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Kena shut down by MAS MAS orders BSI Bank to shut down in Singapore POSTED: 24 May 2016 at 12:38 PM UPDATED: 24 May 2016 at 1:15 PM SINGAPORE: The Monetary Authority of Singapore (MAS) announced on Tuesday (May 24) it has ordered the closure of Switzerland’s BSI Bank in Singapore. 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”. This is the first time since 1984 a merchant bank in Singapore has been ordered to shut down. In 1984 Jardine Fleming (Singapore) was ordered to shut down over serious lapses in its advisory work. BSI Bank has also been fined S$13.3 million for 41 breaches of anti-money laundering regulations. The breaches include a failure to perform enhanced customer due diligence on high-risk accounts, and to monitor for suspicious customer transactions on an ongoing basis. BSI Bank has been operating in Singapore since November 2005, offering private banking services. It is a wholly-owned subsidiary of Switzerland-based BSI SA. “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. MAS is working closely with the Swiss Financial Market Supervisory Authority (FINMA), the home regulator of BSI SA, to oversee an orderly closure of BSI Bank in Singapore,” MAS said. It added that the Swiss authorities had earlier approved the acquisition of the entire BSI group by Switzerland-based EFG international. “In the interest of the customers of BSI Bank, MAS will allow the transfer of the Singapore subsidiary’s assets and liabilities to the Singapore branch of EFG Bank AG or to the parent entity, BSI SA.” SIX STAFF REFERRED TO PUBLIC PROSECUTOR Six members of the bank’s senior management and staff have been referred to the Public Prosecutor to evaluate whether they have committed criminal offences, MAS said. The six 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. The Attorney-General’s Chambers said in a statement on Tuesday that further charges against Yeo will be tendered “in due course”. “Insofar as the five other individuals named by the MAS are concerned, the Attorney-General’s Chambers will be working with the Commercial Affairs Department to review the facts before assessing the next appropriate course(s) of action,” it said. THREE INSPECTIONS, MULTIPLE BREACHES In 2011, MAS inspected BSI Bank and found policy and process lapses at the front office and weak enforcement by control functions. These lapses were rectified, MAS said. In 2014, it again inspected the bank and uncovered “serious shortcomings” in its due diligence checks on assets underlying the investment funds structured for the bank’s customers. The bank’s management was ordered to increase scrutiny of its risk management processes and internal controls. A more intrusive third inspection by MAS last year revealed “multiple breaches of anti-money laundering regulations and a pervasive pattern of non-compliance”. The 2015 inspection revealed widespread control failures which led to numerous serious breaches of various anti-money laundering regulations; poor and ineffective oversight by the senior management; unacceptable risk culture, with blatant disregard for compliance and control requirements as well as MAS’ regulations; and numerous acts of gross misconduct by certain staff, MAS said. “Specific regulatory lapses include the processing of multiple unusual transactions which were essentially pass-through trades often without economic substance. Approvals of such transactions were based purely on faith of client representations despite deficient documentation and concerns raised by the bank’s compliance officers.” Mediacorp News Group ©2015 Mediacorp Pte Ltd