Standard Chartered (LSE: STAN) has landed in hot legal water, with a fresh lawsuit in Singapore claiming the bank helped grease the wheels of the 1MDB scandal^.
The claim, filed by liquidators working to recover stolen assets, seeks a hefty $2.7 billion and accuses the bank of turning a blind eye to warning signs between 2009 and 2013.
Shares in the Asia-focused lender dropped 1.2% in London on Tuesday morning, as the market digested the prospect of another legal battle for a bank that’s no stranger to regulatory scrutiny.
At the heart of the accusation, over 100 intra-bank transfers allegedly greenlit by Standard Chartered, helping to mask the true flow of funds siphoned from Malaysia’s sovereign wealth fund. The lawsuit says the bank failed to perform basic anti-money laundering checks, a serious charge for any institution, let alone one with a global AML compliance department.
Standard Chartered, for its part, says it hasn’t seen the claim documents and “emphatically rejects” the allegations. That’s fairly standard corporate-speak at this stage, but if the claim gains traction, it could raise fresh questions about how well the bank was policing client flows during a period when compliance failures were hardly rare across the industry.
The case feeds into the wider push to claw back billions looted from 1MDB, a fund that was supposed to kickstart Malaysia’s economic growth but ended up as a piggy bank for corrupt officials and cronies. Former prime minister Najib Razak is already behind bars for his part in the scheme, but the international clean-up is far from over.
For Standard Chartered, this lawsuit is unlikely to be a quick footnote. While the legal process will take time, the reputational hit is immediate, and in an era when banks are under constant scrutiny for past missteps, this one could stick.