Ex-BSI Deputy CEO not prosecuted by only given warning and prohibition order

Ex-BSI Deputy CEO not prosecuted by only given warning and prohibition order

The Monetary Authority of Singapore (MAS) and the Singapore Police Force’s Commercial Affairs Department (CAD) released a statement yesterday (10 Oct 2022) stating that Mr Raj Sriram, former Deputy CEO and Head of Private Banking of BSI Bank Limited in Singapore (BSI), has been issued a 24-month conditional warning and a 10-year prohibition order for his involvement in the 1Malaysia Development Berhad (1MDB) scandal. He has also been fined $150,000.

He was slapped with the penalties for his contribution to the failure of his bank to file suspicious transaction reports regarding 1MDB related financial transactions. In its investigation, CAD found that there were actually reasonable grounds for BSI to inform the Singapore authorities with regard to those suspicious IMDB transactions under MAS’ Notice 1014, but BSI did not. “Due to Mr Sriram’s neglect, BSI (Singapore) did not file the suspicious transaction reports,” the statement said.

“After careful consideration of the circumstances of the case and in consultation with the Attorney-General’s Chambers, CAD issued a conditional warning in lieu of prosecution to Mr Sriram for two offences under section 28B(1) read with section 27B(2) of the Monetary Authority of Singapore Act (MAS Act).”

Under the conditional warning, Mr Sriram will need to pay a sum of $150,000 to the Singapore Government’s Consolidated Fund and refrain from any criminal conduct for a period of 24 months. In addition, under the prohibition order, he is further prohibited from providing any financial advisory service or taking part in the management of, acting as a director of, or becoming a substantial shareholder of, any financial advisory firm for 10 years.

“The authorities take a serious view of compliance with anti-money laundering (AML) and countering the financing of terrorism (CFT) laws, and reporting of suspicious transaction reports,” the statement added.

Ms Ho Hern Shin, Deputy Managing Director of MAS, said, “BSI (Singapore), of which Mr Sriram was Deputy CEO and Head of Private Banking, was a key conduit for tainted funds in the 1MDB debacle… the ultimate responsibility for ensuring a financial institution’s compliance with AML/CFT laws and regulations rests with its board of directors and senior management.”

“MAS will take to task errant board and senior management members whose failures result in their financial institutions violating laws and regulations,” she added.

Mr David Chew, Director of CAD, said, “The suspicious transaction reporting regime is a key pillar of Singapore’s approach to anti-money laundering and countering the financing of terrorism… the Singapore authorities will not hesitate to take firm action against reporting entities or their officers, who intentionally or negligently fail to file suspicious transaction reports when legally obliged to do so.”

Raj Sriram was Global Head of South Asian Business at RBS Coutts

Before joining BSI, Mr Raj Sriram was the Global Head of South Asian Business with RBS Coutts where he focused on private banking. He joined BSI in 2009, where he continued to look after private banking business as Global Head of South Asia as well as Head of Private Banking South East Asia. At the same time, he was appointed Deputy CEO for the Asia market by BSI.

In Feb 2015, Mr Sriram was promoted to become the head of private banking for the whole of Asia, in addition to being BSI’s deputy CEO Asia. In his expanded role, he would drive the bank’s business in the Asia region. At the time of his promotion, the bank praised him saying, “This is a very important and exciting time for BSI Asia and Raj’s expanded role is part of our strategy to create an even stronger and more dynamic offering to our clients. Raj is a tremendous asset to our leadership team and is absolutely committed to the needs of clients and colleagues.”

However, not long after Mr Sriram was promoted, on 10 March 2015, the Auditor General of Malaysia was tasked by the Malaysian government to audit the financial statements of the 1MDB Group and to evaluate whether the financial performance and activities of the 1MDB Group are aligned with the company’s original objectives.

After about 1 year later, the audit was completed. But on 4 March 2016, the Malaysian government suddenly classified the audit report as “secret” under the Official Secrets Act without any satisfactory explanations. After the victory of Pakatan Harapan in the 2018 General Election in Malaysia, the audit report was finally declassified for public viewing by the new Malaysian government led by then PM Mahathir Mohamad.

Mr Raj Sriram left BSI in Apr 2016, just slightly more than a year after his promotion to handle all private banking business in the whole of Asia. A statement released by the bank at the time stated that Mr Sriram will “take a break from his professional career”.

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