The Singaporean authorities have uncovered serious lapses in anti-money laundering controls at UBS and Falcon banks, in relation to the unfolding 1MDB Malaysian sovereign wealth fund corruption investigation.
The Swiss banks were among five financial institutions named in a joint statement by Singapore’s financial regulator, police force and state prosecutor on Thursday. The Lugano-based BSI bank had previously been shut down in both Switzerland and Singapore as a result of its 1MDB activities.
The latest update from Singapore followed an announcement from the United States authorities on Wednesday that they are seeking to recover $1.37 billion (CHF1.35 billion) in funds allegedly stolen from 1MDB.
The Monetary Authority of Singapore (MAS), the island state’s financial regulator, has uncovered “control failings” at UBS, the Singapore branch of Standard Chartered and the local DBS bank.
“The preliminary findings are that there were instances of control failings in all three banks and, in some cases, weaknesses in the processes for accepting clients and monitoring transactions. There was also undue delay in detecting and reporting suspicious transactions,” the Singapore statement read.
“The deficiencies observed in DBS, SCB and UBS related to lapses in specific processes and by individual officers. The lapses were serious in their own right, and will be met by firm regulatory actions against the banks. However, the MAS’ inspections did not reveal pervasive control weaknesses or staff misconduct within these banks, unlike in the case of BSI Bank.”
UBS was last week named by the campaigning blog Sarawak Report as having helped shift more than $2 billion of suspect funds out of 1MDB. The bank made no official comment on the report, but it is believed that it submitted a suspicious transaction report with the authorities and is claiming that it is the victim of a complex fraud.
In relation to Falcon private bank, the Singaporean authorities found “substantial breaches of AML [anti-money laundering] regulations, including failure to adequately assess irregularities in activities pertaining to customers’ accounts and to file suspicious transaction reports.” The investigation into Falcon is ongoing some 1MDB activities were carried out in Switzerland.
“With reference to the ongoing investigations by the Monetary Authority of Singapore on 1MDB linked institutions and the statement released today, we would like to reiterate that we are in full cooperation with the authorities. We will comment further when the investigations are complete," said Falcon senior communications manager Urs Fehr in a written statement.
"Combating sophisticated international financial crime is complex and UBS is constantly enhancing its comprehensive AML processes. In this case, UBS self-reported the suspicious transactions and is working closely with regulators to address this matter," UBS said in a statement.
US seizure attempt
The office of the Swiss Attorney General, which has already launched criminal proceedings against BSI, is cooperating with the Singaporean authorities. On Wednesday the office confirmed that it is cooperating with the United States Department of Justice (DoJ).
The DoJ has given details of how $1.37 billion was syphoned out of 1MDB by corrupt officials and laundered through a variety of Swiss and other accounts, cloaked by shell companies in different countries, before being spent on property, art and even funding the Hollywood movie, The Wolf of Wall Street.
The DoJ has asked the federal courts to seize the proceeds of this alleged mass money laundering exercise. The total amount of funds stolen from the state-run wealth fund is estimated to total up to $4 billion.