Singapore central bank shuts down Faclon Bank operations
An empty reception area at Falcon Private Bank office in Singapore October 11, 2016. Reuters

Singapore's central bank has shut down Falcon Private Bank's operations in the country after an anti-money laundering investigation.

The Commercial Affairs Department had arrested Falcon Bank's local branch manager Jens Sturzenegger last week.

The Monetary Authority of Singapore (MAS) said in a statement on Tuesday it was "withdrawing the merchant bank status of Falcon Private Bank Ltd, Singapore Branch (Falcon Bank) for serious failures in anti-money laundering (AML) controls and improper conduct by senior management at the Head Office in Switzerland as well as the Singapore Branch."

The central bank also imposed fines on DBS and UBS banks for violating its anti-money laundering policies.

"The actions on the three banks follow supervisory examinations by MAS into 1MDB-related fund flows that took place through these banks from March 2013 to May 2015," the MAS statement said.

MAS said the action against Falcon was based on three grounds. It said the bank's head office failed to act on conflicts of interest relating to an account of a customer who was associated with former board chairman Mohamed Ahmed Badawy Al-Husseiny.

It also cited the improper conduct of the Singapore branch manager and a "persistent and severe lack of understanding of MAS' AML requirements and expectations."