Around 15 Swiss banks are reported to be in a “red zone” of lenders that are particularly exposed to money laundering risks, according to a Reuters report.
Swiss federal prosecutors have opened criminal proceedings against Zurich-based Falcon Private Bank for allegedly failing to prevent suspected money laundering linked to Malaysia’s 1MDB funds.
Falcon Bank was the second financial institution after BSI Singapore to be forced to cease operations in the Republic’s 1MDB probe, as reported by Finance Magnates.
The latest move is partly due to an investigation by FINMA which has also opened proceedings against some other lenders.
FINMA Chief Executive Mark Branson said, “We have introduced a warning system in relation to money laundering risks. Roughly 15 banks are in the red zone here. That means they are particularly exposed.”
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The banks concerned have not been named but most of them are said to be involved in asset management and often have clients from emerging markets, with lenders from all areas of the country and of various sizes.
Asked whether any major Swiss banks were among them, Branson said. “I would not use the plural, but yes.”
The banks on the list are monitored more closely and have been requested to provide FINMA with additional information, but the watchdog wants them to understand the emerging markets in which they operate rather than withdraw from them, according to Branson.
Falcon, which has been ordered by FINMA to pay back $2.56 million in what the watchdog said were illegal profits, is being given a second chance but would lose its banking license in the event of a repeat offence.
“Falcon was a hair’s breadth away from having its license withdrawn”, said Branson. “We are of the opinion that the new management deserves a chance.”
He further commented, “Some banks are increasingly willing to take risks in relation to money laundering as they come under growing economic pressure to find new clients, but banks have also reported more suspicious cases in recent months”.