Swiss Federal Banking Commission says UBS acted correctly in Montesinos affair
UBS acted "correctly" throughout the money laundering probe of ex-Peruvian intelligence head Montesinos by the Swiss Federal Banking Commission (SFBC), says Tanja Kocher, the commission's spokeswoman.
The SFBC has just ended its investigation of Vladimiro Lenin Montesinos Torres. In November 2000, roughly USD 114 million of assets at five Swiss banks were frozen on suspicion of money laundering by the public attorney of the Canton of Zurich, then undertaking a criminal investigation.
At the time, the SFBC started a regulatory investigation of Bank Leumi le-Israel (Schweiz) AG, Fibi Bank Schweiz AG, Banque CAI (Suisse) SA, UBS and Bank Leu AG. The object of the probe was to find out if the five banks met their duty-of-care and reporting requirements as stipulated in federal money laundering law and SFBC money laundering guidelines.
As a result of the investigation, the SFBC has made a legally valid request for the General Manager of Bank Leumi le-Israel to resign.
UBS and Bank Leu broke off business connections to Montesinos before the start of the investigation, an SFBC press release says.
According to the SFBC, UBS and Bank Leu recognised that Montesinos was a Politically Exposed Person (PEP) from publicly available sources of information and ended their business relationship with him -- before the corruption allegations against him became public in the second half of 2000.
Neither UBS nor Bank Leu had reasonable grounds for suspicion that the fund deposited by Montesinos had any criminal characteristics and therefore they did not make any reporting of the assets at the federal money laundering desk.
Both banks did, however, decide to break off all business connections with Montesinos, and as a result the assets went to Bank Leumi and Fibi Bank.
Also, the press release said that none of the banks -- except UBS -- made attempts to personally contact Montesinos. The other four relied solely on information provided by third parties. The SFBC said that such behaviour with regard to important client relationships in private banking is "unsatisfactory".
Overall, the SFBC said that the mechanisms introduced to fight money laundering appear to be taking effect. The reporting requirement, stipulated in the money laundering law, made a "decisive contribution" in uncovering the Montesinos affair. The banks affected blocked and reported the assets held by Montesinos to the money laundering desk.
The proactive conduct of Swiss justice and police authorities allowed Peruvian officials to acknowledge the existence of Montesinos' assets and make an application for international legal assistance.
Zurich / Basel, 19 November 2001