PROSECUTORS in Switzerland have opened a criminal investigation against Falcon Private Bank Ltd. on suspicion that it failed to prevent alleged money laundering linked to the Malaysian state fund 1MDB.
The move follows the arrest of the bank’s branch manager in Singapore last week, as well as fines and other penalties imposed on the bank by Swiss and Singaporean financial market regulators that were announced Tuesday.
Switzerland’s attorney general said in a statement Wednesday that his office suspects “deficiencies in the internal organization” at Falcon.
Swiss OAG commenced criminal proceedings against Falcon bank, 1MDB money laundering could hv been prevented had it been adequately organized
— Melissa Goh (@MelGohCNA) October 12, 2016
“It is believed that due to these deficiencies, the bank was unable to prevent the commission of the offences currently under investigation in the criminal proceedings relating to 1MDB,” the Office of the Attorney General (OAG) said in a statement on Wednesday.
The decision to open proceedings, the office said, is based on information revealed by the investigations in the 1MDB case and on issues raised in the decision of the Swiss Financial Market Supervisory Authority FINMA from early October 2016.
SEE ALSO: Singapore: Swiss bank shuttered; two others fined over 1MDB scandal
Investigators in Singapore, Switzerland, Hong Kong and the U.S. have been probing allegations that people close to Malaysian Prime Minister Najib Razak stole more than US$1 billion from 1MDB.
Malaysia’s Prime Minister Najib Razak. Pic: AP.
The Monetary Authority of Singapore said Tuesday it had ordered the private bank to close down in the city-state.
This is the second Swiss bank ordered shut by Singapore over violations linked to 1MDB, the state investment firm founded by Malaysia’s scandal-plagued prime minister Najib in 2009.
Singapore closes another bank bcos of 1MDB. Mesia is so damn powerfuk lah. We can close international banks in other countries.
— ArtHarun PhD (App) (@Art_Harun) October 11, 2016
1MDB is currently the subject of numerous multi-agency probes across the world, as well as a civil lawsuit filed recently by the United States’ Department of Justice (DoJ).
According to U.S. prosecutors, fund officials have diverted more than US$3.5 billion through a web of shell companies and bank accounts abroad.
Despite the allegations, Najib and his administration have vehemently denied any wrongdoing in their handling of 1MDB, from which hundreds of millions dollars were found deposited in the prime minister’s personal bank accounts.
The OAG said Swiss law allows the prosecution of a legal entity that is suspected of not taking all the reasonable organisational measures required to prevent natural persons from committing offences, in particular money laundering or corruption offences.
“The information suggests that the offences of money laundering (Art 305bis SCC) currently under investigation in 1MDB case could have been prevented had the Falcon Private Bank Ltd been adequately organised,” the office said.
“As in the case of natural persons, the presumption of innocence also applies to legal entities,” it added.
In a statement Tuesday, MAS said the Swiss private bank showed “serious failures in anti-money laundering controls and improper conduct by senior management” in Switzerland and Singapore.
The bank will have to cease operations in Singapore and pay a penalty of SG$4.3 million (US$3.12 million) for 14 breaches. These include not filing suspicious transaction reports and alerting the authorities of irregular activities in customer accounts.
Additional reporting from the Associated Press
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