Rothschild Bank Ensnared in Money Laundering Scandal that Led to Arrest of Malaysian President

 Switzerland – Swiss authorities have accused the Rothschild Bank AG  and Rothschild Trust AG of not only establishing business dealings with  customers suspected of money laundering, but also “considerably expand[ing]” those dealings while violating the bank’s own reporting by reporting their suspicions “only after a substantial delay.” 

After an investigation  into suspected money laundering operations involving Rothschild Bank  and Malaysian state investment fund 1MDB, Switzerland’s Financial Market  Supervisory Authority (FINMA) has concluded the bank was in “serious breach” of “due diligence, reporting, and documentation requirements.” FINMA said Rothschild Bank AG “failed to adequately document” many high-risk transactions. A press release by FINMA explained: 

Rothschild Bank AG and one of its  subsidiaries have been found to be in serious breach of money laundering  rules in the context of 1MDB. Specifically, they were in breach of due  diligence, reporting, and documentation requirements. FINMA will appoint  an audit agent to review enhancements already put in place by the  institutions. This concludes the last of seven enforcement proceedings  launched by FINMA in relation to 1MDB.

Last year, Luxembourg regulators fined the Swiss private bank Edmond de Rothschild $10.1 million for its handling of funds linked to scandal-hit Malaysian investment fund 1MDB, according to Reuters. The Luxembourg investigation stemmed from an international probe of  money that may have flowed from Malaysian government investment fund  1MBD, which is at the center of various worldwide corruption probes, and  reportedly connected to the Swiss investigation. 

The 1MBD fund was established by Malaysian Prime Minister Najib Razak  in 2009 as a government investment fund. There have been widespread  accusations of corruption surrounding Razak after $1 billion in deposits  into his personal bank accounts were revealed. The deposits totaled  hundreds of millions of dollars more than had previously been exposed by  probes into state fund 1MDB, according to the Wall Street Journal. According to a report in the WSJ: 

The Luxembourg unit of Edmond de Rothschild Group, a  private bank that manages money on behalf of wealthy clients, said it is  “cooperating” with an official investigation of money that may have  flowed from a Malaysian government investment fund at the center of  various world-wide corruption probes… The Luxembourg investigation widens probes of 1MDB already under  way by authorities in Switzerland, Malaysia, Singapore, Hong Kong and  Abu Dhabi. Swiss authorities said in January that 1MDB-related losses  from misappropriation could reach $4 billion. The Luxembourg prosecutor  said its case was connected to the investigation in Switzerland. 1MDB was created to invest in local energy and real-estate  projects to boost the Malaysian economy. The fund amassed $11 billion in  debt which it has struggled to repay. Last July, The Wall Street  Journal reported that almost $700 million was transferred to Mr. Najib’s  bank accounts via a web of entities, money which investigators believe  originated with 1MDB. 1MDB has denied sending money to Mr. Najib’s  accounts and denied wrongdoing and said it is cooperating with probes The case involving the Rothschild Bank was one of seven enforcement  proceedings launched by the FINMA against 1MDB amid suspicions of a  serious breach of Swiss banking laws. Malaysian Prime Minister Najib  Razak, who chaired 1MDB’s advisory board, has been charged with abuse of  power and breach of trust in a graft probe into the fund. He has denied  wrongdoing and pleaded not guilty.

FINMA appointed an audit agent to oversee an internal overhaul of the  bank’s business practices, but nonetheless announced that it was  closing its probe into Rothschild Bank AG, which is part of Paris-listed  Rothschild & Co. “We constantly strengthen our systems and procedures and are  determined to continue to do so to identify and combat the increasingly  sophisticated financial crime faced by the industry,” a Rothschild Bank spokesperson said in a statement. 

The Free Though Project has previously reported  on how instrumental the Rothschild empire has been in assisting the  global elite in moving wealth from traditional tax havens like the  Bahamas, Switzerland and the British Virgin Islands to the United  States. After opening a trust company in Reno, Nevada, Rothschild & Co.  began ushering the massive fortunes of the world’s most wealthy  individuals out of traditional tax havens, and into the Rothschild run  U.S. trusts, which are exempt from the international reporting  requirements.