ZURICH – Switzerland's financial regulator on Thursday said JPMorgan Chase & Co.'s Swiss unit had "seriously breached" anti-money-laundering regulations related to its dealings with Malaysian state investment fund 1Malaysia Development Bhd, which is at the center of a global fraud scandal.
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1MDB is the subject of investigations in the U.S., Switzerland and other countries into whether billions of dollars were siphoned out of the fund.
"J.P. Morgan failed to adequately identify the increased money laundering risks in some of the business relationships related to this case," the Swiss Financial Market Supervisory Authority, or Finma, said in a statement, citing enforcement proceedings it conducted between May 2016 and June 2017.
"In one case, it credited hundreds of millions of U.S. dollars from the 1MDB sovereign-wealth fund, allegedly earmarked for the purchase of a company, to the personal account of an individual with close ties to a 1MDB business partner," Finma said.
However, JPMorgan wasn't fined and didn't have restrictions imposed on it. Finma cited the bank's "good cooperation" during the probe.
The Swiss attorney general opened an investigation into the alleged misappropriation of funds from 1MDB in August 2015 amid concerns the country's banks may have been used for illegal activities. Finma opened enforcement proceedings against seven Swiss banks over the 1MDB case between 2016 and 2017. One case remains open.
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Finma previously ordered Coutts & Co. Ltd., BSI SA and Falcon Private Bank Ltd. to pay millions of francs from profits linked to business with 1MDB. In April, it reprimanded UBS Group AG over its 1MBD dealings.
The regulator said Thursday it has appointed a monitor to review the controls of J.P. Morgan (Switzerland) Ltd. and that is also informed the U.S. Office of the Comptroller of the Currency. "This review focuses primarily on the handling of high-risk transactions including, in particular, the monitoring of transactions between personal and business accounts," Finma said.
"The resolution announced by Finma relates to matters that took place many years ago in the Swiss Private Bank, and since that time we have increased training, added staff and made improvements in monitoring and surveillance," JPMorgan said in a statement.
1MDB has denied any funds were misappropriated or any wrongdoing on its part, and has pledged to cooperate with any lawful investigation. Multiple investigations in Malaysia into 1MDB closed without finding wrongdoing.
Write to Brian Blackstone at firstname.lastname@example.org
(END) Dow Jones Newswires
December 21, 2017 10:27 ET (15:27 GMT)