Compliance
BSI Says It Was Treated Harshly By Swiss Regulator, Files Court Appeal

The saga involving BSI and the claims around AML failings in Singapore continues, with the Swiss bank filing an appeal against its treatment by the Swiss regulator, FINMA.
Lugano-headquartered BSI
is appealing against the Swiss regulator’s allegedly harsh
assessment of its relationships and transactions related to
1Malaysia Development Bhd, the Asian state-run fund plagued by
corruption scandals, the bank said yesterday.
BSI has filed an appeal with the Swiss Federal Administrative
Court against FINMA's decision of 23 May over business
relationships and transactions involving BSI that were linked to
Malaysia’s 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,” it said in a statement.
In its 24 May statement, FINMA said: “Through business
relationships and transactions linked to the corruption scandals
surrounding the Malaysian sovereign wealth fund 1MDB, BSI AG
committed serious breaches of money laundering regulations and
'fit and proper' requirements. This is the outcome of
enforcement proceedings launched by the Swiss Financial Market
Supervisory Authority FINMA. In the case of 1MDB, the bank
executed numerous large transactions with unclear purpose over a
period of several years and, despite clearly suspicious
indications, did not clarify the background to these
transactions. Among other measures, FINMA has ordered the
disgorgement of profits amounting to SFr95 million.”
Since the autumn of 2013, BSI says it has been in “continuous and
transparent contact with FINMA relating to the 1MDB and related
matters”.
“Where deficiencies have been recognised, BSI has taken, and continues to take corrective measures. All client relationships related to 1MDB have been fully closed in early 2015. Accordingly, while BSI acknowledges certain internal shortcomings in the past, BSI believes that FINMA's decision, its timing as well as the manner in which FINMA decided to communicate it were wholly inappropriate,” the bank said.
“In its appeal, BSI in particular challenges FINMA's assessment
of the facts, and holds that the measures ordered are unlawful
and disproportionate under the applicable principles of
administrative law. In addition, FINMA’s communication of the
matter has severely harmed the reputation of the bank and its
employees,” it said.
The issue revolves around financial transactions linked to 1MDB.
The state-run fund is accused of allowing politicians and other
persons to siphon off money for personal use; 1MDB has repeatedly
denied wrongdoing. Recent events have highlighted anti-money
laundering risks in Singapore.
The Monetary Authority of Singapore moved in May this year to
rescind the merchant banking licence of a local subsidiary of
BSI, which is being acquired by Switzerland’s EFG International.
The MAS spoke of the “gross misconduct” of BSI Bank and numerous
failings on AML controls.
The MAS action against BSI Bank was the first time the regulator
has withdrawn such a licence since 1984, when Jardine Fleming
(Singapore) was shut down for serious lapses in its advisory
work.