Founded in Lugano, Switzerland in 1873, BSI is a private bank that offers services to high net worth individuals.
Previously owned by Italian insurer Generali Group, it was sold to Brazil’s BTG Pactual Group in July 2014.
MAS announced on Tuesday that it intends to withdraw BSI’s merchant bank status after uncovering persistent weaknesses in its risk management processes and internal controls.
Among other offences, the bank and some of its staff have been accused of serious breaches of anti-money laundering requirements, poor management oversight of the bank’s operations, and gross misconduct.
The bank has also been fined SGD13.3m (£6.7m, $9.6m, €8.6m) for 41 breaches of MAS’s regulation on the prevention of money laundering and countering the financing of terrorism.
“BSI Bank is the worst case of control lapses and gross misconduct that we have seen in the Singapore financial sector."
The breaches include failure to perform enhanced customer due diligence on high risk accounts and to monitor for suspicious customers transactions on an ongoing basis.
Referred for investigation
Former chief executive Hans Peter Brunner and former deputy chief executive Ray Sriram are among those referred to the public prosecutor.
The only current staff member under investigation, although suspended at present, is head of wealth management services Kevin Michael Swampillai.
Currently in remand is former wealth planner Jaiwei Yeo, who has been charged by the public prosecutor for various offences.
Former senior private bankers Chee Yak Yew and Yvonne Seah Yew Foong have also been referred for investigation.
Pervasive pattern of non-compliance
In 2011, MAS inspected BSI and found policy and process lapses at the front office and weak enforcement by control functions. The lapses were rectified.
In 2014, the bank was inspected again and serious shortcomings were uncovered in its due diligence checks on the assets underlying investment funds structured for the bank’s customers.
Given repeated findings of weaknesses in its control regime, MAS instructed BSI’s management to increase scrutiny of the bank’s risk management processes and internal controls.
A third, more intrusive, inspection by MAS in 2015 revealed multiple breaches of anti-money laundering regulations and a pervasive pattern of non-compliance.
Worst case seen
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. Controls need to be robust, surveillance vigilant, and the management culture must emphasise professional integrity and risk consciousness.”