Switzerland's Financial Market Supervisory Authority (FINMA) has concluded an investigation into suspected money laundering operations involving Rothschild Bank and Malaysian state investment fund 1MDB. The regulator concluded that Rothschild Bank was in "serious breach" of "due diligence, reporting and documentation requirements."
The case involving the Rothschild Bank was one of seven enforcement proceedings launched by the FINMA against 1MDB amid suspicions of a serious breach of Swiss banking laws.
In the case of Rothschild, the FINMA accused the bank of not only establishing business dealings with dubious customers suspected of money laundering activities, but "considerably expand[ing]" their business dealings with them and reporting suspicions "only after a substantial delay," thereby breaching the bank's reporting requirements. Rothschild Bank AG was also said to have "failed to adequately document" high-risk transactions.
1MBD became the center of a financial scandal involving billions of dollars in 2011 after authorities started an investigation into alleged illegal practices. The FBI joined the case in 2015, with investigators from Hong Kong, Singapore, Luxembourg, the UAE, the Seychelles and Australia also involved. The 1MBD scandal saw vast sums of money siphoned from Malaysia's sovereign wealth fund into the hands of corrupt officials. The scandal led to the arrest of former Malaysian Prime Minister Najib Razak earlier this year. Najib was charged with criminal breach of trust and abuse of funds in connection with the affair.
Switzerland's attorney general is engaged in a criminal probe of two other Swiss banks, as well as six individuals. Several other banks have been reprimanded.