On Thursday, the Swiss financial watchdog FINMA alleged that the Swiss subsidiary of U.S. bank JPMorgan had committed anti-money laundering breaches regarding the Malaysian sovereign wealth fund 1MDB.
The claim adds to the scandal on 1Malaysia Development Berhad (1MDB), the hub of money-laundering investigations in at least six countries including Singapore, Switzerland and the United States. Malaysian Prime Minister Najib Razak, who also chaired 1MDB’s advisory board, has denied unlawful activity.
The two-year old case has already come after Swiss private banks Edmond de Rotschild, BSI and Falcon; the international arm of the British queen’s bank Coutts, as well as big banks UBS and Credit Suisse.
“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 final ruling placed a monitor on the bank and did not include monetary penalties or business restrictions. A FINMA-appointed monitor would perform on-site reviews of the bank’s controls.
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“The bank failed in particular to identify the money-laundering risks relating to cash flows between business accounts and personal accounts,” said a supervisor. “In one case, it credited hundreds of millions of U.S. dollars from the 1MDB sovereign wealth fund, allegedly earmarked for the purchase of a company, to the personal account of an individual with close ties to a 1MDB business partner.”
JPMorgan said the discoveries had emerged from activities which have since been more intensely regulated.
“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,” JPMorgan said in a statement.