CSSF

Edmond de Rothschild fined for alleged involvement in 1MDB scandal

The premises of the private bank Edmond de Rothschild in Limpertsberg were searched on 29 June.
The premises of the private bank Edmond de Rothschild in Limpertsberg were searched on 29 June.
Photo: Gerry Huberty

The Luxembourg Financial Sector Supervisory Commission (CSSF) has ordered the private bank Edmond de Rothschild to pay a fine of almost €9 million as part of its alleged involvement in the Malaysian 1MDB misappropriation scandal. 

"The CSSF communicated the conclusion of the administrative procedure to Edmond de Rothschild (Europe) on 21 June," the private bank said on Thursday.

The latter takes note of the decision and "will pay a penalty of €8,985,000 euros, marking the end of this procedure in which it has actively participated", the private bank, located in the Limpertsberg neighbourhood of Luxembourg City, said in a statement.

The statement does not mention the supposed involvement in the 1MDB scandal.

€21 million charges 

The affair, however, is mentioned in the annual report published in June.

"In the financial year 2016, the name of Edmond de Rothschild (Europe) was cited in connection with possible fraud within the 1MDB fund," the official documentation notes, also mentioning that the "other operating expenses" linked to the "litigation" were extremely high: €21 million in 2016 compared with €10.6 million in 2015. 

In its statement this Thursday, the Swiss bank said compliance with legal and regulatory requirements for its subsidiaries, as well as its "collaborators", was a "major priority".

The Luxembourg entity was mentioned in April 2016 as part of a journalistic investigation by French journalists of Cash Investigation for hosting funds allegedly diverted from the Malaysian sovereign wealth fund 1MDB. 

PEP money

Based on documents already used by the Malaysian opposition media Sarawak Report, the report of the French public channel accused the former director of the bank Marc Ambroisien to have knowingly received gray money. 

Khadem Al Qubaisi est aussi connu pour fréquenter les soirées de la jet set.
Khadem Al Qubaisi est aussi connu pour fréquenter les soirées de la jet set.
Photo: D.R.

The former French banker met with the Luxemburger Wort last September and deferred responsibility for the entire group, which reportedly carried out the preliminary procedures for contacting the client, director of the Abu Dhabi IPIC sovereign fund, Khadem Al Qubaisi.

"Edmond de Rothschild has taken steps in the first half of 2016 to strengthen its compliance and control procedures," the bank said on Thursday. 

It also indicates that it has reviewed its governance over the past year.

The management of the bank was almost completely replaced. Its current director is Bernard Coucke.

The president of the board of directors, Ariane de Rothschild, left her position a few weeks after the revelations. 

The financial institution also states that its financial viability was not jeopardised.

"The financial health of the bank is first-rate," it said in a statement.

This Thursday, June 22, the CSSF does not mention the fine on its site.

Judicial proceedings are still underway in several countries, notably Luxembourg, to determine who is responsible. 

Swiss watchdog FINMA also announced on Thursday that they were conducting enforcement proceedings against the private bank to establish whether it had abided by its anti-money-laundering standards, Reuters reports. 

"We know of the case and are in contact with CSSF. We cannot comment on the context of the case," a FINMA spokesman said in a statement. 

(Pierre Sorlut, pierre.sorlut@wort.lu, +352 4993 471, translated from French by Barbara Tasch) 

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