The Monetary Authority of Singapore (MAS) has ordered Swiss wealth manager Falcon Private Bank to cease operations in the city-state over lapses related to its handling of funds tied to scandal-hit Malaysian sovereign fund 1MDB.
The move comes after MAS - Singapore's central bank - in May ordered the shutdown of another Swiss private bank, BSI, and
1MDB, once a pet project of Malaysian Prime Minister Najib Razak, who chaired its advisory board, is the subject of money-laundering investigations in at least six countries, including Switzerland, Singapore and the U.S., after billions of dollars allegedly were funneled from the fund to the private bank accounts of individuals connected with Najib.
Najib has denied any wrongdoing and said Malaysia would cooperate with the international investigations.
Being drawn into the scandal, however, has been an blow to Singapore, one of the world's leading wealth management centers, which prides itself on its clean reputation.
As well as pulling Falcon's banking license, MAS also on Tuesday imposed financial penalties on local banking giant DBS Bank and the Singapore branch of Swiss bank UBS for breaches of the city-state's anti-money-laundering (AML) requirements in their dealings with 1MDB.
"Falcon Bank has demonstrated a persistent and severe lack of understanding of MAS' AML requirements and expectations," MAS said in a statement. "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," MAS added.
It imposed a 4.3 million Singapore dollar ($3.1 million) financial penalty on Falcon.
MAS said that the improper conduct at Falcon involved the bank's former chairman, its Singapore branch manager, and senior managers at Falcon's head office, which "impaired the effectiveness of the Singapore branch's compliance function."
"Their interference was wrongful and egregious in nature," MAS said.
Falcon told Reuters that it the removal of its Singaporean banking license would not impact the strategic development of the bank, and that it was focused on expanding its business in Switzerland, the Middle East and London.