A major lawsuit has been filed against global bank Standard Chartered over its alleged role in the 1MDB scandal — one of the biggest financial frauds in history. Liquidators are now trying to recover more than $2.7 billion from the bank, saying it allowed large transfers of stolen money linked to Malaysia’s state investment fund.
The case was filed in Singapore, where many of the money flows occurred. According to people familiar with the case, the lawsuit claims that Standard Chartered failed to follow proper anti-money laundering checks between 2009 and 2013. During that time, the bank allegedly allowed more than 100 questionable transactions.
Thieves originally took this money from 1Malaysia Development Berhad (1MDB), a fund Malaysia’s government set up to support the country’s growth. Instead, investigators say they used the money to buy luxury items, real estate, and personal gifts for politicians.
Key Figures: Jho Low, Najib Razak, and Tim Leissner
At the center of the scandal is Jho Low, a Malaysian businessman accused of planning the entire fraud. Authorities in the U.S. say at least $4.5 billion was stolen from 1MDB under his direction. Although he denies wrongdoing, he remains on the run.
Malaysia’s High Court Pauses Najib’s Money Laundering Charges — But 1MDB Ghost Still Haunts Him
Another major name is Najib Razak, Malaysia’s former Prime Minister. He was charged and found guilty of corruption related to 1MDB. Najib is currently serving a six-year prison sentence. Investigators claim that he received some of the stolen funds directly in his accounts and spent them on luxury goods for his family.
Tim Leissner, a former executive at Goldman Sachs, also played a big role. He admitted to helping move the stolen money through different banks. Just last month, a U.S. court sentenced him to two years in prison.
The firm leading the recovery efforts, Kroll, believes that over $2.7 billion flowed through Standard Chartered accounts — including payments linked to Najib and purchases of luxury items.
Standard Chartered Responds to Allegations
In response to the lawsuit, Standard Chartered said it has not yet received the official legal documents. However, it “strongly rejects” the claims and plans to fight the case. The bank described the companies filing the case as “shell companies with no legitimate business” and said the accusations have no merit.
1MDB Scores Legal Victory as Singapore Allows $394M Suit Against BSI Bank to Proceed
Standard Chartered has previously faced trouble over its involvement in the 1MDB scandal. In 2016, Singapore’s central bank — the Monetary Authority of Singapore (MAS) — fined the bank S$5.2 million (about US$4 million) for failing to stop suspicious money flows. MAS found that the bank had 28 violations of anti-money laundering rules, including weak customer checks and poor staff oversight.
MAS said weak policies and insufficient supervision caused the bank’s problems. While MAS did not find any “intentional misconduct,” it told the bank to discipline the staff involved.
Standard Chartered is not alone in being caught up in the 1MDB case. Other banks, like UBS and DBS, also faced penalties in Singapore. Some bankers even went to jail over their roles in the scandal.
In addition to this new lawsuit, Standard Chartered is also dealing with a £1.5 billion case in London. That case is about whether the bank broke sanctions by doing business with Iran. In 2019, the bank agreed to pay $1.1 billion to U.S. and U.K. regulators to settle earlier charges over that issue.
The 1MDB scandal continues to make headlines years after it first broke, as efforts to recover billions in stolen money are still ongoing.