Velocity transactions draw scrutiny in AML Compliance
Singapore has started the new year in much the same way they ended 2016—by jailing another banker convicted of AML Compliance wrongdoing related to the Malaysian 1MDB fund. A Swiss national who managed the Singapore branch of Falcon Private Bank AG was the fourth banker sentenced by Singapore to a prison term as a result of investigations of AML financial crimes related to 1MDB dealings.
According to a Wall Street Journal report, Jens Surzenegger pleaded guilty to six of the 16 charges. Those six charges included giving false information to authorities investigating the case and multiple charges of not reporting suspicious transactions.
Investigations into misappropriation of funds related to 1MDB are occurring in several nations, and Swiss financial-crime authorities estimate that around $4 billion of misappropriated money may have been processed through various banks.
Singapore Central Bank authorities late last year withdrew the banking license for the Falcon branch bank in the city-state, and in October Swiss authorities opened an investigation of Falcon Private Bank AG.
Finma, the Swiss Financial Market Supervisory Authority, notes on its website that Falcon processed numerous high-value transactions in and out of accounts very quickly. Finma’s investigation noted that “a number of bank employees expressed serious concerns to their managers about the relationship with the Malaysian businessman because of numerous suspicious factors and key questions remaining unanswered. One internal email relating to the transfer of USD 1.2 billion states: ‘We can’t find any reason/motivation/statement why this transaction has to pass through FPB [Falcon] and not from [Bank X] directly to the respective parties […].’ Nevertheless, these internal warnings were not followed up satisfactorily.”
The Finma investigation traced these questionable velocity transactions to pressure by two board members in a classic tone-from-the-top breakdown: “Two representatives of the bank’s owners who were on the board of directors initiated business relationships with the 1MDB Group and with individuals from their immediate circle. The managers responsible for these relationships therefore attached great significance to them and were concerned to ensure that they operated smoothly. According to their own statements, they assumed that the two board members represented the will of the bank’s owners as far as these relationships were concerned.”
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