Singapore shuts down bank linked to 1MDB, as criminal proceedings launched

The Monetary Authority of Singapore (MAS) announced on Tuesday that it has ordered the closure of Switzerland’s BSI Bank, as Swiss prosecutors opened criminal proceedings against the bank based on investigations into Malaysia’s troubled state fund 1MDB.

In a statement, MAS said it had served BSI Bank “notice of intention to withdraw its status as a merchant bank in Singapore for serious breaches of antimoney laundering requirements, poor management oversight of the bank’s operations, and gross misconduct by some of the bank’s staff.”

It added that it has referred the names of six members of BSI Bank’s senior management and staff to the Public Prosecutor to evaluate whether they have committed criminal offenses, and has ordered the bank to pay financial penalties of $13.3 million.

“BSI Bank is the worst case of control lapses and gross misconduct that we have seen in the Singapore financial sector. It is a stark reminder to all financial institutions to take their antimoney laundering responsibilities seriously,” MAS’s Managing Director Ravi Menon said in the statement.

BSI, which has been operating as a merchant bank in Singapore since 2005, is a subsidiary of the Switzerlandheadquartered bank BSI SA.

Swiss financial regulators also announced on Tuesday that they have opened criminal proceedings against the bank over its links to corruption allegations against 1MDB.

The probe “is based on information revealed by the criminal proceedings in the 1MDB case,” Switzerland’s Office of the Attorney General (OAG) said in a statement.

“The OAG suspects deficiencies in the internal organization 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 added.

In a statement of its own, BSI said it has cooperated fully with Swiss and Singaporean authorities into the probe into 1MDB.

Its chief executive, Stefano Coduri, has resigned with immediate effect.

Malaysia’s 1MDB fund is faced with numerous international investigations over allegations that it was used to funnel money to individuals including Malaysian Prime Minister Najib Razak.