managing director Ravi Menon stated the following about the BSI Bank shut down: “BSI Bank is the worst case of control lapses and gross misconduct that we have seen in the Singapore financial sector. “It is a stark reminder to all financial institutions to take their anti-money laundering responsibilities seriously.”
1MDB Ties with BSI Bank
The Attorney General of Switzerland stated that they were undertaking legal action based on information sourced from a criminal investigation surrounding 1 Malaysia Development Bhd (1MDB) in relation to embezzlement and money laundering on a global scale.
1MDB that is entirely owned by the Malaysian Government was founded to direct initiatives towards strategic long-term economic development. In 2015, it was presumed that the company had used its position to redirect state funds into Najib Razak (Prime Minister) and his associates’ accounts.
The Office of the Attorney General (OAG) in Switzerland stated that it possessed information indicating the possibility of preventing the money laundering and bribery investigation if BSI had acted ethically and effortfully towards avoiding the malpractice.
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