1MDB Fund’s AML morass continues to unwind


page image

Justice Department lawsuit again targets 1MDB Fund with money-laundering allegations

AML Compliance irregularities of Malaysia’s now-notorious 1MDB fund are making headlines again—this time because the U.S. Justice Department filed another lawsuit last week.

The Justice Department alleges that tens of millions of the state fund was misappropriated in order to help finance the purchase of a Texas oil company. The suit further alleges that profit from that deal was then used to purchase luxury real estate in London’s Mayfair district.

Front and center in this case, as in many prior investigations related to 1MDB, is Malaysian financier Jho Low. The suit alleges that Low worked with Cepsa, a Spanish branch of an Abu-Dhabi state investment company, to secure the Houston-area oil deal. The Justice Department will attempt to prove that Low used 1MDB funds to finance his $50 million contribution the acquisition deal, which totaled $2.2 billion.

According to Reuters, Low through one of his shell companies invested $50 million in the deal and “shortly afterward, Cepsa transferred $350 million to Low’s Strategic Resources, buying Strategic Resources’ stake in the joint venture used to buy Coastal Energy, the lawsuit says. ‘The commercial basis for this nearly immediate 600 percent return on investment is not immediately apparent,’ the Justice Department said.”

The Wall Street Journal reported that the turnaround time for Low’s windfall return on his investment was less than a week. The Journal report also details the role of Goldman Sachs in the 1MDB operation and in the acquisition of the Houston oil company. Goldman, which denies any knowledge of or connection to the criminal behaviors alleged in the various lawsuits related to 1MDB, earned approximately $600 million from 1MDB in 2012 and 2013 due to its handling of the sale of $6.5 billion in bonds for the fund, according to the Journal.

The Justice Department alleges that Low’s contribution to the Cepsa deal was possible due to misappropriation of 1MDB money. The still mysterious 600-percent return on the $50 million investment was then used by Low to purchase three Mayfair district properties in London at a cost of more than $97 million.

In addition to Low being a central figure in the various international allegations of misappropriations and money laundering of the 1MDB Fund, Reuters reports that “U.S. prosecutors have said more than $700 million of misappropriated funds from 1MDB flowed into the accounts of ‘Malaysian Official 1’, who U.S. and Malaysian officials have identified as [Malaysian Prime Minister] Najib [Razak]. Najib has denied any wrongdoing and was cleared of any wrongdoing by Malaysia’s attorney general.”


SURETY Eco–The AML Compliance Ecosystem for Peak Performance and Configurability

AML Compliance benefits tremendously from systems thinking, specifically AML ecosystems. If you’re ready to explore the power of the software ecosystem in your AML Compliance work, contact us today to learn more about SURETY Eco, the end to end AML Ecosystem. You’ll be amazed at the power of innovative problem solving and Ecosystem Thinking to transform the effectiveness and efficiency of your AML Compliance efforts and achievements.