The Swiss financial regulator has concluded its investigations into the Malaysian 1MDB scandal by finding Rothschild Bank AG and one of its subsidiaries in serious breach of anti-money laundering regulations.
The Swiss Financial Market Supervisory Authority (FINMA) said on Friday that it has appointed an auditor to make sure the bank and its Rothschild Trust vehicle properly implement an internal overhaul of its practices.
Rothschild Bank AG is the third Swiss bank to be directly implicated in the 1MDB fraud that saw billions of dollars syphoned off from the sovereign wealth fund into the pockets of corrupt officials.
BSI and Falcon banks have also been subject to FINMA enforcements. In addition, the Swiss Attorney General is conducting criminal probes into those two banks plus six unnamed individuals. The long-running scandal has also seen criminal actions in Malaysia, Singapore and the United States.
Concerning Rothschild, FINMA statedexternal link that the two entities were found to be “in breach of due diligence, reporting and documentation requirements”.
“Although there were early indications that this client could be involved in money laundering activities, the institutions decided nevertheless to enter into the relationship and at a later stage considerably expand it,” the statement read.
The entities also failed to document suspicious transactions or report them in a timely manner, FINMA ruled.
The regulator also said on Friday that it has officially closed its 1MDB related investigations following seven enforcement actions.