Swiss regulator also acts against Falcon Private Bank, disclosing its handling of S$5.24b in 1MDB-related assets

Falcon Private Bank's logo seen at its Zurich headquarters on Sept 22, 2016.
Falcon Private Bank's logo seen at its Zurich headquarters on Sept 22, 2016. PHOTO: REUTERS

SINGAPORE - The Swiss Financial Market Supervisory Authority (Finma) announced on Tuesday (Oct 11) sanctions against Falcon Private Bank for serious breaches of money-laundering regulations over its handling of some US$3.8 billion (S$5.24 billion) in assets linked to scandal-hit Malaysian state investment fund 1MDB.

Its announcement coincides with MAS' own move to shut down Falcon's branch in Singapore, the second 1MDB-linked bank to be so penalised in the Republic.

It ordered Zurich-based Falcon, which is owned by Abu Dhabi's sovereign wealth fund International Petroleum Investment Co (IPIC), to surrender 2.5 million Swiss francs (S$3.5 million) in illegally generated profits, and warned that the bank's licence would be withdrawn in the event of a further breach. 

Finma said it has also opened enforcement proceedings against two former Falcon Bank executives, without identifying them.

 
 
 

The bank was also banned from entering into business relationships with foreign politically exposed persons for a period of three years.

Finma said Falcon Bank had seriously breached money-laundering regulations by failing to carry out adequate background checks into transactions and business relationships associated with 1MDB which were booked in Switzerland, Singapore and Hong Kong.

Said the watchdog: "Assets amounting to approximately US$3.8 billion were transferred to accounts at Falcon and associated with the 1MDB Group during that period. These funds were generally moved on quickly.

"The business relationships and transactions booked in Switzerland and at Falcon's Singapore and Hong Kong branches were unusual and involved a high level of risk for the bank both through their nature and the amounts transacted."