1MDB Malaysia - in international media limelight for all the wrong reasons

1MDB Malaysia - in international media limelight for all the wrong reasons

For the reading pleasure and convenience of No News Is Bad News visitors and regular readers, here are three international media news highlights picked up by the Malaysian-banned online news portal Malaysia Chronicle and given fresh headlines:



"SABAH IRONY: WILL ‘KLEPTOCRAT’ NAJIB FOLLOW U.S. DOJ & FILE CHARGES TO BRING HOME THE MONEY – RM30MIL MORE CASH FOUND OVERSEAS

Politics | October 11, 2016 by | 0 Comments

KOTA KINABALU – On the first day, the Malaysian Anti-Corruption Commission (MACC) seized RM114mil worth of assets – RM53.7mil in cold cash from two senior Sabah Water Department officials. Six days later, they traced RM30mil more stashed in foreign banks and another RM30mil in land titles.

In a shocking corruption case involving the department’s director Ag Tahir Ag Talib, 54, and his deputy Teo Chee Kong, 52, investigations led to the money trail in Singapore, Australia and New Zealand.

Both men, who were detained on Oct 4, have allegedly amassed nearly RM200mil from a massive and well-structured scheme.

They are being investigated for alleged abuse of power and money-laundering linked to contracts for federal-funded projects given out by the Water Department in Sabah since 2010.
Initial investigations showed that the deputy director moved about RM29mil to banks abroad while the director did the same with about RM1mil, sources said.

The MACC, which also found 127 land titles for housing, agriculture and commercial, valued them at RM30mil through the Land and Survey Department.

Investigators were also unearthing more incriminating evidence, said the sources, adding that other senior staff of the department could also be party to the scam involving RM3.3bil from federal allocations for the state since 2010.

“More arrests are expected. It may cripple the department as it also involves several other key personnel,” said one of the sources who spoke on condition of anonymity.

Apart from detecting cash stashed overseas and land titles, the investigators also seized RM56.3mil in cash, nine vehicles worth RM2.7mil, an assortment of jewellery worth RM3.64mil as well as designer handbags worth RM500,000.

The MACC has frozen RM62mil in bank accounts.

A source claimed that Ag Tahir kept most of his assets in cash, while Teo stashed his in banks and investments.

When the men were arrested, anti-graft officials found RM53mil in cash – the biggest amount seized by MACC – from their homes and offices.

Apparently, Ag Tahir hid cash amounting to RM45mil at his home at Graceville Condominium here.

MACC deputy commissioner for operations Datuk Azam Baki confirmed that efforts were being made to recover the money kept overseas through the Mutual Legal Assistance treaty.

He said there could be more arrests as investigators recorded statements from contractors as well as the families of the two officials who were believed to be involved in the companies undertaking the projects.

The eight-day remand for the two officials ends today, but MACC is expected to apply for an extension.

Two others, including Teo’s elder brother and his company accountant, were also arrested.

Some 40 witnesses have been questioned so far in connection with the projects allegedly tendered out to family-linked companies.

Yesterday, Chief Minister Datuk Seri Musa Aman called on all parties to stop speculating.

“This is an important investigation. Let the MACC do their job,” he said in a statement.

– ANN"(Also read these for context: http://victorlim2016.blogspot.my/2016/10/at-least-sabahs-yong-talks-sense-on.html, http://victorlim2016.blogspot.my/2016/10/slowly-but-surely-more-and-more-unfolds.html and http://victorlim2016.blogspot.my/2016/10/maccs-blockbuster-rm114-million-seizure.html)


"NO MORE ‘PEACEFUL SLEEP’ FOR NAJIB: BOMBSHELL – S’PORE SHUTS DOWN FALCON BANK OVER 1MDB MONEY-LAUNDERING, BRANCH MANAGER ARRESTED

Politics | October 11, 2016 by | 0 Comments

Singaporean and Swiss regulators slammed Falcon Private Bank for “serious” breaches of anti-money laundering regulations in relation to its role in moving $3.8 billion of funds associated with the troubled Malaysian fund 1Malaysia Development Bhd.

