Swiss bank BSI appeals 95 million Swiss franc penalty over 1MDB links

[GENEVA] Private bank BSI, which is being acquired by EFG International AG, is challenging a 95 million Swiss franc (S$133 million) penalty issued by Switzerland's financial regulator over the lender's ties to 1Malaysia Development Bhd.

"BSI believes that Finma's procedure leading to the decision was flawed in many respects and Finma's decision as such is disproportionate and incorrect," the Lugano, Switzerland-based company said in e-mailed statement on Thursday, after lodging an appeal with the country's Federal Administrative Court.

Finma's move last month coincided with Singapore's financial regulator's decision to strip BSI of its banking license over ties to troubled 1MDB.

US, Swiss and Singaporean prosecutors are investigating whether as much as US$4 billion may have been embezzled and laundered through the Malaysian development fund.

Both 1MDB and Malaysian Prime Minister Najib Razak, who headed the fund's advisory board, have repeatedly denied wrongdoing.

BSI was ordered to give up 95 million Swiss francs of profit because the bank "ignored clear warning signals," about the risk of some of its transactions as it pursued higher-margin returns, Mark Branson, head of the Swiss regulator known as Finma, said last month.

Finma's statement that the bank broke anti-money laundering rules "severely harmed the reputation of the bank and its employees," BSI said.

Finma decisions can be challenged and subject to judicial review "and that's what's happening here," said Vinzenz Mathys, a spokesman for the regulator. Rocco Maglio, a spokesman for the court, said he couldn't immediately confirm receipt of the appeal.

BLOOMBERG