Swiss Bank BSI Appeals $100 Million Penalty Over 1MDB Links

  • BSI calls Swiss finance regulator Finma’s finding ‘flawed’
  • Finma said BSI had violated anti-money laundering rules

Private bank BSI, which is being acquired by EFG International AG, is challenging a 95 million Swiss franc ($100 million) penalty issued by Switzerland’s financial regulator over the lender’s ties to 1Malaysia Development Bhd.

“BSI believes that Finma’s procedure leading to the decision was flawed in many respects and Finma’s decision as such is disproportionate and incorrect,” the Lugano, Switzerland-based company said in e-mailed statement on Thursday, after lodging an appeal with the country’s Federal Administrative Court.

The move last month by the Swiss regulator known as Finma coincided with Singapore’s financial regulator’s decision to strip BSI of its banking license over ties to troubled 1MDB. U.S., Swiss and Singaporean prosecutors are investigating whether as much as $4 billion may have been embezzled and laundered through the Malaysian development fund.

Both 1MDB and Malaysian Prime Minister Najib Razak, who headed the fund’s advisory board, have repeatedly denied wrongdoing.

BSI won’t appeal the Singapore regulator’s decision to strip it of its banking licence, according to two people familiar with the situation. A spokeswoman for BSI declined to comment earlier when asked if the bank plans to appeal.

BSI was ordered to give up 95 million Swiss francs of profit because the bank “ignored clear warning signals,” about the risk of some of its transactions as it pursued higher-margin returns, Mark Branson, head of Finma, said last month.

Finma’s statement that the bank broke anti-money laundering rules “severely harmed the reputation of the bank and its employees,” BSI said.

Finma decisions can be challenged and subject to judicial review “and that’s what’s happening here,” said Vinzenz Mathys, a spokesman for the regulator. Rocco Maglio, a spokesman for the court, said they have not yet received the appeal.

BSI won’t appeal the Singapore regulator’s decision to strip it of its banking licence, according to two people familiar with the situation. A spokeswoman for BSI declined to comment earlier when asked if the bank plans to appeal.

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