Legal Actions Against 1MDB-involved Global Financial Institutions Stepped Up

Malaysia is focusing on global financial institutions accused of facilitating misappropriation of funds linked to 1Malaysia Development Bhd. 

The government are requesting courts in Malaysia, Singapore and Hong Kong to set early hearing dates in 2026 to “fast-track” existing suits against the financial firms, said Johari Abdul Ghani, who chairs a task force set up to recover assets of the state-owned company also known as 1MDB. 

“We are also reviewing other banks and financial intermediaries involved in the flow of funds from 1MDB”, he was quoted as saying. Malaysia has filed lawsuits at home and abroad against Deutsche Bank AG, Standard Chartered plc, Julius Baer Group Ltd, and RBS Coutts. 

As well as specialised corporate management Amicorp and law firm White & Case. 

1MDB had earlier dropped suits against Goldman Sachs, JPMorgan and Coutts and Co after the firms agreed to pay billions of dollars as settlement. Malaysia, nevertheless, is open to settlement negotiations, Johari was reported as saying. 

On October 14, the Finance Ministry reported that more than RM20 billion had been reclaimed through settlements with several financial institutions involved in the scandal. 

Separately, the Malaysian Anti-Corruption Commission had recovered about RM8 billion in cash and assets, which were already returned to the government’s consolidated fund under the Finance Ministry. 

The Malaysia Open jinx continued to haunt Pearly Tan-Thinaah Muralitharan after the second seeds crashed out in the second round on Thursday. 

The Malaysian pair went down 26-24, 21-17 to Indonesia's world No. 60 pair Febriana Dwipuji Kusuma–Meilysa Trias Puspitasari. 

It meant Pearly-Thinaah have now failed to progress beyond the second round in all five of their Malaysia Open appearances. They exited in the second round on debut in 2022, before suffering first-round defeats in the next three editions.

Malaysian Banks Identified in FinCEN Files

Malaysia is not unaffected by the FinCEN files scandal. 

In case, you didn’t read my post this morning, the global financial industry has been put under the spotlight again after a cache of leaked documents show years of transactions handled by the world’s largest banks linked to money laundering, corruption and fraud. 

According to a Malay Mail report published yesterday, a total of 23 transactions involving Malaysian banks were flagged as “suspicious” – with over $4.88 million (RM20 million) going in and $13.38 million (RM55 million) going out. 

On the receipt side, AmBank led the list of dubious dealings, having accepted $2.9 million in two transactions, followed by HSBC Bank Malaysia Bhd ($871,637) and Alliance Bank Malaysia Bhd ($462,378). And the bulk of suspicious transactions, a total of $13.37 million in seven transactions, was sent by Public Bank Bhd. 

Other banks also allegedly involved included CIMB Bank Bhd, Standard Chartered Bank, United Overseas Bank and OCBC Bank. 

These undertakings all involved overseas accounts in countries such as Afghanistan, Latvia, Poland, United Arab Emirates and the United States. 

A timely meet-up with a friend and ex-colleague, Dr Sheila Cheng at the Asia e University campus in Jalan SS 15/4, Subang Jaya, Selangor today. 

We must have had an intense discussion so much so that it slipped my mind to take a photo with her. It’s been years since we last met.

The FinCEN Files Scandal

Rogue banks are in the spotlight again. 

Leaked documents from the US Financial Crimes Enforcement Network (FinCEN) – the people at the US Treasury who combat financial crime – involving about $2 trillion of suspicious transactions have revealed how some of the world's biggest banks have allowed criminals to move dirty money around the world.

These banks such as JPMorgan Chase, HSBC, Deutsche Bank, Standard Chartered Bank, Bank of New York Mellon and more, not only turned a blind eye but they have immensely profited from the dirty money transactions. 

It’s alleged that BNY Mellon, for example, moved more than $1 billion for the financier behind Malaysia’s 1MDB political scandal, and JPMorgan processed more than $50 million for Paul Manafort, the former campaign manager for US President Donald Trump.  

The FinCEN files are more than 2,500 documents, most of which were files that banks sent to the US authorities between 2000 and 2017. They raise concerns about what their clients might be doing. 

These documents are some of the international banking system's most closely guarded secrets. Banks use them to report suspicious behaviour but they are not proof of wrongdoing or crime. 

They were leaked to Buzzfeed News and shared with the International Consortium of Investigative Journalists, which distributed them to 108 news organizations in 88 countries – and disclosing activities that banks don't want the public to know about. 

A BBC News report had given us insights into some of these activities: 

HSBC allowed fraudsters to move $80 million of stolen money around the world, even after it learned from US investigators the scheme was a Ponzi scam. 

JP Morgan allowed a company to move more than $1bn through a London account without knowing who owned it. The bank later discovered the company might be owned by a mobster on the FBI's 10 Most Wanted list. 

Evidence that one of Russian President Vladimir Putin's closest associates used Barclays bank in London to avoid sanctions which were meant to stop him using financial services in the West. Some of the cash was used to buy works of art. 

The husband of a woman who has donated £1.7m to the UK's governing Conservative Party's was secretly funded by a Russian oligarch with close ties to President Putin. 

The UK is called a "higher risk jurisdiction" and compared to Cyprus, by the intelligence division of FinCEN. That's because of the number of UK registered companies that appear in the SARs. Over 3,000 UK companies are named in the FinCEN files - more than any other country. 

Chelsea FC owner Roman Abramovich once held secret investments in footballers not owned by his club through an offshore company. 

Deutsche Bank moved money launderers' dirty money for organised crime, terrorists and drug traffickers. 

Standard Chartered moved cash for Arab Bank for more than a decade after clients' accounts at the Jordanian bank had been used in funding terrorism. 

The above illustrates all too clearly that existing regulations and bank compliance processes are grossly inadequate. 

And according to the ICIJ, in the US, almost 200 banking entities filed suspicious transactions.

Part of the list of 200 US banking entities. Data from ICIJ

By law, these banks have to know who their clients are – it's not enough to file SARs and keep taking dirty money from clients while expecting enforcers to deal with the problem. If they have evidence of criminal activity, they should stop moving the cash.

Scandalous – that’s what it is!