Singapore regulators ordered the closure Tuesday of Falcon Private Bank, citing alleged slack controls for transfers and improper conduct related to 1MDB, an indebted Malaysian state fund.
The Monetary Authority of Singapore said in a statement that the Swiss private bank showed “serious failures in anti-money laundering controls and improper conduct by senior management” in Switzerland and Singapore.
The bank will have to cease operations in Singapore and pay a penalty of 4.3 million Singapore dollars ($3.12 million) for 14 breaches. These include not filing suspicious transaction reports and alerting the authorities of irregular activities in customer accounts.
Falcon is the second bank to lose its license in connection with investigations into Malaysia’s 1MDB fund that have led Singapore to seize many bank accounts, fine banks and charge private bankers.
In 2013, the bank was fined 300,000 Singapore dollars ($217,612) for poor controls for client acceptance and insufficient scrutiny on transactions. The Monetary Authority said it found further, larger breaches and unprofessional conduct by its senior management two years later.
The government said the bank will have to close down in Singapore and pay a penalty of 4.3 million Singapore dollars ($3.12 million) for 14 breaches, such as not filing suspicious transaction reports and failing to alert the authorities to irregular activities in customer accounts.
“Falcon Bank has demonstrated a persistent and severe lack of understanding of… requirements and expectations,” the statement said. “Taking into account the totality of Falcon Bank’s conduct, MAS’ assessment is that the merchant bank will be unable to comply with these requirements and expectations going forward,” it added.
The authority said it was working with the Swiss Financial Market Supervisory Authority on the bank’s closure. Falcon Bank started its Singapore operations in 2008.
Falcon Private Bank said in a statement that it viewed Singapore’s decision as “regrettable and disappointing.” It said it was working toward an orderly winding down of its business in the city-state.
The bank said it welcomed an end to investigations into its links with 1MDB.
“With its committed staff, strong capital base and high liquidity ratio, Falcon Private Bank will now concentrate on further growing its franchise,” it said.
Falcon is the second bank to lose its license in connection with the 1MDB situation. Another Swiss bank, BSI, which is based in Lugano, Switzerland, was shut in May due to serious breaches in anti-money laundering requirements, poor management oversight and gross misconduct by some staff.
Swiss prosecutors investigating suspected embezzlement at the Malaysian state investment fund have said a Ponzi scheme appears to have been used to hide the embezzlement of $800 million from investments in natural resources by a former 1MDB subsidiary.
The Swiss attorney general opened an investigation last year of two former 1MDB officials and persons unknown on suspicion of bribery and money laundering, among other offenses.