The Monetary Authority of Singapore said it has ordered Falcon to cease its operations in the city and announced that the firm’s local branch manager had been arrested. Switzerland’s Financial Market Supervisory Authority has started enforcement proceedings against two of Falcon’s former executives and threatened to withdraw its license if there were any further breaches of money-laundering regulations. Finma linked the private bank to $3.8 billion of 1MDB fund flows, according to a statement released Tuesday.


Falcon “has seriously breached money laundering regulations,” Finma said. The private bank failed “to carry out adequate background checks into transactions and business relationships associated with Malaysian sovereign wealth fund 1MDB which were booked in Switzerland, Singapore and Hong Kong.”

The two regulators fined Falcon a combined $5.6 million. In its own statement, Falcon said it and its shareholder Aabar Investments PJS welcomed the completion of the investigations, which “finally resolves the 1MDB topic for the Bank with the regulators.” Since 2013, the firm had further enhanced its compliance and taken additional measures “to prevent future issues,” it said.

Bank Rebuke

Besides Singapore and Switzerland, U.S. authorities are also digging into how billions of dollars may have been improperly diverted from 1MDB, which was set up in 2009 to fund development projects across Malaysia. Singapore said in May it would revoke BSI SA’s local license and in July rebuked four banks — including Falcon — for lapses in anti-money laundering controls related to transactions tied to the Malaysian fund.

1MDB has consistently denied wrongdoing and Malaysia’s government has said it will cooperate with lawful investigations of local companies or its citizens in relation to the fund. Singapore has criminally charged four people, including three former BSI bankers for their roles in transactions and money flows linked to 1MDB.

The Swiss regulator said it had identified “serious shortcomings” in Falcon’s anti-money laundering activities and in risk management between 2012 and the summer of 2015. Assets amounting to about $3.8 billion associated with 1MDB were transferred to accounts at Falcon during that period and “generally moved on quickly.”

“The business relationships and transactions booked in Switzerland and at Falcon’s Singapore and Hong Kong branches were unusual and involved a high level of risk for the bank both through their nature and the amounts transacted,” Finma said. “Although management’s attention was drawn to these matters, it repeatedly failed to properly investigate the business relationships.”

The MAS fined Falcon S$4.3 million ($3.1 million) for 14 breaches of Singapore’s anti-money laundering rules, it said in its statement. Falcon’s local branch manager, Jens Sturzenegger, was arrested by the city-state’s Commercial Affairs Department on Oct. 5, MAS said.

Taking Action

The Singaporean regulator, which had vowed stronger action on anti-money laundering lapses earlier this year, also imposed penalties on UBS Group AG and DBS Group Holdings Ltd. for their own breaches. UBS was fined S$1.3 million and DBS S$1 million for lapses by specific bank officers, the regulator said, adding that it has completed its inspections of the two banks relating to 1MDB fund flows.

UBS and DBS said in separate statements they will strengthen controls and take actions against employees responsible for the lapses.

The boards and senior management at banks “must set the tone from the top – that profits do not come before right conduct,” MAS Managing Director Ravi Menon said in the statement. “MAS will work closely with the industry to ensure that standards are kept high and will take strong deterrent actions against institutions that fall short.
– BLOOMBERG"

"NAJIB & CO’S 1MDB THIEVERY TRIGGERS BANKING EARTHQUAKE IN SPORE: FALCON SHUT DOWN, UBS, DBS FINED WHILE STANDCHART AWAITS DECISION

Politics | October 11, 2016 by | 0 Comments


SINGAPORE – The Monetary Authority of Singapore (MAS) announced on Tuesday (Oct 11) that it is withdrawing the merchant bank status of Falcon Private Bank Ltd, Singapore Branch (Falcon Bank), for serious failures in anti-money laundering (AML) controls and improper conduct by senior management at the head office in Switzerland as well as the Singapore branch.

MAS said Falcon Bank’s Singapore branch manager, Mr Jens Sturzenegger, was arrested by the Commercial Affairs Department (CAD) on Oct 5.

