Swiss Attorney General Expands Probe of Malaysia’s 1MDB Fund

Swiss Attorney General Expands Probe of Malaysia’s 1MDB Fund

Zurich-based lender Falcon investigated for possible failure to prevent alleged money laundering tied to 1MDB

ZURICH—Switzerland’s Office of the Attorney General has expanded its scrutiny of Malaysian public investment fund 1Malaysia Development Bhd., or 1MDB, by opening a criminal probe of a small Swiss lender recently penalized for its 1MDB ties.

The Swiss attorney general’s office said on Wednesday that internal “deficiencies” at Zurich-based Falcon Private Bank AG may have caused it to fail to prevent alleged money laundering associated with 1MDB. The Swiss authorities opened a broad 1MDB investigation last year, and have previously said they placed another Swiss bank, BSI SA, under a related criminal probe. The status of that probe is unclear.

The Wall Street Journal reported last year that the Swiss attorney general’s office was examining transactions tied to 1MDB that were made through Falcon. A spokesman for the bank said on Wednesday that it has been cooperating with the attorney general’s office, and that it “will continue to do so in order to contribute to an expeditious clarification of the allegations against the bank.” A spokeswoman for BSI declined to comment.

The latest disclosure follows announcements from regulators in Switzerland and Singapore that cited alleged breaches of money laundering rules at Falcon related to its dealings with 1MDB. On Tuesday, the Monetary Authority of Singapore ordered Falcon to shut down its local branch, while Switzerland’s financial regulator Finma ordered the bank to disgorge 2.5 million Swiss francs ($2.5 million) in what it said was illegally generated profit.

The alleged misappropriation of billions of dollars from 1MDB has been the focus of investigations in a number of countries. The Swiss attorney general’s office recently said it suspects an alleged “Ponzi scheme” at the fund, which was established in 2009 by Malaysian Prime Minister Najib Razak.

The Wall Street Journal has previously reported that global investigators believe that more than $1 billion originating from 1MDB landed in Mr. Najib’s bank accounts. Mr. Najib has denied any wrongdoing. 1MDB has denied wrongdoing and has said it is cooperating with authorities.

Switzerland’s Finma said on Tuesday that roughly $3.8 billion in assets associated with 1MDB were transferred to accounts at Falcon between 2012 and last year, and “were generally moved on quickly.”

Swiss Attorney General Expands Probe of Malaysia’s 1MDB Fund
By John Letzing
Oct. 12, 2016 – WSJ


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