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Switzerland's BSI Bank ordered to shut down in Singapore

Xinhua, May 24, 2016 Adjust font size:

The Monetary Authority of Singapore (MAS) announced on Tuesday it has ordered the closure of Switzerland's BSI Bank in Singapore.

A notice of intention has been served to the bank to withdraw its status as a merchant bank in Singapore for "serious breaches of anti-money laundering requirements, poor management oversight of the bank's operations and gross misconduct by some of the bank's staff."

In addition, MAS has referred to the public prosecutor the names of six members of BSI Bank's senior management and staff to evaluate whether they have committed criminal offences.

BSI Bank has been operating as a merchant bank in Singapore since November 2005 where it offers private banking services. It is a wholly-owned subsidiary of BSI SA, a bank founded in 1873 and headquartered in Switzerland.

"Clients and customers of BSI Bank are assured that the bank is solvent and has assets in excess of its liabilities and commitments. It also has the full support of its parent bank, BSI SA, in Switzerland. MAS is working closely with the Swiss Financial Market Supervisory Authority (FINMA), the home regulator of BSI SA, to oversee an orderly closure of BSI Bank in Singapore", MAS said in a statement.

In 2011, MAS inspected BSI Bank and found policy and process lapses at the front office and weak enforcement by control functions, which were soon rectified, MAS said.

In 2014, MAS inspected the bank again and uncovered serious shortcomings in its due diligence checks on assets underlying the investment funds structured for the bank's customers.

Given repeated findings of weaknesses in its control regime, MAS instructed BSI Bank's management to increase scrutiny of the bank's risk management processes and internal controls.

A more intrusive third inspection by MAS in 2015 also revealed multiple breaches of anti-money laundering regulations and a pervasive pattern of non-compliance.

Due to repetitive lapses as well as misconducts in control which led to serious breaches of various anti-money laundering regulations and other problems, MAS decided to withdraw BSI Bank's status as a merchant bank, MAS said.

This is the first time that MAS is withdrawing its approval for a merchant bank since 1984, when Jardine Fleming (Singapore) Pte Ltd was shut down for serious lapses in its advisory work. Endit