The Swiss Financial Market Supervisory Authority said J.P. Morgan (Switzerland) Ltd. "seriously breached anti-money laundering regulations" with regards to business booked in the country with allegedly corrupt Malaysian sovereign wealth fund 1MDB.
FINMA's proceedings, which were conducted between May 2016 and June 2017, revealed that JPMorgan Chase & Co.'s Swiss unit failed to identify heightened money laundering risks because it accepted incomplete or inconsistent information from clients without further examination and documentation.
The regulator also found violations relating to cash flows between business and personal accounts. At one point, the lender credited hundreds of millions of U.S. dollars from 1MDB to the personal account of someone affiliated to a 1MDB business partner. A tranche of the amount was then transferred to a company associated with that individual, without scrutiny from the bank.
The ruling, which was not appealed, led to an in-depth review by the regulator of J.P. Morgan (Switzerland)'s anti-money laundering systems, initiating a monitor on an ongoing basis to review the appropriateness and functioning of the lender's controls. However, no monetary penalties or business restrictions will be imposed on the bank, in contrast to other 1MDB-related proceedings, for its "good cooperation."
The ruling is one of its seven 1MDB-related cases, one of which remains open, FINMA noted, adding that it had issued industry bans against eight bank managers in the last five years for serious violations of due diligence requirements.
