Liquidators pursuing funds looted from Malaysia’s scandal-ridden 1MDB sovereign wealth fund are suing UK-based banking giant Standard Chartered for more than $2.7 billion, alleging the bank played a central role in one of the world’s largest financial frauds. The lawsuit, filed Monday in Singapore, marks a major development in the decade-long global effort to recover billions siphoned from 1Malaysia Development Berhad.
According to a report by the Financial Times, the claimants argue that between 2009 and 2013, Standard Chartered permitted over 100 intra-bank transfers that helped obscure the flow of misappropriated money. The lawsuit accuses the bank of failing to conduct proper anti-money laundering (AML) checks and overlooking numerous red flags associated with the transactions.
The Financial Times notes that Singaporean regulators had previously sanctioned Standard Chartered for AML lapses connected to the 1MDB scandal. In 2016, the Monetary Authority of Singapore (MAS) fined the bank S$5.2 million (US$4 million) for 28 breaches of AML regulations during the same period. At the time, MAS cited “significant lapses” in customer due diligence and ongoing monitoring, which exposed weaknesses in the bank’s policies, oversight, and staff awareness of money laundering risks.
Despite these prior sanctions, Standard Chartered now faces renewed scrutiny. The lawsuit claims that funds funneled through StanChart’s accounts were used for extravagant personal expenses, including purchases of jewelry and luxury goods for the family of former Malaysian Prime Minister Najib Razak. Najib was later convicted in connection to the scandal and sentenced to six years in prison.
In a statement to the Financial Times, Standard Chartered said it had not yet received formal legal documents related to the case but “emphatically rejects any claims” made by the 1MDB-linked entities. The bank insisted that the suing entities are “shell companies with no legitimate business” and vowed to “vigorously defend” itself in court. StanChart also highlighted what it described as “significant investments” in its AML controls and compliance standards.
The 1MDB saga has implicated some of the world’s largest financial institutions and is widely regarded as one of the largest financial frauds in history. U.S. authorities estimate that more than $4.5 billion was stolen from the fund through a series of schemes led by Malaysian financier Jho Low, who remains at large. The scandal has led to criminal prosecutions, asset seizures, and fines across the globe.
Last month, former Goldman Sachs banker Tim Leissner, a central figure in the 1MDB case, was sentenced to two years in prison by a U.S. federal court in Brooklyn. Goldman Sachs has previously paid billions in penalties related to its role in arranging bond deals for 1MDB.
Singapore’s role as a financial gateway in the scandal triggered widespread embarrassment for the city-state, prompting a tightening of regulatory oversight and AML compliance. Several bank executives in Singapore were jailed or fined over their roles in facilitating illicit fund flows.
Standard Chartered is also embroiled in another high-profile legal battle. It is facing a separate £1.5 billion lawsuit in London over allegations that it breached sanctions on Iran more extensively than previously disclosed. In 2019, the bank settled charges related to the Iran case by paying UK and U.S. regulators a combined $1.1 billion.
As 1MDB recovery efforts continue—led by the financial investigations firm Kroll—the new lawsuit against Standard Chartered could further expose the global banking sector’s vulnerabilities to high-level fraud and inadequate compliance practices. The case underscores the long shadow cast by 1MDB and the enduring effort to hold financial institutions accountable.
