Standard Chartered slapped with $2.7bn lawsuit over fraud scandal
Standard Chartered has been hit with a $2.7bn lawsuit over its alleged role in one of the world’s largest financial fraud cases, known as the 1MBD scandal.
The London-headquartered lender is being accused of helping move and hide billions of dollars that were stolen from Malaysia’s 1MDB fund, by not sufficiently checking to see where the money was coming from or where it was going.
Between 2009 and 2013, Standard Chartered allegedly allowed more than 100 suspicious transfers through its bank, despite warning signs that the money might be linked to illegal activity.
The people filing the lawsuit alledge the bank didn’t follow basic anti-money laundering (AML) rules and believe if the lender had, it could have blocked or reported the transactions.
Standard Chartered shares tumbled over one per cent as markets opened to 1,191.50p.
Standard Chartered launches staunch defence of AML
This case is part of a bigger effort to recover billions that were taken from 1MDB – a government investment fund intended to help Malaysia develop its economy but ended up being at the centre of one of the world’s biggest financial scandals.
Money was embezzled from the fund by officials and associates, including then-Prime Minister Najib Razak who is serving a 12 year sentence in Kajang Prison for his role.
In a statement seen by City AM, Standard Chartered said it had not yet received the claim documents. The bank said it “emphatically rejects any claims” made by the 1MDB companies, adding that the liquidators had publicly stated they were “shell companies with no legitimate business”.
The lender defended its “significant investments” in anti-money laundering measures.
“Any claims by these companies are without merit and Standard Chartered will vigorously defend any lawsuit commenced by the liquidators,” the firm said.
A spokesperson for the Board of 1MDB said: “We are pleased to see the Court-appointed liquidators taking action which will benefit the victims of the fraud, including 1MDB.
“The Malaysian people were the true victims of this global fraud, and all parties are determined to hold every facilitator to account — including financial institutions that failed in their most basic duties of vigilance and responsibility.”