Swiss regulator probing 1MDB, Petrobras on multiple fronts

[ZURICH] Switzerland's financial regulator is pursuing multiple cases of alleged wrongdoing in its investigation of a troubled Malaysian development fund and Petroleo Brasileiro SA, the head of Finma said as he called for more vigilance against money laundering.

"There is concrete evidence that the risk management and measures taken to fight money laundering were not sufficient," Finma Chief Mark Branson said at a news conference Thursday in the Swiss capital Bern. The regulator has investigated more than 20 banks and is pursuing seven separate enforcement cases against financial institutions in the Petrobras and 1MDB affairs, he said, using the acronym for 1Malaysia Development Bhd.

A quarter of banks questioned in connection with Petrobas may have violated rules to prevent money laundering, he said.

At least three international probes into alleged corruption have caught the attention of Swiss regulators in recent weeks as Finma and the country's attorney-general investigate the extent to which Swiss banks may have handled money used to pay bribes to public officials in South America and Asia.

Mr Branson, who has run Finma for the past two years after stints at banks including UBS Group AG and Credit Suisse Group AG, has pledged to target individuals, not just the companies they work for, in his crackdown on wrongdoing in finance hubs like Geneva and Zurich.

Switzerland has agreed to turn over records from at least 18 local banks involving Venezuela's state oil company, Petroleos de Venezuela SA, which is the subject of a widening corruption investigation by the US Department of Justice. Finma said last week it's aware of the case and is in touch with several banks to gauge their level of involvement though declined to name any of them.

A series of reports this week by by the International Consortium of Investigative Journalists based on millions of documents leaked from the Panama law firm Mossack Fonseca revealed how its lawyers including an 11-strong team in Geneva created numerous offshore shell companies for its clients. Politicians including the leaders of Iceland, Ukraine and Argentina as well as a number of Swiss banks including Credit Suisse and UBS are all under scrutiny as a result of the revelations.

"The leaked database from Panama is just the latest proof of how money flows like water through multiple jurisdictions, sometimes for legitimate purposes, sometimes not," Mr Branson said.

UBS said it ended its relationship with Mossack Fonseca in 2010. Credit Suisse Chief Executive Officer Tidjane Thiam said in an interview this week that his bank doesn't engage in tax avoidance and only accepts offshore structures if they serve a legitimate purpose.

Finma said on Monday it will "clarify" the extent to which Swiss banks may have used the services of Mossack Fonseca to determine if they broke any domestic banking rules. The Swiss regulator again declined to comment on which banks it will focus on.


BT is now on Telegram!

For daily updates on weekdays and specially selected content for the weekend. Subscribe to