Swiss Regulator Accuses JPMorgan Of Violating Anti-Money Laundering Rules

The financial market regulator of Switzerland has accused JPMorgan’s Swiss division of seriously breaching anti-money laundering rules with regards to 1MDB, the sovereign wealth fund of Malaysia. According to FINMA, the Swiss financial market regulator, the local unit of JPMorgan Chase did not put in place measures to assist in identifying the risks of increased money laundering from the sovereign wealth fund that is allegedly corrupt and which is currently embroiled in a massive scandal.

“The bank seriously breached anti-money laundering regulations by failing to screen adequately transactions and business relationships booked in Switzerland associated with the Malaysian sovereign wealth fund 1MDB and one of its business partners,” said FINMA.

Incomplete or inconsistent

According to FINMA the Wall Street firm had accepted information from clients that was inconsistent or incomplete without documenting or looking into it further. FINMA also cited shortcomings in JPMorgan’s control and monitoring system. The market watchdog of Switzerland also indicated that the U.S. Office of the Comptroller of the Currency had been notified about the case since it was the entity which had overall responsibility for the Wall Street firm.

Six months ago FINMA indicated that enforcement proceedings against the Wall Street bank had been concluded and no penalties would be imposed. At the time this action was interpreted to mean that profits generated by the Swiss division of JPMorgan in the alleged serious breaches were insignificant.

Enhanced monitoring and surveillance

Per Jason Lobo, a JPMorgan spokesperson, the breaches the bank is accused of took place between six and eight years ago. Since then the bank has added staff and increased training besides making improvements aimed at enhancing monitoring and surveillance.

JPMorgan’s anti-money laundering systems will however undergo an in-depth review and a monitor has already been appointed to carry out the exercise. Focus will mostly be in high-risk transactions and this mostly involves business and personal accounts.

With regards to the 1MDB investigation JPMorgan was the 7th case. Investigators in the United States, Hong Kong, Switzerland and Singapore have been carrying out probes following allegations that close confidants and aides of Najib Razak, the prime minister of Malaysia, stole over one billion US dollars from the sovereign wealth fund.

Last year the U.S. Department of Justice moved to seize assets worth over $1.5 billion said to belong to associates and relatives of the Malaysian prime minister using money that was looted from the Asian country’s sovereign wealth fund. The fund was founded by Najib and his administration has denied any wrongdoing.

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