Swiss financial watchdog FINMA said on Thursday the Swiss subsidiary of U.S. bank JPMorgan had committed serious anti-money laundering breaches in relation to Malaysian sovereign wealth fund 1MDB, Reuters reported.
The case adds to the political storm that has raged for more than two years over the scandal at 1Malaysia Development Berhad (1MDB), the focus of money-laundering investigations in at least six countries including Singapore, Switzerland and the United States.
Malaysian Prime Minister Najib Razak, who chaired 1MDB’s advisory board, has denied any wrongdoing.
“Enforcement proceedings conducted by FINMA between May 2016 and June 2017 uncovered serious shortcomings in the anti-money laundering controls of J.P. Morgan (Switzerland) Ltd in connection with business relationships and transactions associated with the allegedly corrupt Malaysian sovereign wealth fund 1MDB,” FINMA said in a statement.
The ruling, which imposed a monitor on the bank but did not involve any monetary penalties or business restrictions, had not been appealed and was final, FINMA said.
The bank failed to question of screen certain fund transfers from the sovereign wealth fund, and it couldn't spot blurred lines between business accounts, and personal ones. In one case, J.P. Morgan created an account worth several hundred million dollars from the fund for an individual with close ties to an 1MBD business partner.
Part of that money was then transferred to a business account associated with the person, FINMA said, without the bank having questioned the purpose or procedure behind the transactions or the substantial sum that stayed in the private account. JPMorgan said the findings arose from activities which had since been tightened.
“The resolution announced by FINMA relates to matters that took place many years ago in the Swiss private bank, and since that time we have increased training, added staff and made improvements in monitoring and surveillance,” the bank said.
The case has already swept up Swiss private banks Edmond de Rotschild, BSI and Falcon; the international arm of the British queen’s bank Coutts, and big banks UBS and Credit Suisse. Finma has also started investigating seven, unnamed bankers in connection with 1MDB.
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