Swiss financial regulator looking into possible connection between banks, 1MDB

From Kuala Lumpur to Singapore to Zurich, financial regulators are investigating the money trail behind the RM42 billion debt amassed by 1MDB since 2009. – Reuters file pic, August 20, 2015.Swiss financial regulator Finma is checking with some of the country's banks on whether they carried out business with Malaysia's troubled state investment fund 1Malaysia Development Berhad (1MDB), a spokesman said yesterday.

1MDB, whose advisory board is chaired by Prime Minister Datuk Seri Najib Razak, was the subject of a probe by Bank Negara Malaysia which was completed earlier this month. The fund has been dogged by controversy over its US$11 billion debt and alleged financial mismanagement.

The Wall Street Journal reported in July that investigators looking into 1MDB had traced nearly US$700 million that moved from an account at Swiss-based Falcon Private Bank in Singapore into accounts in Malaysia they believed belonged to the prime minister.

Falcon has said previously it was in contact with the Monetary Authority of Singapore (MAS) and would be fully transparent with the authorities.

"Finma is in contact with several banks about this matter," the spokesman said.

"In the framework of our supervisory role, we are clarifying whether and to what extent banks are involved and how the terms of Swiss regulatory law were implemented."

The regulator would not comment on the details of its supervisory activity or on individual names it was looking into, the spokesman added.

Earlier this year, MAS also said it was in touch with Malaysian regulators after Malaysia's government said 1MDB had redeemed US$1.1 billion from the Cayman Islands and parked it in the Singapore unit of Swiss private bank BSI.

Representatives for Falcon and BSI did not immediately respond to requests for comment on the Finma spokesman's remarks. – Reuters