BSI – Dealing With Swiss Money Laundering Miscreants

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BSI – Dealing With Swiss Money Laundering Miscreants by Matthew Allen –

On Wednesday, the Swiss financial regulator effectively ordered the liquidation of Lugano-based BSI private bank following “serious breaches of money laundering regulation”. This is by far the most radical action taken thus far by the authorities.

BSI – The crackdown

BSI is being taken over by the EFG group, at which point it will cease to exist. The bank, and some of its executives, are also under investigation by the Swiss attorney general for alleged corruption regarding the 1MDB Malaysian sovereign wealth fund and the Brazilian Petrobras scandal.

The Swiss Financial Market Supervisory Authority (FINMA) is also investigating six other banks in connection with similar money laundering allegations.

Last year, the regulator probed 29 financial institutions for suspected money laundering breaches, but ordered them to fix the problems internally rather than opt for enforcement proceedings. FINMA rarely gives details about its enforcement actions, more often than not opting against naming and shaming the guilty parties. But faced with criticism that it is not doing enough to bring errant banks to heel, FINMA has been keen to point out the number of sanctions it has imposed.

  • It has punished 16 banks and a number of individuals in the “last few years”, according to FINMA chief executive Mark Branson.
  • Last year it ordered the liquidation of a financial intermediary in relation to a corruption probe and imposed industry bans on two senior managers.
  • In recent years FINMA has issued HSBC’s private bank in Geneva with a three-year ban on dealings with politically exposed persons (PEPs) and ordered new members onto the board of a bank.
  • The regulator has also placed 14 banks on a “red rating” list for having too many PEPs on their books with potentially not enough compliance firepower to cope with them.

Branson said the recent tightening of anti-money laundering laws in Switzerland has given FINMA more teeth to deal with problems as they arose. In April he said that issuing sanctions could help prevent future market abuse and warned that punishments could be more severe than mere fines.

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