MAS orders shutdown of BSI Bank, cites "misconduct" by senior staff

Monetary Authority of Singapore (MAS) has informed BSI Bank of its intention to withdraw its status as a merchant bank in Singapore, citing "serious breaches of anti-money laundering requirements, poor management oversight of operations, and gross misconduct by some of the staff."

In addition, MAS has provided to the Public Prosecutor the names of six members of BSI Bank’s senior management and staff to evaluate whether they have committed criminal offences.

BSI Bank has been operational in Singapore since November 2005, a wholly-owned subsidiary of BSI SA headquartered in Switzerland.

In 2011, MAS found policy and process lapses at BSI Bank's front office and weak enforcement by control functions, which were subsequently rectified. In 2014, another inspection revealed serious shortcomings in due diligence checks on assets underlying the investment funds for customers.

Given repeated findings of weaknesses in its control regime, MAS instructed BSI Bank’s management to increase scrutiny of risk management processes and internal controls.

A more intrusive third inspection by MAS in 2015 revealed multiple breaches of anti-money laundering regulations and a pervasive pattern of non-compliance, said MAS in a statement.

MAS’ decision to withdraw the bank's license takes into account these repetitive lapses as well as the 2015 inspection findings which revealed:

1. Widespread control failures which led to numerous serious breaches of various antimoneylaundering regulations.
2. Poor and ineffective oversight by the senior management of BSI Bank
3. Unacceptable risk culture, with disregard for compliance and control as well as MAS’ regulations
4. Numerous acts of gross misconduct by certain staff

The regulator also noted several of the bank staff also committed wilful acts of misconduct, such as:

1. Making material misrepresentations to auditors
2. Abetting improper valuations of assets
3. Taking instructions from persons other than customers’ authorised representatives on matters relating to customers’ accounts

"MAS found considerable evidence of gross dereliction of duty and failure to discharge oversight responsibilities on the part of BSI Bank’s senior management," MAS stated.

"Their ineffective governance led to a poor risk culture, which prioritised questionable customer demands ahead of compliance with anti-money laundering regulations and the bank’s own internal controls."

The following are names of the six members of BSI Bank’s senior management and staff that MAS has submitted to the Public Prosecutor to evaluate whether they have committed criminal offences:

1. Hans Peter Brunner, former CEO
2. Raj Sriram, former Deputy CEO
3. Kevin Michael Swampillai*, head of wealth management services
4. Yak Yew Chee, former senior private banker
5. Yeo Jiawei*, former wealth planner
6. Seah Yew Foong Yvonne, former senior private banker

*Swampillai is currently suspended by the bank. Yeo is currently in remand and has been charged by the Public Prosecutor for various offences.

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MAS has also served BSI Bank notice to impose financial penalties amounting to S$13.3 million for 41 breaches of MAS Notice 1014 - Prevention of Money Laundering and Countering the Financing of Terrorism.

Ravi Menon, managing director of MAS, said, "BSI Bank is the worst case of control lapses and gross misconduct that we have seen in the Singapore financial sector. It is a stark reminder to all financial institutions to take their anti-money laundering responsibilities seriously."

This is the first time that MAS has withdrawn approval for a merchant bank since 1984, when Jardine Fleming (Singapore) was shut down for serious lapses in its advisory work.

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