Compliance

Compliance Corner: US Department Of Justice, Malaysia

Editorial Staff, 16 April 2020

articleimage

The latest compliance news: regulatory developments, punishments, guidance, permissions and new product and service offerings.

The US has returned $300 million to Malaysia that prosecutors say was stolen in a massive bribery and corruption case affecting wealth management hubs worldwide.

The returned money comes from assets forfeited in 2019 by fugitive financier Jho Low, in a Los Angeles federal settlement. The settlement covered assets that included a Manhattan penthouse, a Beverly Hills mansion, a Beverly Hills boutique hotel, a luxury jet and paintings by Vincent Van Gogh and Claude Monet, the Department of Justice said this week. 

Low and his family agreed to forfeit more than $700 million in assets and, to date, the US has returned or assisted Malaysia in recovering more than $600 million.

The money was siphoned off from 1Malaysia Development Berhad, Malaysia’s investment development fund, and laundered through financial institutions in several jurisdictions, including the US, Switzerland, Singapore and Luxembourg. The scandal played a part in defeating former Malaysia prime minister Najib Razak in 2018. Singapore’s financial regulator in 2016 kicked out banks for serious AML lapses (Falcon Private Bank, BSI). The affair has prompted renewed soul searching about the extent of illicit financial flows around the world. In a bizarre twist melding fiction and fact, money from 1MDB was used to finance the hit film The Wolf of Wall Street – about a financial crook.

In its statement this week, the DoJ said: “Combined with other funds that the department previously returned to Malaysia in May 2019, the United States has returned or assisted Malaysia in recovering over $600 million (RM 2.6 billion) of funds misappropriated from 1MDB. The department’s efforts to recover funds misappropriated from 1MDB are continuing.”

In 2019, the US District Court for the Central District of California entered judgments forfeiting more than $700 million in assets acquired by Low Taek Jho, aka Jho Low, and his family located in the US, the UK and Switzerland.  To date, the US has recovered or assisted in the recovery of more than $1 billion in assets associated with the 1MDB international money laundering and bribery scheme. 

The action “represents the largest recovery to date under the department’s Kleptocracy Asset Recovery Initiative and the largest civil forfeiture ever concluded by the Justice Department,” the DoJ continued.   

According to the civil forfeiture complaints, from 2009 through 2015, more than $4.5 billion in funds belonging to 1MDB were allegedly siphoned off by high-level officials of 1MDB and their associates, including Low, through a criminal conspiracy involving international money laundering and bribery.  

1MDB was created by the government of Malaysia to promote economic development in Malaysia through global partnerships and foreign direct investment, and its funds were intended to be used for improving the wellbeing of the Malaysian people. 

The FBI’s International Corruption Squads in New York City and Los Angeles and the IRS-CI are investigating the case, the Department of Justice statement added. 

Register for WealthBriefingAsia today

Gain access to regular and exclusive research on the global wealth management sector along with the opportunity to attend industry events such as exclusive invites to Breakfast Briefings and Summits in the major wealth management centres and industry leading awards programmes