Falcon Faces Swiss Criminal Probe over 1MDB

Falcon Private Bank, 1MDB, Swiss prosecutor, criminal

Falcon Private Bank's problems keep piling up: the day after having the license to operate in Singapore yanked by authorities and its branch manager in the city-state arrested, Swiss prosecutors said they are looking into the bank's dealings with 1MDB as well.

Switzerland's attorney general said it has started criminal proceedings against Falcon Private Bank, whose chairman insisted he had fought to keep the bank alive in Asia after it was accused of aiding corruption and money-laundering at 1MDB.

«The Office of the Attorney General suspects deficiencies in the internal organization of Falcon Private Bank Ltd.,» the prosecutor said in a statement on Wednesday.

«It is believed that due to these deficiencies, the bank was unable to prevent the commission of the offenses currently under investigation in the criminal proceedings relating to 1MDB.»

BSI in Similar Probe

The prosecutor is equally looking into Banca della Svizzera Italiana, or BSI, which was also booted from Singapore, following a referral from Swiss financial regulator Finma in May.

Finma had ordered 95 million Swiss francs in profits linked to 1MDB seized among other sanctions, which the bank is fighting in court.

BSI is in the process of being sold to EFG International, which is a fate that Falcon would prefer to avoid.

Banks Could Have Prevented Crime

In both cases, the prosecutor argues that the banks could have prevented money-laundering linked to 1MDB had they been «adequately organized».

Falcon said it is cooperating in the criminal probe.

Switzerland's prosecutor has worked in lockstep with a wider, U.S.-led investigation into what is suspected to be billions of dollars of misappropriation from state coffers, some of which was used to fund a reelection campaign for Malaysian Prime Minister Najib Razak, buy fine art and jewelry, and produce «The Wolf of Wall Street,» an acclaimed Hollywood film starring Leonardo DiCaprio.

1MDB Swiss Probe Widened

Swiss officials have stepped up pressure on Malaysian authorities, displeased with the lack of legal cooperation provided so far.

The Falcon investigation represents a widening of Switzerland's probe into 1MDB's murky finances: the prosecutor is already investigating two former representatives of 1MDB, as well as two executives formerly in charge of Abu Dhabi's sovereign wealth funds.

Switzerland alleges a Ponzi scheme, in which new investor money is used to fulfill obligations to older investors, which eventually collapses, as well as the misappropriation of $800 million in natural resource investments by a sub-fund of 1MDB. 

 

 

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