Stay clean folks

Stay clean folks

The Monetary Authority of Singapore (MAS) is withdrawing the merchant bank status of Falcon Private Bank’s Singapore branch for “serious failures” in anti-money laundering (AML) controls and “improper conduct” by senior management at the head office in Switzerland as well as the Singapore branch.

MAS is also imposing financial penalties on DBS Bank and UBS’s Singapore branch for breaches of its AML requirements.

All three are being punished for alleged money laundering activities linked to the Malaysian state fund 1MDB. This is the 1Malaysia Development Berhad development company, wholly owned by the Government of Malaysia. It was established to create long-term economic development for the country through global partnerships and promoting foreign direct investment.

Ravi Menon, managing director, MAS, says the banks “must set the tone from the top – that profits do not come before right conduct”.

The actions on the three banks follow supervisory examinations by MAS into 1MDB-related fund flows that took place through these banks from March 2013 to May 2015.

MAS’s 2013 inspection found weaknesses in Falcon’s controls for client acceptance and transaction surveillance. Falcon Bank paid a composition fine of SGD 300,000 ($217,450) for these breaches.

The 2015 inspection uncovered an “even larger number” of regulatory breaches as well as “serious failings” on the part of head office senior management and the Singapore branch manager.

MAS has imposed on Falcon financial penalties amounting to SGD 4.3 million ($3.1 million) for 14 breaches of MAS Notice 1014 – Prevention of Money Laundering and Countering the Financing of Terrorism.

In a statement, Falcon says that “although the withdrawal of the Singapore banking licence is regrettable and disappointing, the decision will not impact the strategic development of the bank”.

Walter Berchtold, CEO of Falcon, welcomes that the case has now been closed with the regulators. The bank “adheres to all rules and regulations”, he states. It will now focus on “growing its businesses in the core locations Switzerland, Middle East and London.”

In terms of DBS and UBS, and their relation to 1MDB-related fund flows, the MAS inspections revealed several breaches of AML requirements and control lapses.

MAS has imposed financial penalties amounting to SGD 1 million ($725,000) on DBS for ten breaches and SGD 1.3 million ($942,000) on UBS for 13 breaches of MAS Notice 626 – Prevention of Money Laundering and Countering the Financing of Terrorism.

Falcon Private Bank: what’s the tech

On the technology side, Falcon is a user of the Avaloq Banking Suite core platform, provided by Avaloq. The vendor replaced rival ERI’s Olympic core system across the bank’s network of locations a few years back.

In addition to Singapore (which is now being wound down), Falcon has operations in Switzerland, the UK and the UAE. Its HQ is in Zurich. Its history dates back to 1965. As of 2009, the bank is owned by International Petroleum Investment Company (IPIC), an Abu Dhabi-based sovereign wealth fund.