Billions of dollars are said to be missing in the 1MDB scandal, nearly $700 million of which was deposited into Najib's bank account alone

Singapore's central bank on Tuesday said it was kicking out Switzerland's BSI Bank, which has been linked to a global money-laundering scandal that has embroiled neighbouring Malaysia's Prime Minister Najib Razak.

In the toughest legal action so far in the crisis rocking Malaysian state fund 1MDB, Switzerland also disclosed it had launched criminal proceedings against the parent firm BSI SA for "deficiencies" in its internal organisation.

“BSI Bank is the worst case of control lapses and gross misconduct that we have seen in the Singapore financial sector," Ravi Menon, managing director of the Monetary Authority of Singapore (MAS), said in a statement.

MAS said it had asked state prosecutors to investigate six senior executives of BSI Bank for possible criminal offences and fined it Sg$ 13.3 million ($9.6 million) for 41 breaches of Singapore's laws against money laundering.

Among those facing investigation is former chief executive Hans Peter Brunner.

Two Singaporean executives of the bank are already facing criminal proceedings in the city-state, which is Southeast Asia's financial hub and hosts more than 200 banks.

BSI has been operating as a merchant bank in Singapore since November 2005, offering private banking services to wealthy individuals.

The last time Singapore stripped a merchant bank of its status was in 1984, when the local branch of Jardine Fleming was shut down for "serious lapses" in its advisory work.

Najib, who founded 1Malaysia Development Berhad (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.

- Denials -

The fund, which ran up more than $11 billion in debt in a series of much-questioned investments, has steadfastly denied money was stolen or that it was in financial trouble.

Najib also faced questions after the Wall Street Journal revealed $681 million in transfers to his personal bank accounts.

But since the scandal erupted last year, Najib has weathered the allegations by curbing scrutiny by authorities, purging officials demanding accountability, and stifling media reporting.

He insists the $681 million was a gift from the Saudi royal family, most of which he returned. A Saudi official in April said that was true, but only after weeks of silence that cast doubt on the claim.

In a series of more recent reports, however, the newspaper said Malaysian investigation documents indicated more than $1 billion in 1MDB-linked money had been funnelled to Najib.

Najib and 1MDB vehemently deny that claim.

Najib has faced calls to resign but has tightened his grip on the ruling party and thwarted domestic investigations. His position is not seen as under imminent threat.

Singapore's MAS said it was "working closely" with the Swiss Financial Market Supervisory Authority (FINMA), which has already approved the sale of the BSI parent firm to another Swiss-based bank, EFG International.

The Office of the Attorney General of Switzerland said Tuesday that it had opened criminal proceedings against BSI SA "based on information revealed by the criminal proceedings in the 1MDB case".

In Singapore, former BSI Bank relationship manager Yak Yew Chee is undergoing a criminal investigation for his dealings with a unit of 1MDB. His bank deposits have been frozen.

Separately, former BSI Bank wealth planner Yeo Jiawei, also a Singaporean, faces seven charges including forgery, money laundering, cheating and perverting the course of justice. He is in police custody and scheduled to appear in court Tuesday.