The Monetary Authority of Singapore on Tuesday ordered the closure of private bank BSI Bank Ltd., citing breaches of the country's anti-money laundering laws and gross misconduct by staff.
BSI Bank had been linked to 1Malaysia Development Berhad, a Malaysian development fund at the center of a political scandal — prompting numerous investigations over the past year, both within Malaysia and by authorities overseas, including Singapore, the U.S. and Switzerland.
Tuesday's MAS announcement didn't mention 1MDB in connection with what the Singaporean central bank said was its third inspection of BSI Bank over the past five years. The latest “more intrusive” inspection revealed “multiple breaches of anti-money laundering regulations and a pervasive pattern of non-compliance,” the announcement said.
An MAS spokesman couldn't immediately be reached for comment on whether Singapore's investigations into 1MDB-related matters had led to its findings regarding BSI Bank.
However, BSI SA, in a separate announcement Tuesday, drew a direct connection, saying it has continued to cooperate fully with investigations by Swiss and Singaporean regulators into 1MDB.
In the MAS announcement, Ravi Menon, managing director at the monetary authority, said, “BSI Bank is the worst case of control lapses and gross misconduct that we have seen in the Singapore financial sector.”
The announcement said BSI Bank has been served notice that MAS will impose penalties of S$13.3 million ($9.7 million) for 41 breaches of money laundering regulations.
The announcement went on to say that MAS has referred the names of six present or former senior managers of the bank to the public prosecutor “to evaluate whether they have committed criminal offenses.”
The BSI SA announcement, meanwhile, highlighted BSI's steps to “continuously” improve its risk and compliance culture, including the introduction of a new chief risk officer position, and the appointment of a new group legal counsel, both at the group executive board level.
The announcement said “BSI acknowledges that these events are important steps with regard to the regulators to resolve legacy issues and removing uncertainty for clients and staff in relation to 1MDB.”
BSI Bank is a wholly owned subsidiary of Lugano, Switzerland-based BSI Ltd., which in turn was acquired last year by BTG Pactual, which is in the process of selling the BSI group to Zurich-based EFG International.
Noting that Swiss regulatory authorities have approved EFG's acquisition of BSI, Tuesday's announcement said MAS will allow the transfer of BSI's Singapore assets and liabilities to EFG Bank's Singapore branch, or to BSI SA.
The announcement noted that the MAS move marks the first time it has withdrawn its approval for a merchant bank since 1984, when Jardine Fleming (Singapore) was shut down for lapses in its advisory work.
