Bank Negara Malaysia (BNM) Governor Muhammad Ibrahim should convene an emergency meeting of Bank Negara Board of Directors under Clause 4 of the Central Bank of Malaysia Act 2009 on whether BNM should remain above the fray of world crackdown on 1MDB money-laundering or should take proactive steps to contact its counterparts in other countries to secure information/intelligence about 1MDB money-laundering.
As 1MDB is the Malaysian sovereign wealth fund, BNM will be exposed to the height of international ridicule and even odium if monetary authorities like the Swiss Financial Market Supervisory Authority (FINMA) and the Monetary Authority of Singapore (MAS) are taking actions to close down banks and initiate criminal prosecutions against bank officers for money-laundering and other financial offences connected with 1MDB but Bank Negara Malaysia is blissfully are unaware and unconcerned about these developments swirling around the financial world.
Even worse, when there are also investigations into the multibillion ringgit 1MDB financial scandal by regulators in other countries including the United States, Hong Kong and Luxembourg!
It would appear that although Malaysia has an Anti-Money Laundering and Anti-Terrorism Financing Act 2013 (“AMLA”), even top Bank Negara Malaysia officials do not understand the meaning of money-laundering, which is defined in Section 4 of the Act as any person deemed to have committed an offence if he or she:
a) engages, directly or indirectly, in a transaction that involves proceeds of an unlawful activity or instrumentalities of an offence;
b) acquires, receives, possesses, disguises, transfers, converts, exchanges, carries, disposes of or uses proceeds of an unlawful activity or instrumentalities of an offence;
c) removes from or brings into Malaysia, proceeds of an unlawful activity or instrumentalities of an offence; or
d) conceals, disguises or impedes the establishment of the true nature, origin, location, movement, disposition, title of, rights with respect to, or ownership of, proceeds of an unlawful activity or instrumentalities of an offence.
Otherwise, why are the BNM “big-wigs” unconcerned about 1MDB money-laundering activities overseas, as highlighted by its counterparts in Switzerland and Singapore?
For instance, the Swiss attorney general’s office had said in a statement that due to suspected “deficiencies in the internal organization of the BSI S.A. bank” “the bank was unable to prevent the commission of offenses currently under investigation in the criminal proceedings relating to” the investment fund, 1Malaysia Development Berhad.
The prosecution arose from an investigation that Switzerland started last year into suspected misappropriation of billions of dollars from 1MDB, and that it has pursued in cooperation with the authorities in Luxembourg, Singapore and the United States.
The Swiss attorney general’s office said that it had started proceedings against BSI, the oldest bank in the Swiss canton of Ticino, as a result of its own investigations into transactions linked to 1MDB and on the basis of an investigation by the Swiss Financial Market Supervisory Authority.
In a separate statement on Tuesday, the Swiss financial market authority said that “through business relationships and transactions linked to the corruption scandals surrounding the Malaysian sovereign wealth fund 1MDB,” BSI had “committed serious breaches of money laundering regulations.”
The authority said that it had ordered BSI to hand over to the Swiss government profits amounting to 95 million Swiss francs, or about $96 million, and had started legal proceedings against two of the bank’s former top managers.
It also approved the takeover of BSI by a Zurich-based private bank, EFG International, on the conditions that BSI be completely integrated into EFG and dissolved within 12 months and that none of BSI’s top management associated with its misconduct take leadership positions in EFG.
The financial market authority said it had investigated 20 other Swiss banks and had started legal proceedings against six of them over transactions linked to either 1MDB or the Brazilian state oil company Petrobras, which has also been a subject of investigation by the Swiss authorities. BSI’s misconduct in its dealings with 1MDB “was particularly serious,” it said.
The Swiss attorney general’s office said in January that it suspected $4 billion earmarked for development projects in Malaysia had been misappropriated from 1MDB, citing cases involving companies in Malaysia and Saudi Arabia, and a United Arab Emirates sovereign wealth fund, “each involving a systematic course of action carried out by means of complex financial structures.”
In its business with 1MDB, the Swiss financial market authority said, BSI handled transactions for several foreign sovereign wealth funds amounting to hundreds of millions of dollars without adequately clarifying the money’s origins and helped to set up intermediate structures for handling the funds intended to increase the confidentiality of the transactions.
The sovereign wealth funds had constituted BSI’s most profitable group of clients, the financial market authority said, and generated fees that were above market rates. BSI’s senior management “did not question why the sovereign wealth funds should use a private bank to provide institutional services and pay excessive out-of-market fees for doing so,” the authority said.
It said the Swiss bank had also failed to apply adequate risk management procedures to business relationships “with politically exposed persons, the origin of whose assets was not sufficiently clarified and whose dubious transactions involving hundreds of millions of U.S. dollars were not satisfactorily scrutinized.”
BSI had “happily accepted” the explanation that one deposit of $20 million was a “gift,” the market authority said, and in another instance it allowed $98 million to be paid into an account with no attempt to identify the commercial basis for the transaction.
“In many cases, there were clear indications of pass-through transactions,” the authority said, citing a case in which a payment of $20 million was shifted through several accounts on the same day before being transferred to another bank. Such transactions were often a clear indication of money laundering, but the bank failed to carry out any checks, the authority said.
How can the new Bank Negara Governor Datuk Muhammad Ibrahim, the Deputy Governors and the BNM Board of Directors fold their arms and do nothing, pretending that these global crackdowns and exposes on 1MDB money-laundering activities did not exist or had nothing to do with the Malaysian sovereign wealth fund in Malaysia?