Swiss Bank Rothschild Tied to Malaysia Money Laundering
Switzerland’s financial oversight agency said Rothschild Bank and a subsidiary violated money laundering rules tied to a financial scandal that brought down Malaysia’s corruption-ridden former government.
Swiss market regulators FINMA also said it had finished seven investigations into the case in which Malaysia’s multi-billion dollar state fund raided to buy everything from US real estate to artworks, the Swiss news site The Local said.
“Rothschild Bank AG and one of its subsidiaries have been found to be in serious breach of money laundering rules in the context of 1MDB,” a FINA statement said, referring to 1 Malaysia Development Berhad, a strategic development company owned by the Ministry of Finance.
“They were in breach of due diligence, reporting and documentation requirements,” it added.
The watchdog found that Rothschild and a subsidiary failed to act on “early indications” that a significant client “could be involved in money laundering.”
The charges essentially said that the bank knew the assets were likely dirty but went ahead in accepting money before reporting the dealings to the regulators “after a substantial delay,” the report said.
“We note the comments made by the regulator and acknowledge and regret those instances where it has been identified that breaches occurred,” Rothschild said in a statement emailed to Agence France Presse.
Despite the severity of the findings, only modest fines were imposed because the bank said it had put in place measures to prevent it from happening again.
FINMA said it will appoint an auditor to review the schemes as criminal cases tied to 1MDB were still in place.
Attorney general Michael Lauber has said his office is probing possible wrongdoing by six individuals and two banks, but that former Malaysian prime minister Najib Razak is not a target, although he was arrested earlier this year after being accused of alleged breach of trust and abuse of funds.
FINMA said Rothschild Bank and Rothschild Trust didn’t check on the source of assets from a client and ignored signs the funds could have been part of a money-laundering scheme.
“We constantly strengthen our systems and procedures and are determined to continue to do so to identify and combat the increasingly sophisticated financial crime faced by the industry,” the bank’s spokesperson told Reuters in relation to the claims by FINMA.
An investigation into alleged illegal practices by 1MDB has been in the works for nearly seven years and its top management is being probed as well for reported embezzlement of monies targeted for state economic development projects.
The FBI joined the case three years ago with investigators from Hong Kong, Singapore, Luxembourg, the UAE, the Seychelles and Australia also involved.