Rothschild fined $14m in 1MDB-linked case

Luxembourg says local arm of Swiss bank failed to safeguard against money-laundering

ZURICH • Luxembourg watchdogs have fined the local arm of Swiss private bank Edmond de Rothschild for its handling of funds linked to scandal-hit Malaysian investment fund 1MDB, a source familiar with the matter said.

The authorities and the bank confirmed Edmond de Rothschild had been fined nearly €9 million (S$14 million) for failing to take proper safeguards against money-laundering. They did not comment on news reports that the case concerned 1Malaysia Development Berhad (1MDB).

Paying the fine "marks the end of the proceeding in which it has actively participated", the bank said in a statement, noting that the Luxembourg arm had taken measures since the first half of last year to strengthen its compliance and risk control procedures.

The group installed a new CEO of Edmond de Rothschild (Europe) in Luxembourg last year in a management shake-up.

Swiss watchdog Finma said it was conducting its own enforcement proceedings against the bank to determine if the group had fulfilled anti-money-laundering standards.

Rothschild is the latest Swiss bank to be swept up in the 1MDB case, which has triggered money- laundering probes in at least six countries including Switzerland, Singapore and the United States. Malaysian Prime Minister Najib Razak, who chaired 1MDB's advisory board, has denied any wrongdoing.

As part of an extensive review into 1MDB-related transactions, Singapore has shut down the local units of Switzerland's BSI Bank and Falcon Bank due to failures of money-laundering controls and improper conduct by senior management, frozen millions of dollars and charged several private bankers.

The review uncovered a complex web of transactions involving shell companies and individuals operating in many jurisdictions, including the US, Switzerland, Hong Kong, Luxembourg and Malaysia.

Singapore's central bank last month fined Credit Suisse and United Overseas Bank a total of S$1.6 million for breaching anti-money-laundering rules in transactions related to 1MDB.

Last year, it fined DBS, UBS, Standard Chartered and private bank Coutts for breaching Singapore's anti-money-laundering laws in connection to 1MDB transactions.

Swiss agency Finma has already reprimanded Credit Suisse and UBS for dealings linked to 1MDB.

REUTERS

A version of this article appeared in the print edition of The Straits Times on June 23, 2017, with the headline 'Rothschild fined $14m in 1MDB-linked case'. Print Edition | Subscribe