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October 13, 2016updated 04 Apr 2017 1:22pm

Swiss regulators launch criminal proceedings against Falcon Private Bank over 1MDB case

The Office of the Attorney General of Switzerland (OAG) has launched criminal proceedings against Falcon Private Bank in connection with Malaysia’s 1MDB state investment fund scandal.

By Verdict Staff

The Office of the Attorney General of Switzerland (OAG) has launched criminal proceedings against Falcon Private Bank in connection with Malaysia’s 1MDB state investment fund scandal.

The move was taken based on information from 1MDB investigations and issues raised in the Swiss Financial Market Supervisory Authority (FINMA) from early October 2016, OAG said in a statement.

The attorney general suspected the Zurich-based bank of deficiencies in the internal organisation, and said that these made the bank unable to prevent the commission of the offences under investigation.

Earlier this week, Falcon was accused by Finma of serious anti-money laundering failings. The Swiss financial regulator said that the bank failed to carry out adequate background checks into transactions and business relationships related to 1MDB that were booked in Switzerland, Singapore and Hong Kong.

FINMA ordered Falcon to surrender CHF2.5m in illegally generated profits, banned the bank from entering into business relationships with foreign politically exposed persons for three years, and has also launched enforcement proceedings against two of the bank's former executives.

The regulator has also warned the bank of withdrawing its licence in case of a further breach.

The latest announcements come close on the heels of Monetary Authority of Singapore’s (MAS) decision to withdraw the license of Falcon's Singapore branch in relation to the 1MDB scandal. MAS withdrew the merchant bank status of the branch for serious failures in anti-money laundering controls and improper conduct by senior management.

Falcon is the second Swiss bank shut down in Singapore over violations linked to 1MDB. In May 2016, MAS ordered Swiss lender BSI Bank, also linked to the 1MDB scandal, to close its Singapore business due to serious breaches of anti-money laundering requirements, poor management oversight, and gross misconduct by some of its employees.

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