1 October 2016
The Monetary Authority of Singapore (MAS) said in a statement  it had ordered Falcon Private Bank’s Singapore branch to cease operations due to “a persistent and severe lack of understanding” of Singapore’s money-laundering controls. It also accused Falcon’s senior management in Switzerland and Singapore of “improper conduct”.  MAS said that the authorities arrested Jens Sturzenegger, the Singapore branch manager of Falcon Private Bank, on 6 October 2016.

Zurich-based Falcon is owned by Aabar Investments, an Abu Dhabi state owned investment fund.

MAS said it is working closely with Swiss financial watchdog, Financial Market Supervisory Authority (FINMA), to ensure an orderly closure of Singapore Branch of the Falcon Bank. MAS has imposed on Falcon Bank financial penalties amounting to S$4.3 million.

MAS also found fault with DBS and UBS banks. It said that there were in the two banks, deficiencies in the on-boarding of new accounts, weaknesses in corroborating the source of funds, inadequate scrutiny of customers’ transactions and activities, and failure to file timely suspicious transaction reports. MAS has imposed fine amounting to S$1 million on DBS and S$1.3 million on UBS. MAS is investigating Standard Chartered Bank, Singapore Branch, and will make an announcement in due course.

Previously, in May 2016, MAS closed down BSI Bank for similar violations. Yesterday, two former senior members of the staff at BSI Singapore were charged with criminal offences for failing to disclose information on suspicious transactions. The offences relate to Low Taek Jho, a businessman linked to 1MDB who had accounts with BSI Singapore.

Mr Ravi Menon, Managing Director, MAS, said, “Keeping Singapore a clean and trusted financial centre is a shared responsibility. The board and senior management of each financial institution play a pivotal role.  They must put in place robust mechanisms to detect suspicious activities, promote strong risk awareness among their staff, and empower their compliance and risk management people. Most of all, they must set the tone from the top – that profits do not come before right conduct. MAS will work closely with the industry to ensure that standards are kept high and will take strong deterrent actions against institutions that fall short.”

The U.S. Department of Justice filed lawsuits on 20 July 2016 seeking to seize dozens of properties with ties to 1MDB, saying that over $3.5 billion was misappropriated from the fund.
FINMA said had identified around $3.8 billion associated with the 1MDB Group that was transferred to accounts at Falcon between 2012 and mid-2015. FINMA said that Falcon ignored internal warnings from the bank staff.