A Swiss private bank (BSI) will face criminal proceedings and be liquidated after allegedly committing serious breaches of anti-money laundering regulations in connection with the suspected embezzlement of a Malaysian state investment fund.

BSI (Panama), a subsidiary of BSI based in Switzerland, is one of the banks which was approached on behalf of Maltese Minister Konrad Mizzi’s and OPM Chief of Staff Keith Schembri’s Panama companies to open bank accounts. BSI Panama, according to its website, is 100% controlled by BSI.

According to the Panama Papers, in an email from Mossack Fonseca to Nexia BT’s Karl Cini, the following was said: “Please note that we have found three banks that are disposed to open the bank accounts for companies which has PEP as Beneficial Owners.  Itaú (Miami): at least 2 year ceased functions as PEP, and the minimum initial deposit is $1M. BSI (Panamá): the minimum initial deposit is $1M. Brickell Bank (Miami): the minimum initial deposit is $1M.”

In response, Karl Cini (above) sent the following email: “Spoke to clients. They want to check re BSI in Panama.  They are asking re the $1m deposit. Is this for initial deposit only? Is there a minimum they need to keep as running/average balance?”

The subject lines of the emails containing the information quoted above are the company codes for Mr Schembri and Dr Mizzi’s Panama companies.

Another email, which contained Tillgate and Hearnville (Schembri and Mizzi’s companies respectively) in the subject heading, sent from Mossack Fonseca to Karl Cini, read: “We were told by one of our contacts that the BSI Bank was recently sold to a Colombian bank. Rules are changing and we were told that if the clients are not applying to immigration Visas in Panama they won’t open the account. I am double checking about this, so it is not negative at all. But, at the same time, on Friday last week I called two other banks and asked them for opening bank accounts for PEP’s. They want me to send the info about the clients in order to run a quick pre-check and let us know if they will be in a position of opening the bank account. If you authorize me, I could send the info they are requesting. But, talking with Juan Carlos today, he told me that for this quick pre-check, the banks will need the info he asks in the email below”. The info referred to activity products and/or services provided, current assets of the company in US$, last reported earning, main clients etc.

A couple of emails later, the following is sent by Mr Karl Cini: “In the meantime please confirm that BSI Bank (in whatever capacity they are now) have not closed any doors and are still open for business for the mentioned clients”. The trail then goes cold.

Minister Mizzi has previously denied opening a bank account: “ With regards to reports that there were attempts by the service provider to open a bank account, this was part of the service that was offered to me. Nevertheless, as a state of fact confirmed by the reports, I did not pursue this option and never opened any account either in Dubai, Panama or elsewhere,” he previously said according to reports.

The Malta Independent is an official partner of the International Consortium of Investigative Journalists and the German newspaper Suddeutsche Zeitung and gained full access to the full set of the Panama Papers.

The Swiss market supervisor, FINMA, said that in the 1MDB case (the Malaysian state investment fund), BSI "executed numerous large transactions with unclear purpose over a period of several years and, despite clearly suspicious indications, did not clarify the background to these transactions."

The Swiss attorney general's office opened criminal proceedings against the bank, whose chief executive resigned Tuesday. BSI will be taken over by EFG International, another Swiss bank, on condition that BSI be integrated and dissolved within a year

In Singapore, authorities said they were ordering BSI's local branch to shut down, citing serious breaches of anti-money laundering requirements, poor management oversight and gross misconduct by some staff.

Switzerland opened an investigation last year of two former fund officials and persons unknown on suspicion of bribery and money laundering, among other offenses.

FINMA said the bank had business relationships with a range of sovereign wealth funds, with accounts in both Switzerland and Singapore. It said senior management "did not question why the sovereign wealth funds should use a private bank to provide institutional services and pay excessive out-of-market fees for doing so."

"In one case involving a deposit of $20 million for example, the bank was happy to accept the client's explanation that the funds involved were a 'gift'," the supervisor said. "In another case, an account was credited with more than $98 million without any effort to clarify its commercial background."

In another case, it said, $20 million was transferred through a variety of BSI accounts on the same day before being transferred to another bank — the kind of transaction that is "often a clear indication of money laundering."

FINMA said exceptions to the bank's internal rules were made for important clients, and that management was informed but took no action to monitor those exceptions. It ordered the confiscation of 95 million francs ($96 million) in "illegally generated profits." It is investigating two former top managers to determine what they knew.