After the Swiss Attorney General Office, now it is the financial regulator of the country, Finma, that is stepping up probes into the 1Malaysian development fund (1MDB) and Petroleo Brasileiro SA (Petrobras).
Finma director Mark Branson said the 1MDB and Petrobras involves billions of US dollars in illegitimate transactions.
“The extent of the cases and the sums involved are vast,” in the Brazilian and Malaysian cases,” Branson said.
“We are talking about cash flows amounting to several billion U.S. dollars, with individual transactions running into hundreds of millions.”
Thus, Finma will step up probes into 1MDB and Petrobras.
“We will investigate suspicious bank connections that have surfaced in leaked Panama documents,” said Branson in mid-April.
“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,” Branson said.
He said Finma’s investigation will involve considerable work because of the sheer volume of information made available.
The regulator had earlier said it would “clarify” the extent to which Swiss banks may have used the services of Mossack Fonseca to determine if they broke any domestic banking rules.
A series of reports in April based on millions of documents leaked from the Panama law firm Mossack Fonseca revealed how its lawyers, including a Geneva team, worked with Credit Suisse Group AG, UBS Group AG and other big banks to create numerous offshore shell companies for world leaders, athletes and other rich clients.
Two other international probes into alleged corruption have intensified in recent weeks. Finma is pursuing three enforcement cases against financial institutions in the Petrobras affair and four proceedings tied to allegations of bribery at 1Malaysia Development Bhd, Branson said.
“There is concrete evidence that the risk management and measures taken to fight money laundering were not sufficient,” Branson said.
1MDB directors offered to resign in April after a parliamentary committee probe found poor oversight of the fund.
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.
Brazilian politicians are trying to impeach the country’s president Dilma Rousseff over allegations her campaign received illegal donations from a kickback scheme at state-run Petrobras. A quarter of Swiss banks questioned in connection with Petrobras may have violated rules to prevent money laundering, he said.
RED RATED SWISS BANKS
There are 14 Swiss banks which currently with a red rating. “We are taking action at each of these institutions,” he said.
In terms of the type of action the regulatory body can take, measures such as three-year bans for new relationships with politically exposed persons (PEPs), the repayment of illegally generated profits, new members for the board of directors and imposing bans on senior bank managers, are all steps FINMA has ordered at banks in recent years.
Source: Bloomberg, News Agencies
By Cordoba.Ali who writes extensively on international affairs for Worldfuturetv.com