BSI appeals against $133m penalty over 1MDB links

 An employee enters the reception area of Swiss bank BSI's office in Singapore on May 24, 2016.
An employee enters the reception area of Swiss bank BSI's office in Singapore on May 24, 2016. PHOTO: REUTERS

GENEVA • Private bank BSI, which is being acquired by EFG International, is challenging a 95 million Swiss franc (S$132.8 million) penalty issued by Switzerland's financial regulator Finma over the lender's ties to 1Malaysia Development Berhad (1MDB).

"BSI believes that Finma's procedure leading to the decision was flawed in many respects and Finma's decision, as such, is disproportionate and incorrect," the company said in e-mailed statement yesterday, after lodging an appeal with the country's Federal Administrative Court.

"In addition, Finma's communication of the matter has severely harmed the reputation of the bank and its employees," it said.

Finma's move last month coincided with Singapore's financial regulator's decision to strip BSI of its banking licence over ties to troubled 1MDB. The Malaysian fund is at the centre of a multi-billion-dollar graft scandal, and its transactions have triggered investigations on three continents. The United States, Swiss and Singaporean prosecutors are investigating whether as much as US$4 billion (S$5.3 billion) may have been embezzled and laundered through 1MDB.

Both 1MDB and Malaysian Prime Minister Najib Razak, who headed the fund's advisory board, have repeatedly denied wrongdoing.

BSI was ordered to give up 95 million Swiss francs of profit because the bank "ignored clear warning signals" about the risk of some transactions as it pursued higher-margin returns, Mr Mark Branson, head of the Swiss regulator known as Finma, said last month.

Finma also said BSI had repeatedly missed red flags in various transfers involving 1MDB over several years, and failed to double-check potentially suspect transactions, including a deposit of US$20 million described by a client as a"gift".

Finma's spokesman Vinzenz Mathys said its decisions can be challenged and subject to judicial review and "that's what's happening here".

Mr Rocco Maglio, a spokesman for the court, said he could not immediately confirm receipt of the appeal.


A version of this article appeared in the print edition of The Straits Times on June 24, 2016, with the headline 'BSI appeals against $133m penalty over 1MDB links'. Print Edition | Subscribe