Falcon bank failed to guard against conflicts of interest: MAS

An exterior view of the Monetary Authority of Singapore (MAS) in Singapore.
An exterior view of the Monetary Authority of Singapore (MAS) in Singapore.PHOTO: EPA

Falcon Private Bank has been operating as a merchant bank in Singapore since August 2008.

Swiss-based Falcon is owned by International Petroleum Investment Company (Ipic), the state fund of Abu Dhabi. Ipic has guaranteed billions of dollars of Malaysian state fund 1Malaysia Development Berhad's (1MDB) bonds.

The Monetary Authority of Singapore (MAS) undertook inspections on Falcon in 2013 and last year.

The 2013 check found weaknesses in the bank's controls that resulted in a $300,000 fine.

The 2015 inspection culminated in Falcon's bank licence being cancelled yesterday.

The MAS said Falcon's head office had failed to guard against conflicts of interest when managing the account of a customer associated with former board chairman Mohamed Ahmed Badawy Al-Husseiny.

Al-Husseiny, an American, "misled the Singapore branch into processing the customer's unusually large transactions despite multiple red flags", the MAS said. He was also chief executive of another government investment company, Aabar Investments PJS, which was involved with 1MDB's bond deals from 2012.

Falcon Bank said yesterday that losing its Singapore licence was "regrettable", but welcomed the news that the 1MDB case had been closed.

The bank expects to close the branch, which has around 35 employees, in the next few months, Reuters reported.

A version of this article appeared in the print edition of The Straits Times on October 12, 2016, with the headline 'Falcon bank failed to guard against conflicts of interest: MAS'. Print Edition | Subscribe