The bank, however, failed to conduct due diligence into the background of the transaction.
Subsequently, between late 2009 and early 2013 numerous high-risk transactions with a total value of $1.7bn were processed through the account.
Despite having serious grounds for suspicion due to the unusual transactions from 2009 onwards, Coutts opened a further business relationship with the Malaysian businessman in the summer of 2012.
Internal warnings ignored
A number of bank employees expressed serious, timely concerns to their managers and the compliance unit about the business relationship with the Malaysian businessman.
Following negative media reports, the individual responsible for providing advisory services to this businessman in Singapore noted: “I feel very uncomfortable with this guy and the transactions that are going through the account. I think the management has to make a decision whether to keep this relationship.”
Although the media reports led to investigations within the bank and an exchange between Coutts Singapore and its Swiss head office, those responsible failed to follow up on these clear causes for concern.
Instead it was decided to continue with the lucrative business relationships and process the transactions.
As early as March 2012 the following was noted in an internal bank meeting about the business relationship with the Malaysian businessman: “[X] is a key client who we are comfortable with the Source of Funds, Source of Income and activity performed on these accounts”.
In 2013 and 2014, various compliance bodies within the bank again raised and questioned the business relationship.
On each occasion, however, they decided to continue with it.
Coutts is not the first bank to be fined for its involvement with the Malaysian wealth fund.