Singapore’s central bank on Tuesday ordered BSI’s operations in the city-state to close down as Switzerland opened criminal proceedings against the private bank based on its investigation into transactions by Malaysia’s troubled state fund, 1MDB.
The Monetary Authority of Singapore (MAS) said it had withdrawn Swiss-based BSI Bank’s status as a merchant bank in Singapore and directed it to shut down for serious breaches of anti-money laundering requirements and other lapses.
In a statement, MAS said it has referred to the public prosecutor the names of six current and former members of BSI Bank’s senior management and staff to evaluate whether they have committed criminal offences.
“This is the first time that MAS is withdrawing its approval for a merchant bank since 1984, when Jardine Fleming (Singapore) Pte Ltd was shut down for serious lapses in its advisory work,” MAS said.
The investigations in Switzerland and Singapore surrounding 1Malaysia Development Bhd (1MDB) focus on alleged fraudulent financial transactions that were used to funnel money to politically-connected individuals and possible money laundering.
The probes into 1MDB have cast an unwelcome spotlight on Singapore, which has been trying to burnish its anti-money laundering credentials.
“BSI Bank is the worst case of control lapses and gross misconduct that we have seen in the Singapore financial sector,”
said Ravi Menon, managing director of MAS, in a statement.
BSI said in a statement its group CEO Stefano Coduri will step down and it has undertaken steps to strengthen management, including the introduction of a new chief risk officer and the appointment of a new group legal counsel.
1MDB did not immediately respond to a request for comment.
Swiss authorities said in February that a criminal investigation into 1MDB had revealed that about $4 billion appeared to have been misappropriated from Malaysian state companies.
The Malaysian fund, whose advisory board is chaired by Malaysian Prime Minister Najib Razak, was also probed by Malaysian authorities.
The Malaysian attorney general’s office in January cleared Najib himself of any criminal offences or corruption, declaring that $681 million deposited into his personal bank account was a gift from Saudi Arabia’s royal family.
Singapore’s white collar police, the Commercial Affairs Department (CAD), have discovered a web of murky transactions at BSI, charged two people in connection with its investigations, frozen bank accounts and questioned bankers in what it described as its most complex cross-border investigation ever.