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(Adds Falcon comment, detail)
By Joshua Franklin
ZURICH, Oct 12 (Reuters) - Swiss federal prosecutors have opened criminal proceedings against Zurich-based Falcon Private Bank for allegedly failing to prevent suspected money laundering linked to 1MDB, the scandal-hit Malaysian state fund, prosecutors said on Wednesday.
Falcon becomes the second Swiss bank after BSI to face a criminal investigation by Switzerland's Office of the Attorney General (OAG) over links to 1Malaysia Development Berhad (1MDB).
Falcon, owned by Abu Dhabi's International Petroleum Investment Co (IPIC), said in a statement it would cooperate with the OAG to help ensure a speedy resolution to the investigation.
The OAG said in January it suspected misappropriations from 1MDB totalled roughly $4 billion, while alleging last week that a Ponzi scheme may have been set up to conceal an alleged $800 million fraud.
Founded by Malaysian Prime Minister Najib Razak, who chaired its advisory board, 1MDB is the subject of money-laundering investigations in at least six countries including Switzerland, Singapore and the United States.
Najib has denied any wrongdoing and said Malaysia will cooperate with the international investigations.
The OAG has been running an investigation linked to 1MDB for more than a year and has also opened criminal proceedings against four people.
The criminal proceedings against Falcon are partly based on an investigation by Swiss financial watchdog FINMA, which on Tuesday sanctioned Falcon for breaching money-laundering rules.
"The information suggests that the offences of money laundering currently under investigation in (the) 1MDB case could have been prevented had the Falcon Private Bank Ltd been adequately organised," the OAG said in a statement.
FINMA has ordered Falcon to turn over 2.5 million Swiss francs ($2.56 million) in what the watchdog said were illegal profits. It also said it has opened enforcement proceedings against two former Falcon officials, without naming them.
Separately on Tuesday, the Monetary Authority of Singapore (MAS) ordered Falcon's Singapore branch to cease operating because of "a persistent and severe lack of understanding" of Singapore's money-laundering controls. ($1 = 0.9768 Swiss francs) (Reporting by Joshua Franklin; Editing by Michael Shields/Keith Weir)