Citing sources familiar with the matter, Financial Times noted that the UK-headquartered bank did not conduct the anti-money laundering (AML) checks that were expected of them.
According to the claimants, the bank had permitted over 100 intrabank transfers between 2009 and 2013 that "helped conceal the flow of stolen funds and chose to overlook obvious red flags in relation to the transfer of funds". Through the transfers, the claimants alleged that they had lost over US$2.7 billion and $20 million in public funds.
In a statement released to the media, Standard Chartered said it had not received the claim documents but it “emphatically rejects any claims” made by the companies involved in 1MDB.
"The liquidators who are making these claims have publicly stated that these companies were shell companies with no legitimate business and were linked to fugitives Low Taek Jho and his associate Eric Tan. They operated under false pretences, and acted as a conduit for funds misappropriated from 1MDB to launder monies," said the lender.
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“Any claims by these companies are without merit and Standard Chartered will vigorously defend any lawsuit commenced by the liquidators,” Standard Chartered added. The bank also said that it since made “significant investments” in its AML controls and statements.
The Monetary Authority of Singapore (MAS) announced, in December 2016, that it imposed financial penalties on two lenders for breaching its AML requirements. Standard Chartered Singapore was imposed a penalty of $5.2 million while Coutts & Co’s Singapore branch received a penalty of $2.4 million. The breaches occurred were in context of the 1MDB-related fund flows through these banks.
"The transactions at issue date back to 2010. We reported the transaction activities of these companies, both before and at the time we shut their accounts in early 2013, and fully cooperated with the investigating authorities," the bank continued. "As set out in MAS’s December 2016 media release... MAS concluded [its] inspection of Standard Chartered in relation to 1MDB-related fund flows. While MAS identified regulatory breaches, the inspection did not find pervasive control weaknesses or wilful misconduct at Standard Chartered."
