BSI Singapore shutdown won't affect our investments: 1MDB

PETALING JAYA: 1Malaysia Development Bhd (1MDB) said its "various fund investments" have not been impacted by the central bank of Singapore's move to revoke the merchant banking licence of BSI Singapore and a criminal investigation into parent BSI SA by the Swiss attorney-general's office.
"1MDB confirms that its ownership of various fund investments has not been impacted by the announcements today (yesterday)," it said in the press release yesterday.
Previous announcements by 1MDB show that BSI Singapore holds about US$1.1 billion (RM4.5 billion) of its funds in the form of "units". The amount was part of US$2.3 billion that 1MDB had placed with a Cayman Islands fund manager in 2012. No specific mention of the funds was made in the statement by 1MDB.
1MDB also stated that it has not been contacted by any foreign lawful authority on matters relating to the company but remains committed to full cooperation, subject to advice from the relevant domestic lawful authorities, and in accordance with international protocols governing such matters.
In a double whammy yesterday, the Swiss attorney-general's office launched a criminal investigation into BSI SA, while the Monetary Authority of Singapore (MAS) fined and ordered the closure of BSI Singapore' operations in the republic after alleged serious anti-money-laundering failures.
MAS served BSI Singapore notice of financial penalties amounting to US$13.3 million for 41 breaches.
BSI Singapore, which has been operating since November 2005, offers private banking services.
The MAS order comes after serious shortcomings were found in BSI Singapore over the course of five years. A more intrusive third inspection by MAS in 2015 revealed multiple breaches of anti-money laundering regulations and a pervasive pattern of non-compliance.
MAS said it served BSI Singapore notice of intention to withdraw its status as a merchant bank in Singapore "for serious breaches of anti-money laundering requirements, poor management oversight of the bank's operations, and gross misconduct by some of the bank's staff".
This is the first time since 1984 that MAS has withdrawn a merchant bank's licence.
"BSI Singapore is the worst case of control lapses and gross misconduct that we have seen in the Singapore financial sector," MAS managing director Ravi Menon said.
MAS, however, sought to assure clients and customers of BSI Singapore that it is solvent and has assets in excess of its liabilities and commitments. It also has the full support of its parent bank, BSI SA.
MAS is working closely with the Financial Market Supervisory Authority (Finma), the home regulator of BSI SA, to oversee an orderly closure of BSI Bank.
The Swiss attorney-general's office said it launched criminal proceedings against BSI SA after an investigation by Finma found the bank in "serious breach" of anti-money-laundering regulations.
Finma in a statement on its website said in the case of 1MDB, BSI Singapore executed numerous large transactions with unclear purpose over several years and, despite clearly suspicious indications, did not clarify the background to these transactions. Among other measures, Finma has ordered the seizure of profits amounting to Sfr95 million (RM394.7 million) from BSI SA.
Meanwhile, BSI SA group CEO Stefano Coduri has stepped down.
Finma also said it was approving the takeover of BSI SA by private banking group EFG International on the condition that BSI is integrated and then dissolved within 12 months.