BY LISA JUCCA AND SAEED AZHAR
Reuters
May 25, 2016
HONG KONG/SINGAPORE – Singapore’s drastic move to shut Swiss bank BSI’s operations in the city-state over its dealings with scandal-hit Malaysian fund 1MDB is a wake-up call for wealth managers in Asia, which had been spared the large fines and sanctions seen in the West.
The private bank is the first casualty of money-laundering probes in at least six jurisdictions into state investor 1Malaysia Development Bhd, whose advisory board was chaired by Malaysian Prime Minister Najib Razak.
The Monetary Authority of Singapore (MAS) did not name 1MDB in a statement on Tuesday announcing it was shutting down of BSI’s business for “serious breaches of anti-money laundering requirements” and “gross misconduct” by some staff.
But details from a Swiss probe into 1MDB accuse BSI of routinely failing to carry out required background checks on large sums deposited.
In one case, according to the Swiss banking watchdog, BSI was happy to take $20 million after being told by a client the sum was “a gift”. In another, it accepted $98 million without any effort to clarify the origin of the funds.
While Western countries, in particular the United States, have censured banks including UBS (UBSG.S), Credit Suisse (CSGN.S), BNP Paribas (BNPP.PA) and Standard Chartered (STAN.L) for lapses on tax evasion or international sanctions, Asian regulators had been slow to bare their teeth.
The MAS move against BSI, however, signals a willingness to act to protect the reputation of key financial centers in the region, lawyers and bankers said.
“Asian regulators cannot sit on the sidelines and deal with the issues quietly because of the increasing global nature of these probes,” said James Comber, a partner with law firm Ashurst in Hong Kong. “No one regulator wants to be seen as failing to take action on its turf.”