World's top private bank dragged into 1MDB probe
Sources say UBS is only one of several financial institutions whose client bank accounts have been scrutinised by MAS
Anita Gabriel
Singapore
UBS Group, the world's largest private bank, has been drawn into Malaysia's 1Malaysia Development Bhd (1MDB) scandal and Singapore's ongoing money-laundering probe into the case.
According to sources, UBS Singapore (the first Swiss bank to set up shop here) is one of several financial institutions whose client bank accounts have been scrutinised by the Monetary Authority of Singapore (MAS) for suspicious transactions in an ongoing probe by the authorities into troubled 1MDB.
"UBS has been assisting in MAS's investigations as have several other banks. It's a pretty complicated case," said a source, adding however that "this is not another BSI situation; it's nowhere close".
According to a UK-based whistleblower site Sarawak Report, at least US$1.24 billion of monies raised by 1MDB Global, a subsidiary of the state-controlled firm, through a bond issue was transferred through BSI Bank in Lugano to a UBS bank account in Singapore held by Aabar Investments PJS Ltd (Aabar BVI).
This is the company into which 1MDB said it had paid billions of dollars and which is at the centre of a bitter feud between 1MDB and Abu Dhabi's International Petroleum Investment Co (IPIC). Aabar BVI's name is nearly identical to that of IPIC's subsidiary Aabar Investments PJS, which IPIC says is not a connected entity.
When asked to comment on the report by the investigative news portal, a UBS spokesman declined comment, citing banking confidentiality rules. An MAS spokesman also declined comment.
This is the first time that UBS - Asia's largest private bank, with over US$270 billion of assets under management (AUM) - has surfaced in the complex cross-border transactions of 1MDB's funds that turned into a full-blown scandal in Malaysia last year. The 1MDB money trail is being probed in at least seven other jurisdictions, including Switzerland, the UK, and the US.
The scandal has already embroiled US banking giant Goldman Sachs and Australia's third biggest bank ANZ - it owns a quarter of Malaysian bank AmBank, which was slapped with a RM54 million (S$18.3 million) fine by the central bank for breaches of certain financial rules.
In March, MAS said that it had asked a number of financial institutions to furnish information amid a "thorough review" of various transactions and cross-border fund flows through the banking system as part of its investigations into possible money laundering and other offences here.
"MAS will not hesitate to take regulatory actions against financial institutions should they be found to have breached our banking rules," it said in a statement.
The regulator walked the talk on that stern warning in May when it ordered the local branch of Swiss bank BSI SA to shut its 11-year operations after it discovered multiple breaches of anti-money-laundering rules and oversight failures, sending shock waves across private banking circles here.
MAS also disclosed the names of six people - most were formerly with RBS Coutts in Singapore before joining BSI about five years ago - whom it had referred to the public prosecutor for criminal offence assessment.
RBS Coutts is also understood to be one of the other banks involved in MAS's supervisory review in connection with 1MDB. Singapore prosecutors have charged ex-BSI banker Yeo Jiawei, whom they say played a key role in the 1MDB transactions, with nine offences ranging from money laundering, cheating, forgery, and obstruction of justice in the 1MDB probe. The criminal case disclosure conference in Yeo's case is fixed for July 28.
The dispute over the ownership of Aabar BVI between the state entities of Malaysia and the Gulf emirates escalated with 1MDB defaulting on the interest payments on its bonds after IPIC claimed that both 1MDB and its sole owner, the Ministry of Finance, had reneged on a June 2015 debt restructuring deal.
IPIC has resorted to the London Court of International Arbitration to claim US$6.5 billion from Malaysia. 1MDB agreed to the arbitration this week, saying that it has submitted a formal and "robust response" through its legal counsel.
