Singapore court lets $2.7 billion 1MDB suit against Standard Chartered

Singapore’s High Court dismissed Standard Chartered’s application to strike out a $2.7 billion lawsuit linked to 1Malaysia Development Berhad, allowing the case to advance while the bank appeals.

The suit, filed in June by court-appointed liquidators for three 1MDB-linked companies, alleges the bank enabled fraud that caused more than $2.7 billion in losses over a decade ago.

According to the liquidators, Standard Chartered permitted more than 100 intrabank transfers between 2009 and 2013 that obscured the flow of funds and ignored warning signs. 

Their filings assert that some of the money passing through bank accounts reached the personal account of former Malaysian Prime Minister Najib Razak, who is serving a six-year prison term following a graft conviction related to 1MDB.

Standard Chartered plans to challenge the ruling. In a statement, the bank called the claims “without merit” and argued they were brought by “shell companies that misappropriated funds from 1MDB.” The bank noted it reported the companies’ transactions before closing their accounts in early 2013.

Authorities in the United States estimate about $4.5 billion was stolen from 1MDB between 2009 and 2014 through a cross-border scheme. At least six countries, including Singapore and Switzerland, have run investigations. 

Malaysia reports recovering 29 billion ringgit, about US$7.01 billion, in 1MDB-linked assets between 2019 and February 2024. In 2016, Singapore’s central bank fined Standard Chartered’s local unit S$5.2 million for anti-money-laundering breaches tied to transactions linked to the scandal.

As we covered previously, the Monetary Authority of Singapore published a consultation paper, proposing Guidelines on AI Risk Management that set supervisory expectations for boards and senior management at banks and other regulated financial institutions to oversee and manage risks related to artificial intelligence.

The proposed guidelines require proper governance and controls over AI used in customer-facing tools, internal analytics, and autonomous systems, and apply across banks, insurers, capital markets participants, and other license holders supervised by MAS.