Standard Chartered is facing a $2.7bn lawsuit over its alleged involvement in one of the world's largest financial fraud cases, known as the 1MBD scandal.
The lender, headquartered in London, stands accused of aiding in the movement and concealment of billions of dollars stolen from Malaysia's 1MDB fund, by failing to adequately verify the source or destination of the money, as reported by .
Between 2009 and 2013, Standard Chartered is alleged to have permitted over 100 suspicious transfers through its bank, despite red flags suggesting the money might be connected to illicit activity.
Those filing the lawsuit claim that the bank neglected basic anti-money laundering (AML) rules and argue that if the lender had adhered to these, it could have blocked or reported the transactions.
Shares in Standard Chartered fell by over one per cent as markets opened to 1,191.50p.
Standard Chartered launches staunch defence of AML
This case forms part of a larger effort to recover billions that were misappropriated from 1MDB – a government investment fund intended to aid Malaysia's economic development but which ended up at the heart of one of the world's biggest financial scandals.
Funds were embezzled from 1MDB by officials and associates, including then-Prime Minister Najib Razak who is currently serving a 12-year sentence in Kajang Prison for his role.
Standard Chartered has strongly dismissed allegations linked to the 1MDB scandal, according to a statement provided to City AM. The bank confirmed that it had not yet received any claim documents and "emphatically rejects any claims" made by the 1MDB companies.
It also highlighted that the liquidators had previously described these companies as "shell companies with no legitimate business."
The financial institution stood by its "significant investments" in bolstering anti-money laundering protocols.
"Any claims by these companies are without merit and Standard Chartered will vigorously defend any lawsuit commenced by the liquidators," the bank asserted.
Meanwhile, a spokesperson for the Board of 1MDB expressed satisfaction with the steps taken by the Court-appointed liquidators: "We are pleased to see the Court-appointed liquidators taking action which will benefit the victims of the fraud, including 1MDB."
They added, "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."
