Swiss court rebukes Finma, says penalty on BSI’s link to 1MDB ‘incomprehensible’

GENEVA/ZURICH (Dec 4): The Swiss Federal Administrative Court threw out a 95 million Swiss franc (RM402.37 million) penalty imposed by the Swiss Financial Market Supervisory Authority (Finma) on BSI Bank over its ties to the 1MDB scandal, Bloomberg reported today.

The court said in a statement yesterday that the bank was responsible for “severe violations of supervisory provisions” but the financial regulator’s calculation of the fine “incomprehensible”.

It referred the matter back to the regulator to reconsider the penalty.

According to Bloomberg, the court said: "The confiscation has to correspond to the actual profit generated by the infringement."

It criticised Finma for choosing to assess a 95-million franc penalty in return for not implementing a seizure in another case involving BSI in Brazil.

“It is not clear why, instead of performing exact calculations, Finma is making a kind of compensatory arrangement between two cases,” the court ruled.

Finma fined BSI for ignoring warning signals about the risk of some of its transactions and Singapore’s financial regulator stripped the lender of its banking license in 2016 for its ties to the 1MDB scandal.

US, Swiss and Singaporean prosecutors are still questioning how billions of dollars was embezzled and laundered through the Malaysian development fund, some of it through Swiss banks.

BSI appealed the penalty to the Swiss federal administrative court that same year, arguing that that Finma’s procedure leading to the decision was “flawed in many respects” and the decision was “disproportionate.”

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