1MDB Fund hit with $1 billion seizure action related to AML Compliance
A ‘kleptocracy’ describes a government rife with public corruption and the de facto theft of public money by government officials seeking personal fortune. There are lots of allegations regarding Ukraine, Russia, and China, for example—and the infamous 1MDB fund of Malaysia.
The citizens of the nations being pilfered have struggled to stop the paralyzing outflow of public money, and the U.S. and other nations have struggled to respond with any force. The U.S., however, delivered its biggest shot across the kleptocratic bow Wednesday when it announced “the filing of civil forfeiture complaints seeking the forfeiture and recovery of more than $1 billion in assets associated with an international conspiracy to launder funds misappropriated from a Malaysian sovereign wealth fund”—1MDB.
According to the complaint filed by the U.S. Department of Justice, more than $3.5 billion of the 1MDB fund—a fund that was created to fund development projects in Malaysia on behalf of its citizens—was stolen by high-level government officials and their associates. Of that sum, more than $1 billion was allegedly laundered through the United States.
“Stolen money that is subsequently used to purchase interests in music companies, artwork or high-end real estate is subject to forfeiture under U.S. law,” said U.S. Attorney Eileen M. Decker. “…All of us are committed to sending a message that we will not allow the United States to become a playground for the corrupt, a platform for money laundering or a place to hide and invest stolen riches.”
As alleged in the complaints, the accused Malaysian officials, their associates, and and their family members allegedly diverted more than $3.5 billion in 1MDB funds. “Using fraudulent documents and representations, the co-conspirators allegedly laundered the funds through a series of complex transactions and fraudulent shell companies with bank accounts located in the Singapore, Switzerland, Luxembourg and the United States,” according to the U.S. Justice Department. “These transactions were allegedly intended to conceal the origin, source and ownership of the funds, and were ultimately processed through U.S. financial institutions and were used to acquire and invest in assets located in the United States.”
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