A liquidator is in pursuit of over $2.7 billion from Standard Chartered through a lawsuit connected to the 1MDB scandal, which involves recovering funds misappropriated from Malaysian sovereign wealth assets. This legal action, initiated on Monday in Singapore, is the latest in a long-standing effort to recoup money from 1MDB, a venture that has drawn the attention of major banks globally.
The case targets Standard Chartered for its alleged failure to perform necessary anti-money laundering checks, allowing billions to be laundered. Regulatory bodies in Singapore have already penalized the bank for its lapses related to this situation.
According to the allegations, from 2009 to 2013, Standard Chartered approved over 100 internal transfers that concealed the movement of stolen funds, ignoring several warning signs in the process.
The bank, in a statement, claimed it had not received the lawsuit yet, and asserted it would strongly contest the allegations, describing 1MDB as a “shell company” lacking legitimate business operations. They emphasized that the claims are without merit, highlighting significant investments made in anti-money laundering practices.
The 1MDB scandal is renowned as one of history’s largest financial frauds, with U.S. officials estimating at least $4.5 billion was illicitly taken, orchestrated by Malaysian financier Jho Low. It also led to the conviction of former Malaysian Prime Minister Najib Razak, who received a sentence of six years in prison. Numerous prominent banks from various regions faced scrutiny as well.
Recently, Tim Raisner, a former Goldman Sachs banker involved in the scandal, was sentenced to two years in prison. Liquidators from Kroll have traced more than $2.7 billion that passed through Standard Chartered accounts, noting substantial payments made to Najib and expenditures on luxury items for his family.
Singapore played a critical role as a channel for 1MDB-related funds, a fact that has caused significant embarrassment to its financial authorities, known for promoting stability and a strong legal framework. This scandal prompted the implementation of stricter anti-money laundering regulations for financial institutions in the region.
In 2016, Singapore’s financial regulators fined Standard Chartered $5.2 million after uncovering repeated violations of anti-money laundering rules between 2010 and 2013. A thorough investigation revealed serious deficiencies in due diligence and ongoing monitoring of customers, leading to numerous regulatory breaches.
While the Monetary Authority of Singapore concluded there was no intentional wrongdoing by Standard Chartered, it did enforce disciplinary measures against staff for failing to execute their responsibilities properly.
Standard Chartered is also embroiled in a separate £1.5 billion legal challenge in London regarding allegations surrounding violations related to sanctions on Iran. The bank’s attempts to limit these claims earlier this year did not succeed. In 2019, it resolved earlier sanctions-related charges by agreeing to a $1.1 billion settlement with U.K. and U.S. regulators.
