MAS yanks licence of Swiss bank for 'serious' breaches
Swiss bank BSI had its licence yanked for what the MAS calls 'serious' breaches. It's the first time this has happened since 1984...
Six members of BSI Bank's senior management and staff have been referred by the Monetary Authority of Singapore (MAS) to the Public Prosecutor to evaluate if they have committed criminal offences.
Checks revealed that at least three of them left private bank RBS Coutts in 2009 to join BSI. Here is what we know about them:
Mr Hans Peter Brunner, 64, former CEO
He became CEO in March 2010 and retired in March.
The Swiss citizen became a Singapore permanent resident in 2007.He left RBS Coutts for BSI in 2009, and some 70 RBS Coutts staff later joined him.
Mr Raj Sriram, former deputy CEO
Mr Sriram was interim head for one month after Mr Brunner left. In April, he resigned to take a "career break".He was head
of private banking in Singapore and global head of South Asian business at RBS Coutts before joining BSI with Mr Brunner in 2009.
Mr Kevin Michael Swampillai, head of wealth management services
He is currently suspended by the bank as investigations into his involvement into Malaysian state fund 1MDB are ongoing.
A LinkedIn check showed he was an executive vice-president at RBS Coutts.
He is the manager of former BSI wealth planner Yeo Jiawei, the first bank employee to be charged in relation to 1MDB.
Mr Yak Yew Chee, former senior private banker
Mr Yak attempted to sue the Government to gain access to some of the $10 million in his bank accounts frozen by the authorities as part of their 1MDB probe.
The ex-employee of RBS Coutts handled the 1MDB account after he joined BSI in 2009. According to a Straits Times report, Mr Yak claimed he had earned more than $27 million in salary and bonuses from the bank between 2011 and 2015.
Mr Yeo Jiawei, 33, former wealth planner
Now in remand, he faces nine charges, including money laundering, cheating involving millions of dollars, forgery and perverting the course of justice.
Ms Yvonne Seah Yew Foong, senior private banker
Ms Seah was among several BSI executives involved in the 1MDB account.
The Monetary Authority of Singapore (MAS) inspected BSI Bank in 2011 and 2014, and found problems on both occasions which it then asked the bank to resolve.
In 2011, it was policy and process lapses at the front office and weak enforcement by control functions.
In 2014, MAS uncovered serious shortcomings in its due diligence checks on assets underlying the investment funds structured for the bank's customers. A third and deeper inspection last year revealed multiple breaches of anti-money laundering regulations and a pervasive pattern of non-compliance.
Yesterday, MAS announced it was withdrawing BSI Bank's status as a merchant bank.
It also revealed some details of the 2015 inspection which showed:
a. Widespread control failures which led to numerous serious breaches of various anti-money laundering regulations
b. Poor and ineffective oversight by the senior management of BSI Bank
c. Unacceptable risk culture, with blatant disregard for compliance and control requirements and MAS regulations
d. Specific regulatory lapses, including the processing of multiple unusual transactions which were essentially pass-through trades, often without economic substance.
Approvals of such transactions were based purely on faith of client representations, despite deficient documentation and concerns raised by the bank's compliance officers.
The Office of the Attorney-General of Switzerland said yesterday that it had opened criminal proceedings against BSI "based on information revealed by the criminal proceedings in the 1MDB case".
1. This is the first time the Monetary Authority of Singapore (MAS) has withdrawn its approval for a merchant bank in nearly 30 years.
In 1984, Jardine Fleming (Singapore) was shut down for serious lapses in its advisory work.
2. Swiss financial regulators yesterday approved the dissolution of BSI Bank over its links to embattled Malaysian state investment fund 1MDB.
In a statement, Swiss Financial Market Supervisory Authority (Finma) said it was approving the takeover of BSI by Zurich-based private banking group EFG International on the condition that BSI is integrated "and thereafter dissolved" within 12 months, reported Reuters.
Finma also ordered the seizure of 95 million Swiss francs (S$132 million) of BSI's "illegally generated" profits.
3. BSI group CEO Stefano Coduri announced his resignation with immediate effect yesterday.
4. Clients and customers can be assured that the bank is still solvent, said MAS. It is working closely with Finma to oversee an orderly closure of BSI Bank here.
5. Calls to BSI's Singapore office yesterday indicated they were still in operation. Staff approached by The New Paper said they were not allowed to comment.
- Additional reporting by Lakeisha Leo and Prisca Ang
By the numbers
Amount in financial penalties imposed by MAS on BSI Bank for 41 breaches found under MAS' Prevention of Money Laundering and Countering the Financing of Terrorism regulations. These include failure to perform enhanced customer due diligence on high-risk accounts, and to monitor for suspicious customer transactions on an ongoing basis.
BSI Bank is the worst case of control lapses and gross misconduct that we have seen in the Singapore financial sector. It is a stark reminder to all financial institutions to take their anti-money laundering responsibilities seriously.
- Mr Ravi Menon, managing director of MAS
Their ineffective governance led to a poor risk culture, which prioritised questionable customer demands ahead of compliance with anti-money laundering regulations and the bank's own internal controls.
- Monetary Authority of Singapore statement on May 24