Date: December 21, 2017
, Risk and Regulation
Switzerland’s financial regulator said JPMorgan Chase’s Swiss subsidiary “seriously breached” anti-money laundering rules by completing transactions with a Malaysian government investment fund that is under investigation in at least six countries.
The Swiss Financial Market Supervisory Authority, known as Finma, said Thursday that it was installing a person inside the bank to monitor and review its money laundering policies, “given the inadequacy of the bank’s controls and the serious breaches which have been identified in this case.”
Swiss authorities, along with counterparts in the United States and Singapore, opened investigations after money went missing from the fund, 1Malaysia Development Berhad, known as 1MDB. The Justice Department said in a court filing last year that people close to Malaysian Prime Minister Najib Razak had drained more than $3 billion from the fund to support lavish lifestyles.
According to Finma, JPMorgan’s Swiss unit helped several individuals tap into the fund, transferring “hundreds of millions of dollars” that were meant to be used for 1MDB’s purchase of a company to the personal account of someone tied to a 1MDB business partner. The bank then sent some of the money to another company associated with that person.
“The bank questioned neither the economic purpose of the transactions, the procedure involved, nor the substantial amount that remained in the personal account,” Finma said. The agency said it has referred the case to the Office of the Comptroller of the Currency, which is one of JPMorgan’s main United States regulators.
Brian Marchiony, a JPMorgan spokesman, said the Swiss action “relates to matters that took place many years ago.” He added that “since that time we have increased training, added staff and made improvements in monitoring and surveillance.”
This is the latest instance of JPMorgan drawing censure for not doing enough to prevent money laundering. The bank had to overhaul its anti-money laundering practices as part of an inquiry into whether lapses in its internal controls had allowed Bernard L. Madoff to keep a $50 billion Ponzi scheme going. JPMorgan paid the Justice Department $1.7 billion in 2014 to settle the case.
Re-disseminated by The Asian Banker from The Economic Times