Swiss FINMA revises disgorgement estimate in 1MDB case against BSI
The Swiss Financial Market Supervisory Authority (FINMA) today announces that it has revised the estimate of profits that have to be disgorged in the 1MDB enforcement case against BSI.
FINMA has more precisely reassessed the disgorgement of profits from BSI in the 1MDB case from 2016. The regulator has ordered that an amount of CHF 70 million be confiscated instead of the original CHF 95 million.
In making this reassessment, FINMA considered the income and costs of the bank that were closely linked to the violations of supervisory law in business relationships in the context of 1MDB. FINMA has thus taken into account the new case law on the disgorgement of profits, including the Federal Administrative Court’s judgement of November 2019.
Let’s recall that FINMA launched enforcement proceedings against BSI in 2015 after indications that the bank had breached money laundering regulations. The problems related to business relationships and transactions in the context of the corruption scandal involving the Malaysian sovereign wealth fund 1MDB. FINMA investigated a large number of transactions, as well as the internal processes and organisational control functions at the bank. The proceedings were concluded in May 2016.
In the context of 1MDB, misconduct on the part of BSI was particularly serious. On numerous occasions, business relationships relating to 1MDB were discussed at top management level. This was particularly the case when at the end of 2013 FINMA highlighted to the bank the many serious risks inherent in the client relationships and pressed the bank for further clarification. Nevertheless, the bank’s Board of Directors and Executive Board knowingly and repeatedly expressed their intention to continue with these financially lucrative client relationships without adequately clarifying the numerous clear risk indicators or controlling the said risks.
The bank had contested FINMA’s decision with regard to AML failings in the 1MDB case from the year 2016 before the Federal Administrative Court. The latter confirmed the serious violations of supervisory law in its judgement of November 2019, but rejected one aspect of FINMA’s ruling: the calculation of the disgorgement of profits. Following the redetermination of the disgorgement of profits, this case is now closed.
In addition, FINMA today said that it had concluded all enforcement proceedings against individuals that were opened following the BSI case. FINMA had opened proceedings against four individuals. In two of these cases it issued industry bans of several years.
These rulings were contested before the Federal Administrative Court and are still pending. In one case, FINMA concluded the proceedings by holding with legal effect that a serious breach of supervisory law had occurred, but without ordering further measures. In the other case, it brought the proceedings to a close after the person concerned had credibly agreed not to accept a managerial position at a supervised institution in the future. FINMA also issued reprimands to four further individuals.