Spotlight now on Swiss bank caught in 1MDB saga

Swiss bank BSI has attracted media attention in recent months, after becoming caught up in the controversy surrounding Malaysian state investor 1Malaysia Development Berhad (1MDB).

The latest development came when one of BSI's senior private bankers here - Mr Yak Yew Chee - filed a request with Singapore's High Court for some of his money to be released.

It has been reported that several of his bank accounts, containing about $10 million, were frozen as part of investigations surrounding 1MDB Global last September.

BSI is a relative latecomer in Singapore's private banking scene, having started business here only in 2010.

It created headlines when it was said to have poached about 80 employees from rival private bank RBS Coutts in 2009, in what was the biggest staff move in Singapore's private banking sector at the time.

According to the bank's website, it was established in Lugano in 1873, making it one of the oldest Swiss banks. It was bought by Italian insurer Generali in 1998 and was sold to Brazilian investment bank BTG Pactual last year.

Its new Brazilian owner kept the BSI brand and identity, using it as a platform to globalise the business.

BSI has around US$100 billion (S$142.6 billion) in client assets and about 2,000 employees, according to a newspaper report in July 2014.

BSI spokesman Luciano Crobu said its branch in Singapore, located at Suntec City, has about 240 people and is focused on servicing clients in South-east Asia. He added that no one single market accounts for more than 20 per cent of its global assets under management.

The bank's chief executive here is Mr Hanspeter Brunner, a Swiss national and a Singapore permanent resident since 2005.

BSI might very well be just one of several banks caught up in the 1MDB investigation, which political pundits warn is an issue that Singapore will have to handle with care, given the importance of maintaining good relations with Malaysia.

Dr Mustafa Izzuddin, a research fellow at the Iseas-Yusof Ishak Institute, said one approach would be to make it loud and clear that the investigation at this end is being conducted as a matter of upholding the rule of law.

"The most viable approach is to focus on the facts, and not on polemics, which is exactly what Singapore is doing now," he added.

"It is essential for Singapore not to be tangled up in the volatile domestic politics of Malaysia and not to pass judgments or point the finger at anyone, most notably, the Prime Minister of Malaysia."

Dr Alan Chong, a political scientist at the S. Rajaratnam School of International Studies, agreed, adding it is also in Malaysia's best interest not to criticise Singapore's investigation and politicise the matter.

RHTLaw Taylor Wessing partner Nizam Ismail noted that, regardless, Singapore has to press on with the probe as it is a matter of maintaining its reputation as an international financial hub.

The Monetary Authority of Singapore (MAS) and Commercial Affairs Department (CAD) have their work cut out for them, he added.

"In terms of next steps, MAS will ascertain whether banks have complied with anti-money laundering regulatory requirements - to see if their monitoring programme had been sufficiently robust to flag certain transactions as suspicious... to scrutinise decisions taken by the compliance and management teams of banks, and whether the banks had filed suspicious transaction reports," said Mr Nizam.

The CAD, meanwhile, may investigate if any person or entity had engaged in money laundering, and possibly follow up with prosecution and confiscation orders in court, he added, noting that this work could take many months.

"Money laundering investigations are very complex, especially when it comes to reconstructing money and documentary trails, and obtaining evidence which can be used in court."

yasminey@sph.com.sg

kohping@sph.com.sg

This article was first published on February 4, 2016.
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