JP Morgan Chase's Swiss unit committed serious breaches of anti-money laundering regulations in its dealings with Malaysian sovereign wealth fund 1MDB, the Swiss financial markets watchdog found Thursday, but no fines or other sanctions were imposed.

The regulator, FINMA, said the subsidiary of the US bank "seriously breached anti-money laundering regulations by failing to screen adequately transactions and business relationships booked in Switzerland associated with the Malaysian sovereign wealth fund 1MDB and one of its business partners."

The scandal surrounding the Malaysian state fund 1Malaysia Development Berhad (1MDB) has rocked the administration of Malaysian Prime Minister Najib Razak.

Najib, who founded 1MDB in 2009, has battled allegations that billions were looted from the investment vehicle in a vast campaign of fraud and embezzlement stretching from the Middle East to the Caymans.

FINMA said the US bank's Swiss subsidiary "failed to adequately identify the increased money laundering risks in some of the business relationships related to this case".

Despite the findings, FINMA said it would not seek legal proceedings against any individuals and there would be no fines against JP Morgan.

The US Justice Department alleges in civil lawsuits that $4.5 billion was looted from 1MDB in an audacious campaign of fraud and money-laundering.

Najib and the fund deny any wrongdoing. However, Najib, who must called elections by mid-2018, has purged critics from his government and curbed domestic investigations.

Celebrities have been sucked into the scandal, with the Justice Department alleging stolen 1MDB money was used to buy jewelry worth millions of dollars for Miranda Kerr as well as gifts for Leonardo DiCaprio.

Authorities in several countries as still investigating the complex deals involving the Malaysian fund and other entities.

In April 2016 1MDB defaulted on $1.75 billion in bonds after missing an interest payment of $50 million.

While JP Morgan Chase's Swiss unit has escaped fines, FINMA said Thursday it will now conduct an in-depth review of the bank's anti-money laundering systems.

JP Morgan noted that the investigation found nothing illegal, and that its findings called for neither penalties nor business restrictions.

"The resolution announced by FINMA relates to matters that took place many years ago in the Swiss Private Bank, and since that time we have increased training, added staff and made improvements in monitoring and surveillance," the bank said in a statement sent to AFP.

FINMA said JP Morgan had "displayed good cooperation" with investigators during the probe.

It has taken action against other lenders implicated in dealings with 1MDB, including ordering last year the dissolution of the BSI bank, citing "serious breaches" of money-laundering regulations in its dealings with 1MDB.

Source: AFP