The 1MDB corruption scandal still rumbles on: a Swiss court partially upheld an appeal against the confiscation of gains that BSI bank made through transactions of 1MDB assets. Judges said the banking regulator's estimate of the gains was «incomprehensible».
The Swiss banking regulator’s handling of the 1MDB case had come under scrutiny of the courts after BSI complained about the sanction in 2016. Switzerland’s Federal Administrative Court in St. Gallen now has ruled that Finma had gone too far.
The Bern-based financial regulator in 2016 decided that BSI had fallen foul of the Swiss anti-money laundering act and the banking act in its due diligence of transactions with assets that stemmed from Malaysia’s state-fund 1MDB. Finma demanded the closure of the bank and the confiscation of 95 million Swiss francs ($96.4 million) in illgotten gains. Soon after the Finma ruling, BSI was swallowed by rival EFG International.
Violations Did Occur
The court, which rules on disputes that fall under the authority of the federal administration, said it acknowledged the «occurrence of severe violations of supervisory provisions». But it also considered the estimate of 95 million francs Finma ordered to be confiscated as «incomprehensible».
«The confiscation has to correspond to the actual profit generated by the infringement,» said the court in the statement, which can be appealed to the Federal Supreme Court.
Compensatory Arrangement
The judges also said that it wasn’t clear why Finma had made a compensatory arrangement between two cases when it justified the amount of 95 million francs with the renouncement to implement a seizure in another corruption case involving BSI’s Brazilian customers.
The Federal Administrative Court thus partially upheld the appeal lodged by BSI and referred the decision back to Finma.
Neutral to EFG Result
EFG International acknowledged the ruling, it said in a statement on Wednesday. The case didn’t affect its financial reporting as a provision for the claim had been part of the final purchase price. Any modification of the amount to be paid for the violations will be neutral to EFG's financial results.
