May 24, 2016 – Switzerland’s Office of the Attorney General (OAG) today opened criminal proceedings against Swiss bank BSI.
In a press release, the OAG said the decision to initiate proceedings was based on information revealed by the criminal proceedings in the 1MDB case and on issues raised by the Swiss Financial Market Supervisory Authority (FINMA) on May 23.
“The OAG suspects deficiencies in the internal organisation of the BSI SA bank. It is believed that due to these deficiencies, the bank was unable to prevent the commission of offences currently under investigation in the criminal proceedings relating to 1MDB,” it said.
The OAG also said that based on the information it has, the offences of money laundering and bribery of foreign public officials currently under investigation in the context of the 1MDB case “could have been prevented had BSI SA been adequately organised”.
In a separate statement, Swiss financial watchdog FINMA said it found BSI in breach of money laundering regulations in connection with 1MDB.
“In the case of 1MDB, the bank executed numerous large transactions with unclear pupose over a period of several years and, despite clearly suspicious indications, did not clarify the background to these transactions,” FINMA said.
Among other measures, FINMA has ordered the “disgorgement of profits” amounting to CHF95 million (US$96 million), and launched enforcement proceedings against two of the bank’s former top managers. The money disgorged will go to the Swiss government, it said.
At the same time, it had also approved the takeover of BSI by EFG International with the condition that BSI will be integrated and dissolved within 12 months.
In February, Swiss bank EFG International agreed to buy BSI from Brazil-based BTG Pactual for 1.33 billion Swiss francs (US$1.34 billion).
In a statement on Tuesday, BSI said with regard to the investigations into 1MDB, arising from activities occurring between 2011 and April 2015, the bank has cooperated fully with both FINMA and MAS. The financial penalties levied by both regulators will be paid from BSI’s General Reserves for Banking Risks.
As part of remedial actions, the bank said it has undertaken “significant steps” to strengthen management, including the introduction of a new Chief Risk Officer and the appointment of a new Group Legal Counsel both at Group Executive Board level to enhance the overall risk and compliance framework.
Additionally, BSI Group CEO Stefano Corduri has tendered his resignation with immediate effect, and Roberto Isolani was appointed as Group CEO. “The Board of
Directors thanks Stefano Coduri’s for his sense of responsibility and accepts his resignation,” the statement said.
FINMA’s and OAG’s announcements came on the heels of news that the Monetary Authority of Singapore (MAS) has ordered the bank’s Singapore operations to be shuttered, and imposed S$13.3 million in financial penalties for 41 breaches of anti-money laundering regulations.
Six members of BSI Bank’s senior management and staff have also been referred to the Public Prosecutor in Singapore to evaluate if they have committed criminal offences. One of them, Yeo Jiawei, is currently facing seven charges, including money laundering and cheating.
FINMA said cooperation with MAS was “particularly intensive” as the latter carried out on-site investigations at the BSI subsidiary in Singapore in parallel to the Swiss watchdog’s proceedings and identified “comparable control failures there”.