Switzerland sanctions Coutts bank over 1MBD scandal

Switzerland on Thursday slapped penalties on British bank Coutts & Co, saying it "seriously breached money laundering regulations" in connection with the scandal-tainted Malaysian state fund 1MDB. Switzerland's financial market regulator Finma ordered Coutts - one of the world's oldest private banks which is partially owned by the Royal Bank of Scotland - to pay back 6.5 million Swiss francs ($6.5 million, 6.1 million euros) in illegally generated funds.
It also said it was considering opening legal proceedings against the bank employees responsible.
Finma launched its investigation into Coutts early last year amid suspicions that some of the billions of dollars that were allegedly stolen from 1MDB passed through banks in Switzerland. Coutts, whose international business was sold in 2015 to Swiss private bank Union Bancaire Privee (UBP), has a branch based in Zurich. Finma said Thursday its probe "uncovered serious deficiencies in the bank's anti-money laundering processes for business relationships and transactions associated with the alleged corruption scandal involving the Malaysian sovereign wealth fund 1MDB." It accused the bank of failing to "adequately clarify the circumstances surrounding a number of business relationships and unusually large, high-risk transactions," and of not reporting any suspicions to Swiss authorities in a timely fashion.
"Given the inadequacy of the bank's anti-money laundering controls in this particular case, Coutts was in serious breach of its duty to ensure proper business conduct," it said.
Finma said Coutts, through its Singapore branch, was the first Swiss bank to accept assets from individuals associated with the 1MBD fund, back in 2003.
A total of $2.4 billion in 1MBD-related assets were transferred through Coutts's accounts in Switzerland, it said.
Finma pointed to a range of suspicious transactions, including an account opened in 2009 for a Malaysian man who said he planned to deposit $10 million in family assets.
Just a few months later, around $700 million were transferred into that account from the 1MBD fund, Finma said, pointing out that "reasons given for this transaction were inconsistent, and some information was changed retrospectively."
And since Coutts belonged fully to RBS during the period in question, the Swiss regulator said it had brought the case to the attention of its British counterpart, the Financial Conduct Authority (FCA). Founded in 2009 by Malaysian Prime Minister Najib Razak, 1MDB has been the focus of multiple investigations around the world into allegations that billions were looted from it.