Latest 1MDB scandal victim: Singapore shuts down Falcon Bank

Monetary Authority of Singapore orders closure of Falcon private bank’s unit in Singapore over ties with the 1MBD corruption scandal. On which grounds were the latest 1MDB scandal victim charged?

11 October, AtoZForexThe Monetary Authority of Singapore (MAS) on Tuesday shut down a second Swiss private bank operating in the city-state and fined banks DBS and UBS over alleged money-laundering activities connected with Malaysia’s 1MBD corruption scandal. The bank that got shut down is Falcon Prive Bank AG, one of the asset management specialised Swiss private banks. Falcon Bank is based in Zurich and its total asset was estimated at 1.968 billion, according to an analysis in 2012.

DBS and UBS fined S$1 million 

The MAS said it would fine DBS Bank Ltd. and UBS 1 million Singapore dollars (US$725,486) and S$1.3 million (US$943,132) for failures in anti-money laundering controls relating to their handling of 1MBD funds. Swiss regulators echoed the MAS fines, who said in a statement on Tuesday they would take 2.5 Million Swiss francs (US$2.54 million) from Falcon because of the illegal profits. Also, the regulator bans Falcon from dealing with foreign politically exposed persons for three years.

“Wealthy clients typically get very nervous when they read about their bank being the target of an anti-money laundering investigation. When a regulator goes as far as to shut down part of the business there’s every chance some clients will run for the hills.” said Jonas Floriani, a bank analyst at Keefe, Bruyette & Woods in London.

See also: Falcon brokers license suspension extension.

MAS exposed weakness of Falcon Private Bank

Falcon failed to adequately investigate the background of pass-through transaction totaling $681 million and the repayment of $620 million six months later, according to the Finma statement.

The MAS has found several weaknesses in the bank’s control in 2013 for client acceptance and transition surveillance which led to breaches of MAS’ AML requirements. Because of that Falcon Private Bank paid S$300,000 (US$217,849) as a composition fine. The MAS instructed the Falcon Private Bank to strengthen its AML controls. But that wasn’t all. The MAS has found more weaknesses in 2015. The inspection uncovered serious failings in the Head office’s management, the Singapore Branch Manager as well as in a large number of regulatory branches.

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