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”, the MAS said in a statement.
The bank has also been fined S$13.3m ($9.58m) for 41 breaches of anti-money laundering regulations. They include a failure to perform enhanced customer due diligence on high-risk accounts and failure to monitor for suspicious customer transactions on an ongoing basis.
According to the MAS, BSI Bank has been operating as a merchant bank in Singapore since November 2005, offering private banking services. The lender 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. [The] MAS is working closely with the Swiss Financial Market Supervisory Authority, the home regulator of BSI SA, to oversee an orderly closure of BSI Bank in Singapore,” the authority said.
Meanwhile, six current and former members of the bank have been referred to the public prosecutor to evaluate if they have committed criminal offences.
The six people are former CEO Hans Peter Brunner, former Deputy CEO Raj Sriram, head of wealth management services Kevin Michael Swampillai, who is currently suspended by the bank, former senior private bankers Yak Yew Chee and Seah Yew Foong, and former wealth planner Yeo Jiawei, who is currently in remand and has been charged for various offences.
In February, EFG International agreed with BTG Pactual to buy BSI for about CHF1.33bn ($1.34bn) in cash and stock. The deal is expected to make EFG one of the largest private banks in Switzerland with around CHF170bn in assets under management as at 31 December 2015.
In a BSI statement released earlier today, officials said the Swiss Financial Market Supervisory Authority (FINMA) has approved the merger with EFG and MAS has allowed the transfer of the Singapore subsidiary’s assets and liabilities to the Singapore branch of EFG Bank.
However, it is unclear whether the forced closure of BSI in Singapore will impact on the merger.