Falcon Bank is the second financial institution after BSI Singapore to be forced to cease operations here in the Republic’s 1MDB probe. Before BSI, the last time MAS shut down a financial institution was in 1984 when it ordered the closure of Jardine Fleming (Singapore) Pte Ltd for serious lapses in its advisory work.

MAS is also imposing financial penalties amounting to S$1 million on DBS for 10 breaches and S$1.3 million on UBS for 13 breaches of MAS Notice 626 – Prevention of Money Laundering and Countering the Financing of Terrorism. The two banks must also appoint an independent party to confirm that rectification measure have been “effectively implemented” and report their findings to MAS.

Singapore’s central bank said the actions on the three banks follow supervisory examinations into 1MDB-related fund flows that took place through these banks from March 2013 to May 2015.

MAS’ actions also come a day after two more former bankers at BSI Singapore were charged in court with 1MDB-related offences.

Said MAS managing director Ravi Menon in the statement on Tuesday: “Keeping Singapore a clean and trusted financial centre is a shared responsibility. The board and senior management of each financial institution play a pivotal role. They must put in place robust mechanisms to detect suspicious activities, promote strong risk awareness among their staff, and empower their compliance and risk management people. Most of all, they must set the tone from the top – that profits do not come before right conduct.

“MAS will work closely with the industry to ensure that standards are kept high and will take strong deterrent actions against institutions that fall short.”

MAS said it has imposed on Falcon Bank financial penalties amounting to S$4.3 million for 14 breaches of MAS Notice 1014 – Prevention of Money Laundering and Countering the Financing of Terrorism. The breaches include failures to adequately assess irregularities in activities pertaining to customer accounts, and file suspicious transaction reports.



MAS said its investigations benefited from close cooperation with various overseas regulatory counterparts, in particular the Swiss Financial Market Supervisory Authority (FINMA).

It said clients and customers of Falcon Bank are assured that the merchant bank here has the full support of its head office which is financially sound. MAS is also working closely with FINMA to oversee an orderly closure of the merchant bank branch in Singapore.

Falcon Bank has been operating as a merchant bank in Singapore since August 2008. MAS conducted inspections on Falcon Bank in 2013 and 2015. The 2013 inspection found weaknesses in the bank’s controls for client acceptance and transaction surveillance that led to breaches of AML requirements, said MAS. Falcon Bank paid a composition fine of S$300,000 for these breaches, and MAS instructed the merchant bank to strengthen its AML controls.

But the 2015 inspection uncovered an even larger number of regulatory breaches as well as serious failings on the part of head office senior management and the Singapore branch manager.

Detailing the lapses, MAS said:

– The merchant bank’s head office failed to guard against conflicts of interest when managing the account of a customer who was associated with the bank’s former board chairman Mohamed Ahmed Badawy Al-Husseiny. The former chairman misled and influenced the Singapore branch into processing the customer’s unusually large transactions despite multiple red flags

– The improper conduct of the Singapore branch manager and certain senior managers at the head office had impaired the effectiveness of the Singapore branch’s compliance function in discharging its responsibilities. Their interference was wrongful and egregious in nature, and contributed to substantial breaches of AML regulations.

– Falcon Bank has demonstrated a persistent and severe lack of understanding of MAS’ AML requirements and expectations. Taking into account the totality of Falcon Bank’s conduct, MAS’ assessment is that the merchant bank will be unable to comply with these requirements and expectations going forward.


On DBS and UBS Singapore branch, MAS said it has completed its inspections of the two banks in relation to their 1MDB-related fund flows and found no pervasive control weaknesses. Instead, the control lapses “relate to specific bank officers who failed to carry out their duties effectively”, said MAS.

There were deficiencies in the on-boarding of new accounts, weaknesses in corroborating the source of funds, inadequate scrutiny of customers’ transactions and activities, and failure to file timely suspicious transaction reports, MAS added.

In its Tuesday statement, MAS also said it is finalising its assessment of Standard Chartered Bank, Singapore Branch, and will make an announcement in due course.

It has also referred the 1MDB-related transactions processed by Raffles Money Change to CAD for their follow-up investigation.STRAITS TIMES"