Singaporean monetary regulator has ordered that the local branch of the Swiss bank Falcon Bank should cease operations as a result of its connection to the money-laundering activities of the under-attack Malaysian sovereign fund 1Malaysia Development Bhd.
In a statement released on Tuesday, the Monetary Authority of Singapore said it has ordered the closure of the Falcon Private Bank branch in the city-state for considerable breaches of its anti-money laundering regulations, accusing the bank’s senior management of misconduct.
The Singaporean central bank also disclosed that local branch manager of Falcon Private Bank, Jens Sturzenegger, has been arrested. He was arrested on Oct. 5 by the city’s Commercial Affairs Department.
“Falcon Bank has demonstrated a persistent and severe lack of understanding of MAS’ AML requirements and expectations,” the MAS said. “Taking into account the totality of Falcon Bank’s conduct, MAS’ assessment is that the merchant bank will be unable to comply with these requirements and expectations going forward.”
The Swiss bank has been fined S$4.3 million ($3.1 million) for breaching 14 provisions of the anti-money laundering laws of Singapore. It has been accused of failing to duly assess customers’ accounts for irregularities and to report suspicious transactions, among other charges.
The Singaporean regulator revealed that it wasn’t the first time the private bank, which commenced operations in the city in 2008, had been found wanting. It said it uncovered “an even larger number” of breaches and “serious failings” by senior management after an inspection in 2013. A fine of S$300,000 was imposed on Falcon for those lapses.
Falcon is the second Swiss bank to be shut in Singapore in recent months for connection with money-laundering activities of 1MDB. The branch of BSI Bank in the city was ordered to be shut for similar reason in May, making it the first bank to receive such punishment in over 30 years.
Back home, Financial Market Supervisory Authority (FINMA) has ordered Falcon Bank to surrender to it 2.5 million Swiss francs ($2.56 million) which it considered as illegal profits. The Swiss regulator said in a statement released on Tuesday that the bank handled $3.8 billion in 1MDB fund flows from 2012 to the summer of 2015. It noted that the funds were “generally moved on quickly” and that the bank failed to investigate the unusual, high-risk transactions it brought to its notice.
FINMA has also commenced enforcement proceedings against two former Falcon executives, whose names have not been given. It has also threatened to withdraw the bank’s operating license it further money-laundering rule breaches were discovered.
The Swiss and Singaporean financial regulators will work together to ensure orderly closure of the Falcon Bank branch in Singapore, according to MAS.
Singapore’s financial regulator, which promised earlier in the year to take stronger action against money laundering also fined the banks UBS and DBS the amount of S$1.3 million and S$1 million respectively. The fines were for money-laundering control lapses seen in the banks.
Originally known as Ueberseebank, Falcon was founded in 1965. The Zurich-based bank had its name changed in 2009 after it was acquired by Abu Dhabi government-controlled investment firm Aabar.